Budgets and Etiquette

There’s been an unfortunate theme among a couple of my friends recently that I want to talk about. Two very close friends of mine were both recently offered full time positions in their respective small to medium size companies. As you could imagine, they were thrilled and we were prepping to pop the champagne and celebrate. Within days however, each company had actually taken a minute to review their budgets and decided to rescind their offer and in fact, both of my friends were laid off due to a lack of funds. This happened to my one friend twice actually with two different companies. What leaves me completely baffled is the idea that these companies were not aware of their budget for hiring employees beforehand. How is it possible to post an ad looking for help, hire someone, give them two weeks of paid training, offer them a full time hourly paid position and three days later terminate them altogether??? With my other friend, he had been with the company for six months under a freelance contract. He bent over backwards for them and really stepped up when they had their backs against the wall. They had a meeting to discuss a full time, salaried with benefits position and it was headed in the right direction. A week later, he was cut down to four days a week and the week after that, the entire office (including him) knew that his position was actually going to be cut for good but nobody had formally addressed it with him. Can you imagine going to work and hearing through the grapevine that you’re days away from unemployment and nobody has actually sat you down to tell you to your face? In my opinion, thats just plain rude.

This is where budgets and proper etiquette come in to the discussion. As a small business, your budget for new hires should be in your business plan. One more time for the people in the back…Your budget for new hires should be in your business plan!! There should be a ” people” portion of your plan that goes into: How many employees can you realistically afford to hire? What is your payroll cap? How many employees realistically do you need in order to run an efficient and profitable business, aka your productivity.  Your. “people plan” is tied so closely to your financial plan. You must scale your staffing plan based on the scale of your business growth. Perhaps you review it monthly or quarterly. How will your staff grow as your business grows? These are all factors that must be discussed with your partners and decided upon before you start hiring all these folks and messing with their livelihood when you realize you actually can’t afford them. If you are unsure then take assurance in knowing this is why you wrote a business plan in the first place! It is your guide and your map. Review your numbers, are you on target to your projected goals? Are you growing according to the model you used to scale your business the last time you reviewed your plan? if so, then perhaps it is time to bring on another helping hand but before you go ahead and offer them the job, it is SO important to offer them this position with confidence that your company can handle having another person.

Perhaps while considering hiring another employee it would be worth while mentioning during the interview process that before you officially offer them the job, you will review your numbers and make sure it is the right time to bring them on. This way, the person will walk out of the interview knowing it might not work out. Transparency is key. Having somebody complete a full two week training period and be offered a full time position only to be terminated three days later is a waste of time and money, for you and them.

On the other hand, in regard to my friend who had already been with his company for 6 months before they cut him loose-there is a proper way to terminate somebody and letting office rumors fly is NOT the way to do it . As soon as the rumor mill started to turn, they should have sat him down to address the rumors to either confirm or deny. In his case they did confirm and eventually did sit him down but frankly, the damage had already been done. He spent day after day for weeks wondering if it was going to be his last. People were coming up to him saying that they’ll miss him and to send them his resume so they could try to help him out. Listen, business is business, things change and it’s really not personal but what an awful way to find out you’re losing your job. Am I right??

Again, know your budget and review your plans before taking on a new employee and if for some reason you cannot keep somebody on board, have the decency to address it to their face as soon as the decision has been made.



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