Retain Experienced Personnel in an Economic Downturn

Suzanna de Baca -- Expert Business Source, 12/16/2008

(submitted by Suzanna de Baca on December 11, 2008)

“One of the biggest mistakes a business owner can make is to think about letting go the highest paid, most experienced employees for a less experienced, yet less expensive replacement,” writes Ricci Victorio in a recent Expert Business Source post entitled “How to cut back without crippling your organization.” 

Victorio makes a great point which is relevant to most small business owners. Remember, your team is one of the most important investments you can make. Downgrading your talent in an attempt to save money in a tough climate can have disastrous economic consequences.

All small business owners know that employees are expensive. Each person on your staff represents a significant cost to the organization which must be weighed against the benefits and revenues that person brings to the business. Yet, a simple cost/benefit analysis can be deceiving when it comes to measuring the contributions of highly compensated employees. You’re not only benefiting from their direct contributions to the bottom line, but from their training, experience, judgment, productivity, loyalty, and possibly even their positive influence on the morale of the business.

In trying to save some cash by hiring a less expensive replacement, you may ultimately pay much more to train and integrate that person. Less experience may mean more supervision and hand holding on your part – which can be expensive, especially in an environment where your valuable time may already be stretched.

I know from past management experience in organizations large and small that when budgets are tight, it can be tempting to hire less experienced staff or to replace high earners with less experienced personnel. However, as Victorio so aptly points out, this can be a serious management error which can be expensive in both the short and long term.

Suzanna de Baca is president of Private Capital Solutions Group. Securities offered through Broker Dealer Financial Services Corp. Member FINRA & SIPC. Investment Advisor Representative of Investment Advisors Corp., A Registered Investment Advisor. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice