Make hiring more affordable -- and create jobs
It was a reception where most people wore suits or dresses. I found myself chatting with an affable gentleman wearing a golf shirt and slacks. He didn't seem to feel underdressed.As we sipped our wine and sampled hors d'oeuvres, he told me he owned a surveying/civil engineering company. He had had 12 employees when the bubble first burst, and he had had to let a few of them go. Business continued to trend downward, despite declarations of a recovery, and he let a few more go.In relatively short order, he had to let the rest go, and now he's down to just himself."I'm actually netting just about as much now as I was when I had 12 people working for me!""Really?" I was surprised. However, as business author Alan Weiss often states, "It's not how much you make; it's how much you keep.""There's a huge difference in the gross, but the net is about the same, and I don't have all the headaches that come with having employees.""Headaches?"He looked at me as if I had two heads."Unemployment insurance, workmen's comp and all the benefits. You have to have somebody just to do all the paperwork and manage it. People call in sick, and you have to cover for them, so the job still gets done, and of course, they still want to be paid. Then I have to work half the night to do my own job. The day after a big ballgame is murder."Sometimes I have to pay them to do nothing because there's no work. When the work comes in, they want overtime to do a little extra. And then you have the hassles of this guy doesn't want to work with that guy. I would actually speak with my lawyer before disciplining someone to make sure I couldn't get sued. Who needs all this aggravation?"My dirty little secret is that I can make roughly the same amount of money [net] without all those headaches. I'm not hiring anybody back, even if the economy turns around.""How do you handle jobs that require more than one person?""Partner with others. It's so much easier, and without a regular payroll, I'm not paying people to do nothing for minor slowdowns. I never liked laying people off, even for a day or two. Now, I don't have that problem because partners expect to only get paid when there's work, and I don't have to keep paying unemployment insurance."What have we done?Even with a nice glass of wine, this was a sobering discussion. Although I've managed groups and operations, I've never owned a business that hired employees. I know many people that have, but they're never that frank. Our friend didn't tell me anything I didn't already know, but he put it in a context in which I had never quite thought of.What have we done?Certainly, we want to protect our employees with workmen's compensation, unemployment insurance and other benefits. Each of these by itself seems reasonable, but when you put them all together, it becomes quite a burden for business owners.There are probably differences for each industry, but I wonder at what number of employees a business can start netting substantially more to justify not operating as the Lone Ranger?In this industry, it seems to be more than 12, perhaps much more. Some operations, whether service or manufacturing, require a minimum number of people to run them, so we often have no choice.Our friend works on projects in New Hampshire. He doesn't have to worry about competition from overseas. Many New Hampshire organizations face foreign competition that doesn't have these burdens. These are the ugly realities, and we have to find ways to be competitive -- hopefully without sinking to their levels.We keep hearing pleas from Washington for companies to start hiring, but here are some reasons they can't. If we could find ways to reduce the bureaucracy without reducing the benefits, they would necessarily become more affordable. It's not just the cost of a benefit or service; the hassle factor is a cost as well and can easily render it unaffordable.A lot of people are running for office right now. I think both parties need to have a better understanding of how we're choking our businesses. Tell them what would help your business thrive again.If they listen, it just might keep you from having to make some very unpleasant decisions.Ronald J. Bourque, a consultant and speaker from Windham, has had engagements throughout the United States, Europe and Asia. He can be reached at 603-898-1871 or RonBourque@myfairpoint.net.