Note To Employers - Save Your Business

Note to employers whose employees are now acting like vendors, not employees, like you are not an employer, you are a client.  Thank your lucky stars.  Let me explain why.

The debt load you took on in boom times cannot be supported by the lower sales volume and tighter margins you have now during the bust.  So you are cutting employee costs, rebalancing inventory, renegotiating the lease, and cutting overhead.  Everyone has a different weighting in these areas, so its all about judgment.

If you are like many businesses you’ve by now fired your high priced, boom time help and replaced them with low priced help.   You’ve cashed in your 401K and paid the tax and penalty to make up for the loss of the bank line of credit.  You await the promised economic recovery, when you can replenish your stores.

If you own a restaurant you have at least one chef working for free.  It is called staging.  For the restaurant to be open, and minimum wage paid (and not just work for tips) someone has to work for free.  It is the poor bastard who has a chef degree and a student loan, who is working for free hoping somewhere, sometime a chef drops dead.  Since working for free is illegal, these chefs move on, pretending to be "guest cheffing."  

As you know "interning" is quite widespread, but the politicians made it illegal about 3 years ago.  And they exempted politicians and lawyers.  I am not making this up.

In any event, you are doing what you have to do until the economic recovery comes.

There is no economic recovery coming.  We are in year five of a 30 year rolling disaster, which will get far worse.  There is simply no way, for lack or perspicacity AND concern, that any public policy will address any aspect of the economic crisis.  This is not to say your business cannot do better. There is business out there, but you need to change to get that business.  And you need good people to make it happen.  Such people are hard to find, or impossible, it would seem, to afford.

If you are looking at other people in business as your competitors, you are looking in the wrong direction.  They are in the same boat you are.  He who will eat your lunch has not yet started a business.  He will beat you because the workers will all be owners, their rent will be dirt cheap, they will have no debt obligations to service, and they will likely get vendor financing for customers they serve with better product at a lower cost. They will not be flogging dead inventory.

This competitor may be working for you right now.  Your impulse may be to fire this person when you find him going all entrepreneurial on you, treating you like a client, but you may be better off listening and working with this person.  Listen to the person’s ideas, and between the two of you you may pull your business out of the death spiral.

Now, you may look around the low priced help you have, or whoever you have on staff, and say, no such person here.  And creative, smart aggressive energetic people are too expensive to hire right now.  Right?

Wrong!  Again, you are stuck in old thinking.

Your business like all other has a series of posters on the wall outlining how the state, as a matter of public policy, has interfered in the rights of employers and employees to negotiate any deal they like.  Public policy is meant to curb the excesses of the capitalist system with rules and regulations.  Never mind that if a system engenders excesses we should dump the system, get rid of capitalism, but no. Keeping capitalism alive is necessary for progressives to have something to do.  It may not have mattered when the economy was growing, but it is counterproductive right now.  Public policy no longer fits within economic reality.  The economic reality is we cannot afford any playing at "public policy."  In any event, the trick is to not be duped into confining you thinking within the limits of public policy.

Public policy is for employers to be a welfare agent for employees from cradle to grave.  Your parents’ employers took care of you from the cradle, and your employer is to care for you to the grave.  Of course people change jobs, but laws such as COBRA provide for seamless transition.  It is all so out of touch with economic reality.  A huge solution to a tiny problem.  Costs on top of pointless costs.

A new conception of "employee"  (ick... I don't like the word...) may prove to help align production with reality, but may also be one heck of a competitive advantage.  A network of associates who show up for an hour and earn $1000 to produce $10,000 in sales is better than a full time employee who costs $5000 a month and produces $40,000 in sales.  You get better performance from the former and there is a mountain of management costs for the latter. Full timers tend to equate time with entitlement, and an idle mind is the devil's workshop. 

If so, where to farm new recruits?

There is massive unemployment out there, even when people who would be working are hanging out in school or otherwise diverting themselves.  Uncertainty alone may forbid hiring.  Inability to contract on terms mutually agreeable makes sure you do not hire anyone new.  Forget about them.  They want to be employees and cannot help you.

I once wanted to learn about ag exports so I spent a year in Wenatchee picking, sorting, storing, packing fruit in Wenatchee, and then consulting with a couple of big outfits on ag exports.  The farmer I initially worked for told me the Mexicans ask for a certain wage, and his reply was "it's not in the fruit."  The meaning being, there was only so much he could make off the fruit, and that determined what he could pay.  At some point, it was better to lease his 30 acres out to big bad Dovex who got its money cheaper and was big enough to rock the subsidies.

Paying employees in your business is not in the plate or the furniture or the clothes.

There are some people stepping outside the box.  You’ll see them appearing to compete with you, either inside your company or out.  Or they may have other gigs in which they are more interested in than yours, but their creativity may serve you.  Bring them on as consultants, or in a way that you get your $10,000 in sales, and they get $1000, but only for one hours work.  Match the personnel to the opportunity.

These people do not want bennies, they dread mandatory "health care."  The thing is a literal killer on many levels, but in short, they don't want to pay for something they will never use.  They made separate arrangements for "health care" to stay healthy.  They want no retirement because it would not occur to them to retire.  They will never collect unemployment because it would not occur to them to be unemployed, which is always a voluntary circumstance.  When you are talking to people, listen.  Don't wonder if they would be a good employee.  Wonder under what conditions they will work WITH you.  The employee is over.

Competition means to strive with, not fight against.  How can you work with these lives wires in a way that benefits you both?

One final thing.  Most people are out of business before they realize it.  Get cold blooded about your situtation.  Have your CPA advise you when your liabilities grow to the point where you can go bankrupt and end up with nothing but $125,000 (what you get to keep in bankruptcy)  If you get there, go no farther.  Cash it all in.

Reflect on this.  What if you had absolutely no obligations, knew what you know, and had $125,000 to start over?  No worries except the business you want to build, from scratch.  The other people in the business, who have not gone bankrupt will remain shellshocked, dispirited, struggling full of woe.  You will be trim, fit, tanned and ready to rock.

The people you are really up against, the ones who will eat your lunch, are right there,  absolutely no obligations, no worries except the business they want to build, from scratch.  They are trim, fit, tanned and ready to rock, except for the experience and $125,000.  You have the advantage of experience and cash.  Doesn’t that sound pretty good place to be?  It is an option, study it.

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