Q. My employees of my cleaning business make too much money. I want to attract the best, so I pay between $12 and $15 per hour. This wouldn’t be so bad if I weren’t constantly dealing with absenteeism, tardiness, customer complaints, and insubordination. My accountant says that I am not making any money, and I need to lower my expenses or my business may go under. What can I do? If I lower their wages they may get angry or quit?
Drowning in Payroll, Texas
Dear Drowning in Payroll,
Sounds like its time for you to “put your game face on”; smile and do what needs to be done. Yes, it is very possible that a change in wages like this can cause a lot of ugliness. However, it is not reasonable for you to work for free, or to lose the business that you have worked hard to build. It’s not going to be easy, but the rewards of coming out with a healthier business are well worth it.
Your first step is to think about what’s best for your business, without getting too hung up on the feelings and emotions around the staff that you currently have. It sounds harsh, but nobody is going to work for you forever, so its most important for you to protect the business, because nobody else will. Next, determine a reasonable wage scale, a workable performance review and raise schedule, other incentive programs (to replace the attraction that your overly inflated wages are now creating), etc. (For help with this contact me)
Once you have mapped out a system where the numbers work, implement your system in phases. Start all new hires on the new compensation system. If your employee turnover rate is less than a year or so you may never need to lower the wages of the existing staff, because they will soon leave and be replaced by new people. However, if it is not, then once you have a few new people, you can announce to the existing staff that wage adjustments are necessary and they will be taking place in 30 days. Your staff will likely (and understandably) be upset by the decrease in wages, and its best to just let those who cannot handle the change leave, instead of bitterly staying.
If you follow these steps your business will come out healthier. The behavior problems that you mentioned may have been attributed to a staff that receives a high compensation without being connected to performance. Top employees that don’t cause management headaches may add enough value to be worth these higher wages. A better developed system that links performance to compensation, will more effectively equalize your staff to be making a compensation that reflects their value-added to the company.
So I encourage you to, “put your game face on”, get it done, and begin reaping the rewards that you deserve.