LLPOH’s Short Story: Responsibilities Employers Take for Employees

I cop a lot of flak for comments I make re employees, and the fact that I believe – in fact I know – that there is a significant number of people who, in a modern economy, are effectively unemployable. I base my comments on my experiences running businesses, both as an employee myself, and as an employer. I generally find that the people objecting to my comments are not employers, but employees, and most commonly government employees. Below, I am listing some of the responsibilities I have toward my employees, in hope of explaining why there are some people that are simply unemployable.

Responsible to pay wages:

Each week, I am responsible for meeting payroll. By payroll I mean wages and benefits. I am responsible for putting the pay in their banks, and for paying garnishments, child support, etc.
My weekly payroll is in the neighbourhood of $150,000. Failure to meet payroll is not allowed. I cannot skip a week because cash flow is a bit tight, no matter what might happen that might negatively affect my ability to meet payroll (customers not paying me on time, computer crashes, etc.). Not meeting payroll is not an option.
I am also responsible for sorting out all of the issues that occur re employees receiving their pay. Last week, come payday, I received two calls from irate wives when their husbands pay was not in their accounts. These wives were not happy. I investigated immediately – it took me away from other, money-making duties. What I found in both cases was that the families had changed their bank accounts without advising us. So their pay went into the ether. Not my fault. I then had to advise the irate wives that we did send their pay, that it was their own fault for not advising us of the changed bank accounts, and it would take a few to several days to sort out and for them to receive their pay, as we have to wait for the banks to return the money to us from the ether. Of course, I was abused and cursed, and they demanded I send their money forthwith. This I did not do. I am not a bank, and I am not responsible for their mistakes. I do have a long memory, and I do not appreciate being abused.
And there are times when employees die. This makes for ticklish situations. The bereaved families of course want their loved one’s final pay, holiday money, etc. They are in grief, and need to pay for funeral costs, etc. And I have to tell them that I cannot release the money to them until cleared to do so by the appropriate legal authority. It is heart-wrenching. Why cannot I release the money? Because I have no idea who has claim on it, and if I release the money to the wrong party, I am liable for its loss. For instance, I had a case where an employee had a wife and kids, and was not divorced. He lived with a girlfriend, with more kids by her, and they shared his account. The girlfriend wanted the money owed. The estranged wife of course wanted the money as well. If I had released the money to either of them without legal authority, I would have taken a big chance.

Responsible to be Tax Collector:

I am responsible for collecting and paying my employees taxes – federal and state, and social security, etc. I must calculate the tax, withhold the tax, and forward the tax on time to the appropriate agencies. God forbid I do this late, as the penalties are significant. And, should my employee owe the taxman money at the end of the year, I get the pleasure of being abused for failing to withhold enough.

Responsible for the Output of the Employee and for Keeping the Employee Working:

Everything I make and sell is priced, and the labor content is calculated down to the second. That is the same for a $30 product or a $3000 product. Each minute worked costs me around $1. Every minute lost costs me money – the same $1. If an employee takes a ten minute bathroom break, it costs me $10. If they arrive to start work at 7, and don’t get started until 7:10, it costs me $10. If they leave for lunch 2 minutes early, and do not start back until 2 minutes after the lunch break ends, it costs me $4. If I or my supervisors need to explain their work to them, it costs me $2 per minute – $1 for them, and $1 for the supervisor. I estimate that each worker loses the better part of an hour per day to these factors – and I have over 100 employees. Therefore the lost time costs me $6000 per day. Some of this is factored into the cost of the product. But not all. $6000 per day times 220 days per year = $1.3 million dollars lost each year for lost time. I take lost time very seriously – very seriously indeed. Employees that lose excess time are simply not tolerated. Employees that take excessive time to train, retrain, or instruct cost me money – a lot of money. I cannot afford it.

Responsible for the Continued Improvement of the Productivity of the Employee:

This is similar to the above, but somewhat different. Each employee must be able to produce more next year than this year. The target is a minimum of 2.5% improvement each year, in order to keep up with wage growth, and foreign competition. I must provide the means for each employee to produce more each year – be it equipment, training, plant layout, etc. If I cannot generate this 2.5%+ improvement each year, I will go broke. My employees must be capable of adapting to the changes that are required to achieve this improvement. If they cannot adapt, or cannot help me achieve the improvement, or take too long to train in order to achieve the improvement, I simply cannot employ them.

Responsible for the Quality of Output of Each Employee:

I am responsible for the quality of the product and of the work for each employee. Any mistakes made cost me money – in rework or scrap if the mistakes are caught in-house, or in costs associated with warranty if caught outside the plant. Each minute of rework costs me $1. Scrap costs me both material and labor. Faulty products that escape the plant cost me huge amounts – in general it costs me 10 times the sell price if a part leaves the plant faulty. A faulty $100 part costs me $1000 in warranty cost. I require that my employees be able to follow all quality procedure – written of course in order to maintain my quality accreditation – and to be able to notify me of issues as they arise. If they cannot do these things, I cannot employ them.

