NYcarbineer7871169 said:
Maybe if you paid your people more you'd get better quality people.
Actually, to add onto this, you're right, but in a way that demonstrates my point not yours.
My business is a combination of three businesses I bought over the last 4 years and merged and I run them together. I'd never had a staff reduction though, we'd filled some needed positions. We grew revenue by about 1/3 last year. Our staff cost as a percent of revenue was still too high, but we were struggling to get the work done. Clearly we'd picked up a lot of dead wood with the acquisitions.
We'd been discussing some low performers. We'd documented and trained and put their feet to the fire, but they still didn't care. They'd improved while the spotlight was on, then go back to their sucky ways. The concern was though that many of them had been with the businesses I bought for decades and there was concern in the management team we'd lose too much knowledge of their businesses if they left.
After beating our heads against the wall all last year, I decided in January we were going to lay off our crappy staff and give our best staff raises. We were constrained to pay our best staff better because as I said our overall staff costs were too high. But I decided I wanted to go ahead.
We started the process over the next few months of putting poor performers on notice and getting rid of them. In the end, we laid off about 25% of our staff and gave about 25% of the staff raises, some of them substantial. My management team was split, about half were for doing it and half thought that even though they were low performers, the work would pile on the good staff and we'd lose too much knowledge of businesses and customers we'd acquired. The results? It was a resounding success.
1) The top staff were happy they got raises
2) The work got easier rather than harder. One person after another told me they were concerned to let that much staff go, but they realized as time went on, they were actually impeding the work, they weren't just low performers
3) Morale improved and people were less frustrated
4) Revenue is on pace to be up another 50% this year.
In the end, we didn't have to hire one new person and we are doing more work easier.
So it is true, raises are good. As long as you shit can the useless crap who show up for work every day and don't care. There seriously ended up being no downside to this.