2010 October « Managing Change

The Payoff for Ethical Hiring In Hard Times

I work with a lot of owners of small businesses, and many of them have hiring needs, even during the long recession.

As a matter of fact, a lot of them are hiring like crazy right now because business is getting better, and there is a large pool of very talented job-seekers out there to choose from due to all the job losses brought on by that recession.

When business owners become aware of just how many skilled people there are looking for jobs today, they can’t help but feel some relief about one of the most difficult parts of their hiring process – finding good people who are willing to work, who won’t cost them a fortune in wages.

More than one owner has personally told me, “look at all the incredible talent I can get for next to nothing!”.

At first glance it’s a great situation, but what I’m writing about today is how to walk on the right side of the line between reducing labor costs and exploiting workers unfairly.

On the surface, the abundance of talent looks like such a good thing; go find the highest quality applicants and pay them the lowest possible wages. Capitalism at its best. What a deal. Reduce costs big-time!

But it’s not that simple, and if you hire that way, it could really hurt your business in the long run.

Consider:

Many applicants these days have been through great hardships. They have been out of work for a long time, run through most of their resources, perhaps even lost their homes. They are highly stressed and often desperate, and if they take your position that comes with a rock-bottom recessionary low wage, they will feel temporarily grateful, but they will always carry some inner resentment, too.

This will keep them from giving deep loyalty to you or your company, and they will show their dissatisfaction in many ways, all of which will subtract from your bottom line. They’ll under-perform, bring negative attitudes to work, act out and will always have an eye open for a better job elsewhere.

This approach will cost you far more over time in turnover and lost productivity than the money you saved on salaries.

One of my clients in particular is making it a point to go the other way, and I think she’s smart to do so.

She is very thankful for all the talent in the labor pool, which gives her many more choices when she needs to bring someone on. When she does find someone great, she brings that person in at a good, strong wage.

This employer also does not reduce positions and heap huge amounts of work upon the remaining employees in the name of efficiency and cost-cutting. Her people get paid well to work hard and be productive, and they also get to have a life.

Her employees know they’ve got a great thing in the middle of hard times – solid jobs with an ethical employer who treats them fairly.

This creates strong loyalty to the company and strong performance from employees. It cuts turnover, and builds a positive atmosphere and culture in the workplace.

There is, I think, one exception to this policy, one good, ethical reason to start people at really low salaries. That would be if your company is in perilous condition and you just flat don’t have more money to pay.

If that’s the case, be clear with your people up-front, both those who already work with you and the new hires, that wages are not what you’d like them to be right now in hard times, but that you will raise their pay as revenues increase.

Then be sure you do that as soon as things start getting better. Give them an ongoing series of small raises that keep pace with your revenue improvement, proving to them your commitment to get their salaries to a fair level as soon as possible. Psychologically, people really like a series of small steps instead of the promise of something big. Those steps start sooner, and feel more dependable and do-able.

In summary, your company is only as good as your people. If you take unfair advantage of them during the recession, that policy will come back and bite you when the recession is over and they get to have more choices.

If you treat your people well, respect their needs and their dignity with good pay and fair hours, they will connect with you and your company deeply and help you build you a successful future as big as you can imagine.

Besides, it’s just the right thing to do, and you’ll sleep better at night.