Responsible for the Safety of Each Employee:

I am required by law to maintain a safe workplace. There are written safety procedures that must be followed. There are written procedures with respect to handling of materials and chemicals. I pay huge sums of money insuring against workplace accidents and injury, and each claim drives these costs up. I cannot employ people that are incapable of following the procedures and of using good judgement in their work activities so as to minimize the risks associated with work. I am also responsible for any injuries that occur owing to extreme stupidity. Injuries associated with stupidity are the norm and not the exception.

Responsible for Making Sure Employees Adhere to EPA Laws:

This is self-explanatory. What is not so evident is the number of times that employees breach the laws intentionally so as to make their jobs easier (easier to dump chemicals down the drain as opposed to moving them to the designated disposal sites, etc.). Also, stupidity plays a factor – such as the time an employee failed to turn off a tap to a large chemical container, and allowed a major spill to occur. The lost chemicals were worth several thousands of dollars, but fortunately we caught the spill just before it reached the sewers.

Responsible for the Mistakes Employees Make:

Again, this is self-evident, and includes damage to equipment, erroneous or poor communication with customers and other employees, bad general decision making, etc.. What is not so self-evident is how varied the mistakes can be. Here is a good example of a mistake that cost me a lot of money, and had the potential to send me broke:

I have a system in place that ensures that customers receive invoices daily, and that allows me to track exactly that the invoices are indeed received by the customer. The reason is simple – the only reason I am in business is so that I get paid, and the business can only survive if I manage cash flow well. Both of those things depend on me invoicing my customers accurately and timely.

Two of my most senior managers took it upon themselves to change this system. They decided to implement a system that would send invoices electronically to the customers, and so save around $3000 per year in paperwork and handling costs. They implemented the system without my knowledge. The system failed – and the electronic transmissions did not occur. The managers did not follow-up to ensure that the system was working – they implemented the system, congratulated each other for a job well-done, and walked away. The invoices never reached the customers. The customers of course did not tell us they were not getting invoices – it is not in their interests to do so. The clerks involved are evaluated on how slowly they can pay out money, not on how fast.

Due to the lag-time between issuance of invoice and payment of invoice, the fact that the invoices were not received was not discovered for approximately 6 weeks. During this time, we were getting paid as usual, for invoices issued previously, and I did not know the system had changed. Then one day the money owed did not come in. I immediately asked why. At that point I discovered that they had changed the system, had failed to follow up that it was working, and that the invoices had never been issued to the customer.

I now had a $1.5 million cash flow problem. And I was not happy. The customer was very happy, of course – they hadn’t been invoiced for 6 weeks. A $1.5 million cash flow problem was created because two senior people had made a very bad mistake in order to save $3000. It is a mistake they will not repeat here.

The business survived, I met payroll every week, despite this enormous hole in cash flow, etc., but it was not a good situation.

The long and the short of it is, I cannot tolerate many mistakes from employees. They cost me money and would send me broke.

There are many more responsibilities I take by employing people, but will not go further with the list. What I hope becomes evident when going through the above is that I must have competent employees in order to stay in business. They must be able to work independently; they must be able to read and understand complex procedures; they must be able to determine risk and avoid it; they must have a good work ethic; they must be able to independently come up with ideas to improve productivity and must be receptive to change; they must be able to focus on detail; they must make few mistakes; they must run their daily lives well in order to not overly burden me with garnishments, child-support payments, failure to report bank account changes, etc.; in short, they must be intelligent people that help me make money.

I am not alone in this – every employer trying to make money needs employees with the same attributes. But the fact is, a significant percentage of potential workers do not have these attributes – they cannot read well or understand complex written instruction, they require too much supervision, they are unable to predict the outcome of their actions, they have uneven personal lives, they waste time, etc. I simply cannot employ these people and make a profit by so doing, and to employ them brings too much risk to my business re safety, EPA. Very few profit seeking employers can employ them. I have classified this group of functionally unemployable as those with IQs below 85 – that is of course arbitrary, and overly generalized. However, the fact is, using the IQ scale; it is from that group that the highest percentage of unemployable will be found. I simply cannot fully organize my business around people that cannot read, act independently, and reason.

I do not think I am being harsh – I am being realistic. Laws and the competitive environment make me responsible for my employees on a great many levels, and there are many risks with employing people. I must minimize the risks if I am to keep my company solvent. The belief that all people have a right to employment and a reasonable standard of living is noble, but it is unrealistic and unachievable.