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Paul Burri: Misplaced Loyalty in a Tough Economy

Ensuring survival means making hard decisions — even at the expense of customers and employees

Here’s the situation. You own a small company that is reasonably profitable. You have four employees who you have trained well, do good work and who have been with you for an average of four years. The screening, selection and training process has been much harder than you ever expected, and over time you had to “go through” about 15 not-so-satisfactory employees to get the four you have now.

Paul Burri
Paul Burri

You have always tried to keep your employees happy with regular salary increases and whatever “perks” the company could afford — sometimes a bit more than it could afford. You have invested a lot of time and money into developing a successful staff, and admittedly, your efforts at keeping them satisfied haven’t all been altruistic. The plain truth is, you don’t want to lose them because that would mean starting the whole searching, screening and training process all over again.

Now, suddenly, the economy has changed and business is slower than you’ve ever seen it. Sales and profits are down, but expenses are pretty much the same. Although you hate to accept it, your payroll is starting to kill you. What now?

I completely understand wanting to protect your employees and to keep them on the payroll despite their drain on the company. But — and it’s a big but — you owe your primary loyalty to your company. The company must survive above all other priorities.

First of all, your own survival probably depends on it. Second, what will happen to all of those employees if the company fails? Wouldn’t it be better to lay off one employee to save the jobs of the remaining three? Or perhaps cut everyone’s hours so that they — and you — suffer somewhat equally? What if you lost one employee because he or she couldn’t afford to continue to work for you because of the reduced hours? (Ignoring the fact that in today’s economy it’s not too likely the employee would be able to find another job.)

Here’s another instance where hard decisions need to be made. You have a customer who constantly makes unreasonable demands, such as requiring you to follow procedures that are convenient to him but costly to you. It could be one who repeatedly asks for contract revisions or changes to your quotations. It could be one who insists on payment terms or other conditions that are favorable to him but expensive for you. It could be a customer who asks for things in which compliance costs you time or money.

You need to always remember that your first loyalty is to your company. With a customer like this, you should be asking yourself, “Will the effort required to comply with these customer demands be beneficial to my company? Is this the best use of my time?” Obviously, if the answer isn’t yes, you should seriously think about refusing to comply.

One of the secrets of survival in today’s economy is being able to make some hard decisions. Anyone can make it in a booming economy, but it takes thoughtful decisions and actions to survive in a lousy one. The truly successful businesses are the ones that make it through the tough times.

— Paul Burri is an entrepreneur, inventor, columnist, engineer and iconoclast. He is not in the advertising business, but he is a small-business counselor with the Santa Barbara chapter of Counselors to America’s Small Business-SCORE. The opinions and comments in this column are his alone and do not represent the opinions or policies of any outside organization. He can be reached at .(JavaScript must be enabled to view this email address).

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