Richard looks at the often sensitive issue of how to handle your employees during business rescue. He gives his professional view on:
– how to remove your personal feelings from critical decisions.
– the benefits of upskilling employees during business rescue.
– the difficult decision of redundancy of employees during business rescue.
– why never to put your own money into your business before business rescue.
‘Employees during business rescue’ transcript:
I’m Richard Simms from FA Simms & Partners.
You’re joining us as part of our six-part guide on The Kitchen Table Guide.This is about basically how you can deconstruct and reconstruct your business. How to help you break your business down, reconstruct it and decide how you want your business to be going forward.
How to make it the best it can be for you in the future environment, how you make yourself the best for yourself.
Okay. We’ve concentrated in this particular episode on your employees, your staff basically. And we’re not including you in this bit, because you come in a separate part later on. But we’re looking at the staff you have in the team there.
I’m recapping here to a certain extent in that I said before that I’m not here to judge your business. I don’t know your business. I don’t know the individuals in your business. So I’m looking at them as purely a role. They are, to me, an asset in the company. Now as I’ve said before, you’ve got the good bits on this kitchen table, the bad bits and the unsure bits in the middle.
So you may have some employees who are firmly in the good bits. You may have some employees are firmly in the bad bits. Or you might have some employees in the middle bits. Now I’ve got to say, I’m more focusing on the role they need to do, to work for you. And you have to establish what roles you need to be fulfilled. So again, when we move from Point A to Point B, in terms of your goals, you might at Point B need different skills to Point A. You might say to yourself, ‘well, how do we help these employees be what I need them to be?’
You may think some of them are actually beyond help. Some you might think you couldn’t live without. Let me say from experience, there’s no one employee in your business you couldn’t not deal with. You have to be prepared to potentially go through some change to get better, get stronger.
It may be actually that there are parts of your business, employees in your business, that you think are essential to you. But actually are something that will help you to change going forward. You have to be clear in your own mind – I’m being very hard here on purpose – clear in your own mind that your employees are part of the growth of the business. That they are a reason for the business to grow. I’m saying that’s really hard here. But please do have a good look at that.
As I say, I’m being mean here but please do have a look and make sure your employees that might have been fit for purpose 10, 15, 20 years ago are still fit for purpose in the future business and the current environment.
Make sure they suit what it needs to be. We’ve talked before about this agility, the ability to move quickly as a business. This speedboat versus cruise ship approach. This need to move fast as a business. Make sure your employees are actually able to do that.
Or can you, if you take one employee, can you actually say…”it’s a situation where I can take that employee, I can take their current skills and I can change them. I can train them. I can develop them. I can invest in them. I can make them better, stronger for what I need.” So we need to think about all those things. How can we change that? How can you make the employee what they need to be? How can we make them fit for the future of your business going ahead?
Look at them as an individual. But look at the role, in my view, and don’t see their personalities. And then we have to see do the individuals fit? Do the personalities fit the roles you need them to be? Are they fit for purpose? Are they skilled? Can they be skilled to do the role you need them to do?
Okay, when we come to look at the transition then from Point A to Point B – so from today to the future – we might need to think about things like redundancy costs. We need to think about what that might do, what that cost might be. What changes can we do: can we upskill people? Can we change people’s salary? Can we do what we need to do to make people suitable to do what they need to do going forward?
Big questions here. As I said, I can distance myself from the almost ethical dilemmas of having to decide that you want to make an employee redundant. Someone you’ve known for a long time. Someone when you’ve worked with for a long time. Somebody you might be very fond of. And I’m encouraging you here to be purely business orientated.
I’m sorry to say that folks. I don’t want you to think that’s really mean to say so, but I’m encouraging you to consider that situation. This is what I call this ethical dilemma. We then say, well, actually what’s best for the business might not be best for the employee.
I’ll say this to you very blunty. And I apologise if it sounds a bit mean again. I’ve been in to deal with clients, with businesses that ended up having to go through an insolvency process. The directors and owners of the business have worked in that business for a long time. They’ve ended up putting money into the company, putting their personal money into the business, to keep the business alive. To keep it running. Taking nothing out of the company and ending up putting their own money in repeatedly, purely to pay the staff to keep the business running.
It’s costing the business owners the equity in their houses, their friends’ and family’s money to keep paying employees who ultimately, at the end of the process when the liquidation came, turned around and walked off. Couldn’t give a monkey’s. They wanted to take what they could get from the company while they’ve been an employee.
Now I’m not saying this to say what’s the right thing to do. I’m just saying to you, please ask yourself, challenge yourself – this is part of the problem – challenge yourself to say: ‘are these the right team I need in place to do this? Can I do anything to change them? How do I make it better?’ Don’t be the people who are just pouring more and more money into your company to keep their staff employed, because you think it’s the right thing to do. Look after yourself, be a bit selfish. Now I don’t mean that too readily, but do be a bit selfish.
It’s really important you’re a bit selfish because if you’ve got to go through the process of rescue for your business, or restructuring your business, selfishness is a really key part of that. Because it has to work for you. You have to want to do it. You have to have the enthusiasm to do it. You want to rekindle that enthusiasm to make it work.
Okay. Massively important you think about those steps in there. And I’ll just give you this example here guys. I’ve not mentioned it before but just keep the idea, this concept in place. Think about a bucket. I think about an old fashioned bucket. Sat in the corner of your house, your garden. Wherever it might be. Obviously it’s got some water. And there’s a hole in the bucket. Simplistically. There’s water pouring out of the bucket. That’s your money. That’s your business’ money. There’s money running out of your business down the hole in your bucket.
You can do two things. You can either pour more water in a bucket. So put more cash in the business and let it run out the bottom. Of course, for a while it looks better, doesn’t it? The water levels back up again, the bucket does great. But actually what happens is the money – the water – the money is still running out of the business.
Your alternative is to fix the hole. This is what we’re talking about. This is about fixing the hole. So fix the hole before you put more money in. Okay. We’ve gone on a slight tangent here, guys. But think about that. Think about that. Don’t put money in the business, don’t put your funds in the business until you know the business is stable. Until you know the hole in the bucket’s gone.
Okay. Really important to think about all these things. Okay. Thanks for joining us. Please do join us for the next episode, when we’re talking about the good bits of the business, the good side of the kitchen table, and working out how we can best make the most of those.