Q&A: What to do with the cost of hiring employees during recession?
Monday, January 12, 2009 at 3:53AM 
Question: I am a business owner running a local accounting business. I am starting to see negative impacts to my business due to recession. I am planning to reduce the cost of hiring employees, i.e. salary, benefits...etc. What are your thoughts on this?
Answer: Be careful on who to lay off. Laying off or cutting top performers because they are well-compensated can kill morale and could potentitally lead to a bigger impact on your business. Try to find a way to keep the top performers. Replacing senior, experienced staff with newbies can often set you back. Consider the training costs and the performance-to-salary ratio. If it takes a senior staff one hour ($30/hr) to complete a task, it might take a newbie three hours to complete the same task. You might end up paying more until the newbie gets more comfortable with the job and perform better.
As for the benefits, I would suggest you not to cut the benefits. If you're going to have a long-term business, you need to take care of your people.
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Reader Comments (1)
Very wise answer...I'm an employer too. And these days, the fearness of loosing job is happened everywhere. However it impact my employees performance too. I try my best not to fire anyone as those people have been supporting my business during the good time.
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