LLPOH: Follow-up to a Rant

Yesterday I ranted about how I am sick and tired of the pain I go through in order to maintain my small business. Specifically, I was screaming about how my life is made hell by a never-ending series of bad employees, that think I owe them a living and that they owe me nothing for the $85,000 per year it costs me to employ them. One dear poster advised me to “just fire them all and do all the work myself”. That is a great answer, which shows a complete lack of understanding of what running a small business is about. Not that I haven’t considered it, mind you.

In general figures, I employ approximately 100 persons, and these can be roughly categorized as follows:
– 10 employees are absolutely top-notch. I pay and treat them accordingly. I am not one who buys into the “treat everyone the same” bullshit. These folks are outstanding, and I treat them accordingly. Often, other employees come to me wanting something, and when denied, they say “But you let so-and-so do such-and-such”. I am very straightforward when that occurs – I simply respond that when they do as good a job as so-and-so they too will get special privileges. That tends to shut them up.

– About 70 employees are acceptable. They do not cause me too much headache, they generally come to work, they need not too much supervision, etc. However, the job isn’t near the top of their priority list. They are more concerned about other things. Very rarely do they ever move up to the next level – almost never, in fact. However, they do often move down.

– About 20 employees are unacceptable to the business, and I have to work continuously to weed them out. It is hard work to do so, and it requires a lot of skill and experience and dedication to accomplish. Most of the weeding out falls to me as a result. Failure to weed out these twenty on a continuing basis would see my company collapse in very short order.

These bottom twenty are the source of perhaps half the grief in my life. Customers account for perhaps 25%, and the government accounts for the balance. What makes these 20 bad employees? To me, a bad employee is one that does not do his/her job, misses a lot of work, disrupts the workforce, requires and inordinate amount of supervision, refuses or attempts to refuse work-orders, hinders training efforts, works slowly, wastes time, etc.

The reasons that people are bad employees are many, and include the following: drug addiction, alcoholism, criminal activity, gambling problems, problems with their spouses/partners, problems with their children (misbehaviour at school, crimes, attention deficit disorders, etc.), weight and health problems, smoking addictions, outside activities taking precedence over work, heavy indebtedness, problems with sick parents, car problems, general laziness, feelings of being mistreated/unfairly treated/ poorly paid, stealing from me (both goods and time), depression, aggression, false claims of injury/discrimination, attempted suicide (occasionally successful suicide, unfortunately), grandiose sense of entitlement, etc. etc. etc. I see and have to deal with all of these reasons regularly, and by regularly I mean daily. Unfortunately, many of the acceptable employees slide into the unacceptable category over time, for any one of the reasons above.

When I am hiring, in general I need to hire 4 or 5 employees to get one that makes it into the acceptable category. I never seek to hire someone that fits into the top, outstanding category. That is a fool’s errand. Of these 4 or 5, the majority self-select out pretty quickly when they realize that they will actually be required to work. That is not on their agenda. Please keep in mind that all of my employees have the opportunity to make more than the average wage, and can make upwards of $55,000 per year if they are even marginally dedicated. Of these 4 or 5, one or two will require a push out the door, which isn’t too hard to accomplish nor too painful, as it occurs before they are entrenched into the business. And so in the end I am left with one employee that that is acceptable. Hopefully that one will not eventually become an unacceptable employee, but it happens.

Once the employee is entrenched in the business, and falls prey to any of the reasons/situations that result in him/her becoming an unacceptable employee, my job becomes infinitely harder. Managing through those situations is difficult. The best result is to get them back to an acceptable level, as they are trained and able to do the job required, but simply are not doing so. To lose them means going back to that revolving door of hiring 5 to get one, and the costs associated with that are substantial. Additionally, on a human level, trying to salvage the situation is the right thing to do. Some of them I am able to move back up, but a great many I am not. This process largely falls to me, as it requires a significant skill and experience base. The additional fact is that most people simply are unable to confront this range of issues, nor are they prepared to terminate an employee. It is a difficult thing, I assure you.

So, this, in a nutshell, is what I face each day with respect to dealing with my employees. It is never-ending. I have been doing it for over 30 years now, and I am growing weary.

But compounding this are other major issues involved in running a small business.
– The government adds to the burden daily, via an endless stream of red tape, OHSA regulation, Obamacare, etc.

– My customers look continuously for me to drop prices and improve quality of product and service, and take a very short-term view of the world. I lose business to China/Thailand/India et al in a slow but steady trickle.

– I have a cost base of around $85,000 per employee, while my overseas competition has a base of perhaps $5,000 to $10,000 per employee. Just think about that – the labor I use costs almost 20 times as much as that of some of my direct competitors.

– The skill base required to run a successful small business is huge. To run a small business requires a depth and breadth of skill rarely found. A lot of the need for this skill base comes from government mandate, but customers push a lot of it onto the business as well. For instance, how many people reading this have ever set up an accredited quality system? A quality system is extremely difficult to establish and is very expensive to maintain, and generates no return whatsoever save to appease the customer. Other skills required to run a small business include production planning, purchasing, accounting and financial skills, human resource skills, marketing and sales skills, engineering skills, maintenance skills, debt collecting skills, etc.

– Further, the personal risk absorbed by small business owners is substantial. Not only do business owners, in general, risk all of their worldly possessions by establishing a business, they also assume liability for the actions (read possible stupidity) of their employees. What if a driver that works for the company gets drunk and runs over someone while out on a run? What if an employee disables a safety guard because it annoys him, and someone is injured or killed? Who is ultimately responsible for those actions? The business owner.

Although I have rambled on a bit, I want to quickly point out an industry that is suffering mightily due to the pressures of running a business. That industry is doctors in private practice. Doctors spend a large portion of their lives gaining medical skills. In order to run a small practice, they also need to possess the skills described above, and to also be able to navigate the insurance/Medicare/Medicaid/Obamacare system and still turn a profit. Just when and how are they supposed to obtain these skills, given their dedication to the medical profession? Is it any wonder that private practices are disappearing in large numbers, with large numbers of doctors going bankrupt. Spare a thought for those many doctors that visit this site, as their burden is both extreme and unfair. As is that of small business people everywhere.

But back to the question of why do I not just fire everyone and do it myself? To do so would be to eliminate the livelihoods of 100 people, plus there is the flow on effect it would have throughout the community. Perhaps several hundred families would be affected, as the jobs would flow overseas, for sure and certain. That is a decision I am loathe taking, despite being mightily dismayed and unhappy with a lot of my day-to-day work-life. Also, it has been my life’s work to create and build things, and it would be gut-wrenching to walk away.

The day is coming that my business will end, I am afraid, and we are slowly winding it down in response to various pressures. For instance, as customers take profitable goods from us to build them overseas instead, we also then choose to stop making less-profitable goods in order to keep margins in balance. We are managing our products so as to maintain profitability while slowly shrinking the business. However, each day brings a new governmental or customer-generated challenge. We will continue on, but for how long is the question. I guess things will come to a head within the next 5 years. I hope it may be different. But I do not expect it to be. I wonder who will be left to turn out the lights when all small business is gone.