In spite of an incredibly healthy economy and high demand for AEC services throughout the land, there are still individual companies out there that are struggling financially for one reason or another. And inevitably, since labor is the largest single expense, a discussion of who stays and who goes ensues.
As a business owner, these are among the most agonizing and painful decisions one ever has to make. The worst day of my business career was the day I, along with several other second-tier managers, had to let go of about 30 people in a single day back in 1987. It was terrible.
That said, sometimes it is inevitable that a firm finds itself overstaffed. Loss of a large client or two, completion of a major project or projects, or just plain old indiscriminate hiring that has gone on for too long results in too much labor for the revenue to support. Cuts have to be made.
Here are the things I look at when deciding who stays and who goes:
- Does the person sell work for other people to do? People who sell work and keep others besides themselves busy are valuable. We probably don’t want to cut them or we’ll end up in even worse shape than we are at present.
- Does this person have critical client relationships that would be jeopardized if he or she wasn’t there any longer? Again, similar to the situation above. We don’t want to cut off our nose to spite our face. Big client relationships have to be maintained or we could face a downward spiral of reducing costs and losing even more revenue.
- Does this person have such a following that it will demotivate too many other people to cut them? Some people are like that. They are so popular and so loved that cutting them will destroy the morale of 20 other people. Proceed with caution on cutting them.
- Does this person have some terrible personal situation that will make management look heartless to cut him or her? Maybe they are sick, or their spouse just left them with three kids, or their house burned down recently and they lost everything. You can say this isn’t a business issue – and at some point, it isn’t – yet it is the reality that you don’t want to look inhumane or your entire staff could lose faith in management having their best interests at heart.
- Does this person have a strong work ethic and willingness to learn? If so, you may not want to cut them. These attributes are too rare and too valuable. Find something for them to do to earn their keep as long as you can.
- Does this person have any particularly annoying personality traits or habits that bother other people? Again, you could easily say, “That’s not a business issue.” But it is. Too many smoke breaks, bad personal hygiene, too many verbal gaffes that it is embarrassing – all of these things can be problems. When cuts get made, it is hard not to think about them.
- Is this person peaked out in terms of their potential? They may be candidates for cutting. Every firm needs people who can move up to the next level. Those who are maxed out may be candidates to cut.
- Does this person have a skill that no one else in the firm possesses? If so, it may not be possible to cut them. Too many other jobs are riding on their unique skill, qualifications, and credentials.
- Will cutting this person actually improve morale? Some people are so difficult to work with that even if they are competent they will inevitably be the first to be put on the “cut” list. You always know who these people are.
- Is this person going to be OK if he or she does lose their job? Personal stuff does come into play here. You may not be able to afford to consider this at some point depending on your financial situation. These are some of the most difficult cases.
One thing is for sure – cutting people is never easy. That said, it is too often delayed by owners and managers of AEC firms, and this could result in even more cuts being made later on.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.