Cut staff hours but keep the morale
If you need to cut costs, here's some tips on how to break the bad news to the staff.
Richard Ryan, Barberitos Southwestern Grille and Cantina, Charleston
I own a small restaurant that grosses around half a million a year. I am going into my third year and I currently employ six people. Most of them live off this job. I am holding a meeting today to explain why everybody will have their hours cut in half. Any advice on how to do this without losing the good performance and enthusiasm of the staff?
By Emily Maltby, CNNMoney.com writer
Many business owners today are finding themselves in the same position: The down economy forces them to make tough cost-cutting decisions, which may entail layoffs, pay cuts and reduced hours. These actions, while often essential to the bottom line, can make employees nervous, discouraged and sometimes depressed.
Because you don't want those negative feelings broadcast to your customers, you should prepare yourself well before diving into the meeting.
The first thing you need to evaluate is whether axing hours is actually the best course of action. Ask yourself whether eliminating jobs, for example, might be a better choice for your business and the employees, advises Bonnie Bernie, director of service operations at HR outsourcing firm Administaff.
"You have to look at all the options because you need to feel confident that you are making the right decision," she says. "Confidence is key when you are delivering negative news."
Keep in mind that employees probably see the writing on the wall. They know the economy is bad, and if they are seeing fewer customers, they can easily put two and two together. So make sure you give them credit for that by being open and honest.
"Acknowledge what they already know. You don't have to go deep into the company's financials, but you have to convey that you are in survival mode, that the downturn is impacting the business. Maybe that means stating that revenues are down a certain percent," Bernie says. "Convey that changes have to be made in order for the restaurant to remain open."
"You also have to send a message of hope," says Kevie Mikus, vice president of client services at The HR Group, another HR outsourcing firm. "Let them know that this was a difficult decision, and recognize that it will impact people's lives. But also stress that, because of these measures, you don't anticipate having to close the doors. If you believe this to be a temporary solution, then send them that message. If you can spell out the expected duration, then paint them a clear picture of what this will ultimately mean for the business when it's over."
Both Mikus and Bernie stress that leaders need to emphasize to the staff that everyone is in this together. Help them stay motivated by getting them involved in rebuilding the business.
"Ask for recommendations on cost containment and increasing sales," Bernie says. "Also consider cross-training them so that they can boost their skills."
Chances are that you know which employees are going to feel the impact of this decision the most – some may be struggling with bills, or with having other family members out of work. But don't make special concessions for them.
"You need to ask employees to step up their game, and if you are treating some people differently, others will hear about it," Bernie says. "That will take the focus off their own productivity."
One way to soften the bad news is to evaluate any other incentives that you may be able to offer to the employees. "Any little measure you can afford, like free meals, for example, could help to offset the blow," Mikus says.
As with any situation where you are dealing with people's livelihood, communication is essential. So make sure that following the meeting you are available and accessible.
Bernie recommends using this as an opportunity to hone your leadership skills. For example, keep the employees informed of the restaurant's progress so that they're not left making assumptions. Also, be sure to roll up your sleeves and show them that you, too, are stepping up your game.
If employees come to you with problems stemming from the new arrangement, do some research for them.
"Depending on where you are and on the employee's salary level, they may be eligible for benefits through a workforce commission. Give them some tools to work with if they need additional employment," Bernie says. "And when possible, be flexible if they have to take on another job."
Give us your advice: Check out recent “Ask & Answer” questions.
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From Jenna Harrow, Los Angeles, CA I, too am a small business owner, who recently had to lay off some employees. I had some advice recently that said most firms don't cut deep enough or quick enough to make a significant difference. You have to do what is best for the entire organization. If paycuts will allow everyone to keep their job, then you need to be straight with your employees. If laying off a few people, will strengthen the rest of the team's jobs, most people will support your decision.
From Diana Houston Texas Why not take it to the employees, explaining the situation. Ask them with the economey the way it is what are the best ways to reduce costs. It looks as though we will have to cut hours, and that will be across the board. What suggestions do they have that can help. Keeping in mind, you value all of them and don't want to loose anyone, that is why slashing hours across the table it the only soulution you can come up with.
From Denis Brown Richard, these are hard times that require hard decisions and it cannot be stressed that in such times when it's all hands to the pump, even a workforce however small needs to pull together in moments like these.
The responsibility needs to be recognised by your team of workers that united you have a greater chance of riding out the storm. Communication between you and your staff is paramount for a number of reasons i.e. allaying fears of job losses, maintaining a healthy morale, being positive and not displaying doom and gloom. People still have to eat, still want a pleasant atmosphere to escape from the reality, and if you and your workers don't you may be the next statistic in the victims list. Which we all want to avoid, and can do if we stay focussed and pull together.
At the end of the day the buck stops with you as it does with all employers, and to be honest until you've been an employer your staff will have no idea of the pressure you are under. Perhaps you ought to give them an insight to that so they can see and understand what is required from them, as it will be easier when they realise just how much you carry on your shoulders.
