You may have already formed an opinion after reading the title, and that’s expected. What I’m about to write here goes against the grain of conventional wisdom when it comes to HR practices in business.
Now, I’ll preface this by saying that I’m not referring to highly skilled or superstar workers that are extremely hard to find and replace. These workers you need to work to retain – and a superstar sales person, heck, pay them whatever they want. I am also not referring to performance based workers. What I’m talking about is the more average and below average workers which make up a vast majority of the workforce. Simply, easily replaceable labor.
I know, that may offend some people – but I have no time for worrying about feelings. We are discussing objective truths here.
Veteran workers are expensive
It’s inevitable – Trish has been with you for a year, it’s time for a raise. And after another year, another raise. And on it goes. If you are like most businesses nowadays, these raises tend to be more obligatory than performance based. Which means a worker that’s been there 5 years is probably looking at 3 – 5 raises over that time period – raises that outpaced inflation and are well above your starting pay.
But is Trish actually outperforming a new hire? Is she… underperforming?
And that is when reality sets in. You aren’t exactly thrilled with this workers performance, but you are dreading replacing and hiring someone new.
The training! The ad costs and interviews! Oh my!
If only there was an easier way…
Turns out, there is.
Now I’m not suggesting that you churn your veteran workers – that would be suicide for your culture and simply unethical. Don’t do that. But you don’t always have to overpay them nor do you need fight to keep them if they are thinking about leaving.
A good exercise in business is figuring out your pain points. The tasks that give you anxiety just thinking about. Or another way to put it – if you left for a month, which tasks would you specifically worry about?
So let’s apply this to labor.
Begin thinking about your specific pain points, then work on systems to alleviate them. When it comes to hiring and training, who can help you with it? Is there someone you can task with it? If you simply must do it yourself – can you create a repeatable system to make it easier?
Do you have a designated trainer? Maybe two? Written systems in place to guide the training process?
In other words, don’t dread it – tackle it.
The savings can be huge
Is it worth the effort? Yes, it probably is.
Let’s say your starting wage is $15/hr for a cashier. Your veterans are making $20/hr. It’s a simple job that you can train in an afternoon – and save $200/week on a full time position or over $10,000/yr. On just 1 single position.
A company like mine – I employ over 40 workers. I like a little bit of churn.
The reality is that the nature of my business has limited upward opportunities. We pay people well and treat them great – with a rock solid culture (I’m sure I’ll write more about that later). But eventually they move on to bigger and better things, and it’s a win/win. I’m genuinely happy for them improving their lives and it also frees up a position and allows me to reduce my labor costs.
I have one of my managers that handles hiring and we have well established training procedures. So replacement is just not that big of a deal. An advertisement goes up, the manager interviews a few candidates – and brings in a fresh face that usually brightens the office a bit. They train for a day or two with one of our leads and they are good to go.
We also operate the business with an appropriate amount of labor to make sure our customers are always taken care of – even if someone quits or calls out.
Figure out your pain points and focus on the fundamentals. Embrace the opportunity to lower costs and increase profits.
Use the savings to reward the stars
One of the benefits to weeding out the average and below average workers – and getting new faces in at starting wages, is that it frees up that capital we just talked about.
That doesn’t mean it all needs to go to your bottom line.
Pay your stars like they are stars.
You know who they are. They outperform everyone else and usually do so for similar pay. It doesn’t have to be that way.
We recognize talent and pay them accordingly to keep them around. One talented worker will change the dynamic of everyone else around them. And they usually know that they are talented, too. If you treat (and pay) them like everyone else, you’ll quickly burn them out. Reward them and they’ll be your Hank Hill (get the reference?).
So pay your stars. Don’t be afraid to churn the average and consider quickly replacing the below average.
Consider offshoring
And lastly, can this position be moved offshore?
This will be a topic I’ll cover in more detail as I run my own office overseas that I setup to handle different aspects of my US based business. If you want to get ahead of your competition, this is the way to do it. In my case, I have an office manager running a team of 20. If one quits, they are promptly replaced and trained – often without me even noticing. It’s a well oiled machine, which is absolutely critical if you want to crush your competition. (see what I did there?)
Is the position you need to cover something that an offshore worker can do? Not only will they cost less, but offshore talent tends to be more reliable and more professional. If you hire right, it’s truly a golden ticket.
If you are looking to explore offshore hiring, an up and coming company that I’d recommend (I have zero affiliation) is Sagan Passport. Many companies overcharge to “manage” your hires, but it’s totally unnecessary. A company like Sagan will hook you up directly with your hire and save you a fortune in the process. That’s why I like them.
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