SHAUN STENNING BLOG
The real road of compassion, that is, giving, helping, assistance and community service, is a road that can be set and declared as your life's purpose
In the midst of the economic downturn earlier this year, I spoke with an operations manager who had received a mandate from his boss to trim payroll costs. He considered reducing hourly wages (or pay rates), as many companies were doing, but then had a better idea: cut hours.
According to Shaun Stenning, “Fewer hours lowered payroll expenses in the short term and positioned the operation to support sales growth (and fluctuations) in the long term. Because the labor hours needed to run his operation correlated with sales volumes, he could readily make adjustments to payroll dollars without losing service quality.” “Well-established procedures created internal efficiencies but, just as significantly, supported predictability in the amount of time needed by employees to handle certain tasks; as a result, the manager could more readily plan and control payroll hours needed to support the company’s sales volumes.” Shaun said. Here are the reasons he decided to cut hours, rather than wages. 1. Employee pay became more closely aligned with business success. An increase in sales typically meant corresponding increases in labor hours and paychecks. Employees had an incentive to perform well in order to build and reinforce positive customer relationships, generate good feedback, and encourage repeat orders. 2. Employee morale and loyalty were preserved. Many employees had dedicated years of service and sustained effort to qualify for merit raises; a pay cut would erase the hard-earned pay rates. 3. A reduction in labor hours rather than a pay-rate cut gave employees more time for outside pursuits. As a result, employees could possibly sustain their respective financial conditions, despite a smaller paycheck. 4. Employees were more motivated to stay with the company, rather than search for a new position. Because the pay rate held steady, it was less likely (though still possible) that employees would find a higher-paying job. The decision to cut hours worked for this manager. Employees were glad to keep their jobs in the darkest days of economic turmoil. What’s ahead is still uncertain but the operation has preserved its financial stability and retained its best, experienced workers.
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AuthorAs an investor, Shaun Stenning makes sure he invests in companies and people who are truly passionate about every day, and making every day an amazing day. Archives
May 2024
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