|  by Jack Kazmierski
October 28, 2009
Human Resources
The New Reality
How has the economic slump impacted your business, and how can you manage your human resources so that you’re ready for the recovery ahead?
Much has changed since world economies started to free fall in 2008. The recent economic slump has impacted all industries, creating challenges for business owners and their employees not just here in North America, but all over the globe.
Although Canada is weathering the economic storm better than most developed nations, all of us face a new reality as the economy claws its way out of the abyss of the recession. While economists say they can already see a light at the end of the tunnel, those of us who have businesses to run still have to deal with day-to-day realities. That means garage owners might still have to make tough decisions even as the world meanders down the road to economic recovery.
Theoretically, recessions are supposed to be good for the aftermarket since financial uncertainty creates an environment where consumers put off buying big ticket items like brand new vehicles, preferring instead to dedicate their cash to taking better care of vehicles they already own with the hope that the trusty family sedan will last longer.
That’s why some shop owners have reported a “business as usual” atmosphere during this recession. Some are having a good year. Business is brisk and they see no reason to panic. But others are not as fortunate and are looking for ways to cut costs in order to stay afloat financially.
If you count yourself among this latter group, you’re likely already thinking of ways to cut costs and slash expenses. And if you’re thinking of wielding your cost-cutting axe in the human resources department, make sure you do the math before you cut and slash.
Think long term
Although eliminating employees as a cost-cutting measure may make sense in the here and now, will this cost-cutting measure help you in the long run? Your employees have skills and know-how you value and need... that’s why you hired them in the first place. Will you miss these skills in a few months when business picks up again?
Before you let anyone go, understand the core competencies your business needs in order to thrive and survive and then take a close look at your staff to see who possesses these vital skills and know-how, and who might be expendable.
In some cases, you might need to cut down on the number of techs you have working in your bays. How will you decide who is expendable? While you might be tempted to cut the most expensive tech out of the picture, that could be a big mistake.
The tech who makes the most per hour is likely the one who brings in the most business. His expertise allows him to get the job done right the first time, with zero or very few comebacks.
On the other hand, the tech that’s responsible for the most comebacks may be the one who is most expendable no matter how much you pay him. Do the job once and the client pays you. Do the job twice and you’re paying for it.
Before you let anyone go, understand
the core competencies your business
needs in order to thrive and survive.
Say no to layoffs
In some cases, you may not want to lay anyone off. Perhaps you have assembled a topnotch team of experts who work together like a welloiled money-making machine. Everyone is competent, everyone works hard, and no one is expendable.
Can you still cut costs without taking anyone off the payroll? It’s certainly possible, although doing so may take a bit of creativity.
Some companies have opted for a jobsharing scenario where all employees work only four days a week, taking a day off without pay. This allows everyone to keep their respective jobs while cutting the budget for salaries by one-fifth. On the other hand, perhaps your employees would be willing to work a full week, while taking a cut in their salary. This is an option some companies have tried with varying levels of success.
But before you make any cuts, or even suggest them to your employees, be sure to have a recovery strategy in place outlining how your employees will be rewarded for their sacrifices once the economy recovers and business picks up. You have to offer your staff a light at end of the belt-tightening tunnel if you expect them to buy into the idea of a slashed salary.
Teamwork
Perhaps you can cut costs in other ways. Not sure where you can minimize expenses? If finding ways to save money sounds like a daunting task, why not share the responsibility? Encourage everyone to pitch in and find ways to reduce expenses, improve efficiencies and identify new revenue streams.
If your staff has unrealistic ideas of what it takes to run a shop, imagining perhaps that you expect them to make cuts on their end while you line your pockets with all the profits, consider an eye-opening exercise recommended by Dennis Forbes, owner of Forbes Service Centre in Hamilton, Ontario.
“I had a meeting where I got my employees to open and look at the bills the business has to pay—hydro, taxes, etc.,” Forbes says. “It’s a great wake-up call that shows the employees why we have to charge as much as we do and why we have to be profitable, as opposed to just busy. The typical reaction I get from my employees is, ‘Holy cow, I had no idea!’ It’s a real eye-opener.”
Most economic downturns are relatively short lived, and there’s no reason to think this one is any different. If you’re doing well and business is good then count your blessings. But if you’re not doing as well as you’d like to, your goal as a garage owner is to find ways to stay afloat financially, manage your human resources with the future in mind, and prepare your staff and your shop for the inevitable turnaround in the economy.
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