One of the major problems with businesses is simply they don't communicate properly, and staff always feel left out and that's partly why they don't show the committment or interest in the business. When you communicate and you have your staffs buy-in no matter what storms you face they will be there for you and equally as long as you show character of steel at these times rather than cut and run your business will survive.
I hope this helps, not just you and your business but all the other businesses that are experienceing the same right now. I am not an expert, and I don't have any degrees to my name, but I do care about people. I care about this world.
Thank you for taking the time to read my message. From Denis Brown in Great Britain.
From Dale Little, Washington, D.C. Great answer! And kudos to you, Mr. Ryan, for asking the question! Too many employers are anxious and allowing that anxiety to guide their actions, hence short-sighted actions that are damaging to the company in the long term. Organize regular brainstorming sessions (15-20 minutes is fine) and keep your employees involved in the partnership of increased profits and decreased expense. Be free with praise for all employees, even those that must be laid-off. Network with other business owners in an attempt to assist your future former employee in their new job search.
From CoffeeAddict, Washington, DC Agreed. The so-called business school mentality of the MBS is that workers should give undying loyalty, but employers must sacrifice them for the glory of profits at all times. Workers need to start looking at employers like a cheap date: they're a fun ride, but there's always a hotter model out there to spend time with. Use the employer and then lose them. It's what they have been doing to workers for the last two decades.
From Pat Quinn Umm I think it is much better than an unemployment check! You cannot have your cake and eat it too. Just be thankfull you have a job and quit complaing about everyone else at work. Either do something about it or mind you own business
From Theresa Schmitt,Lou.,Ky.
TE.Schmitt,"Who's Who," Business Partnerships Denver Door Store,Blogger>
From TheresaSchmitt,Lou.Ky. Must I remphasize from, Busness Weekly,
Commentary that helping the Economy
means filling retirement positions.>
From John Smith My employer EDS (Electronic Data Systems) got acquired by HP in May 2008. Ever since, the bonuses and pay raises were frozen. In Jan 2009 HP announced 5% pay cut to all the employees. Last week, EDS announced another 10% more pay cut to all the employees.
Many hard working employees prefer the lay offs better than this as they know, they will not be laid off and a lay off will clean up the house (getting rid of the bad employees).
Many hard working employees also feel that cutting the working hours would have been better (like a furlough) so that they can at least enjoy the free time.
What we live with now is 15% pay cut and still have to work for the same number of hours and still have to see the slacking employees are still in the house playing solitaire.
Talk about morale in this situation.
From Juan Hoffman, Mexico City Dear Mr. Ryan
I understand you all too well I went through the same with my restaurant recently in my country, there are no easy choices only inteligent decisions, good luck on your meeting and I hope your employees will understand the situation.
The only thing I would like to add is that much of this crisis was generated in the US but with consequences worldwide, perhaps there should be tougher punishment for those responsable.
Again good luck
From Brian, Chicago, IL I love the last comment from the author, "be flexible if they have to take on a new job." If an employer is going to make the cuts then I think they have to expect to be inconvienced by employees searching for a new job or even morale being down. This comment seems to sum up the basic corporate philosophy – where the employer asks and expects loyalty from employees, even in the most difficult of circumstances, and then resorts to the easy way out of laying everyone off when times get tough. I think today's worker bees need to treat employers they way employers treat employees – it's purely business. Just have the attitude to go collect a paycheck and always look out for yourself, since an employer never will.
From Martin England, Asheville, NC I own a B&B and Restaurant in NC mountains and went through similar in January.
Ask them if there is a flexible schedule that, while reducing their work hours, may allow them to earn maoney elsewhere for a short period (my handyman does some yardwork, a waitress who is at college to be a teacher does some child tutoring).
With reasonable humility, ask them if they have suggestions as to the direction you're taking your restaurant or for ways to increase trade – they may know the local people's needs better than you. One employee said he could bring a Diesel truck club to dine once a month on a quiet night – a group I would never have made contact with!
Listening to them and giving them an opportunity to make suggestions (even criticism) helps retain their interest in the business and makes them feel part of the progress.
The key is communication and an environment where hopefully you have already established credibility and an earned reputation of being honest with your employees. If not, there is not much you could say to EE's where they would respond positively. If you have credibility, then communicate often and openly. I believe in overcommunicating at first when you are making these decisions and hold "all hands" meetings with an open forum for questions. The EE's will probe to see if you are telling the truth. Each time to meet with EE's you set the stage for the next time. Ask for their ideas on how to cut expenses and then follow up. Show that you are trying to take all the steps necessary to preserve jobs. I used to think that cutting pay was the last resort and that layoffs were preferable. I have changed my opinion in this recession, and I think cutting jobs should be the last resort. Cutting Pay and Benefits is more acceptable because EE's do not want to lose their job or the job of a colleague. Each organization has a method of coping with tough decisions. Honestly and no surprises are the best courses of action. Good Luck! Ron Deutsch-AspenBeach Consulting (HR).