In episode 56, hosts Elizabeth Larkin and Gene Marks answer a question on alternatives to laying off employees:

“I think I need to downsize but I really don’t want to lay anyone off. Are there other options? Could I reduce some people’s hours instead of laying them off?”

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Transcript

Elizabeth: Gene, what are you watching on TV these days?

Gene: You love… I love talking about TV. Just saw Big Little Lies.

Elizabeth: Did you like it?

Gene: Oh my God, Elizabeth. We loved that show.

Elizabeth: And it’s not-

Gene: You were the one to tell us to watch it. We watched it just this past week… Watched the entire thing completely through, absolutely beautiful. Big Little Lies, if you’re not familiar, its HBO show.

Elizabeth: It’s an HBO show.

Gene: Nicole Kidman, Reese Witherspoon, there’s… Anyway, you can watch it for yourself. It takes place in northern California.

Elizabeth: It’s just south of San Francisco.

Gene: So anyway, but it was really well acted, really beautiful, and there was a murder that occurred. There was a person that died at the very beginning and it was a mystery all of the run up events that led to that.

Elizabeth: Did you guess who it was?

Gene: No, I did not. I didn’t… Did you?

Elizabeth: Well, I had read the book first, of course the book is so much better.

Gene: Of course. It always is.

Elizabeth: So if you’ve watched the show, read the book. If you haven’t watched the show, read the book and then watch the show.

Gene: It’s beautiful to watch, and it was really well acted and well written and I just thought it was a great show. That’s what I’ve recently watched. Thank you for recommending that show.

Elizabeth: And it’s not… I remember when I recommended it you were like, “That sounds like a ladies show.”

Gene: Yeah a chick show. And it is kind of in a way because it’s the main characters are-

Elizabeth: It’s about women, but it’s not just about… It’s-

Gene: None of the men come off good on that show. When you think about the men on that show, none of them are that great.

Elizabeth: Yeah, some of the men aren’t that bad.

Gene: None of them are that great.

Elizabeth: None of the women come off that great either so …

Gene: Yeah, they’re certainly stronger though. They’re certainly stronger characters. But it was really good. I love Laura Dern as well. I thought she was very good.

Elizabeth: Yeah, she’s so great. I just started watching House of Cards.

Gene: From the first season?

Elizabeth: No, the first two seasons I thought were so good, it’s been really crazy the past couple seasons.

Gene: Yes. I just said to my wife… They’re starting season five. It just recently started, and I said to my wife, “They’re in season five of House of Cards?” Like we haven’t watched it since the second season because it got a little out of control.

Elizabeth: It’s based on a British series, right?

Gene: Yeah.

Elizabeth: Did you watch that?

Gene: Yeah, we did. Francis Urquhart was the name of the Prime Minister and then it was called… Now I’m blanking… We watched it years ago and it was excellent.

Elizabeth: Yeah, I’ve heard the British version…

Gene: His name was Francis Urquhart and he was the Prime Minister… Francis Urquhart, everybody referred to him by his initials.

Elizabeth: Oh, funny.

Gene: The whole show going on, it was very funny.

Elizabeth: All right, so those are our two recommendations. Big Little Lies-

Gene: And House of Cards-

Elizabeth: …which I previously recommended, and House of Cards. But start from the beginning. The first two seasons were just really good and then it just…

Gene: I’ve got plenty more, we’ll talk later.

Elizabeth: Oh yeah, next episode.

Gene: Plenty more, so we’re going to watch a lot of TV.

Elizabeth: Yeah, come back for more TV recommendations. Okay, we’ll be right back with our question, which is about “Should I reduce my employee hours or should I lay them off?”

Gene: Fire them all.

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QUESTION: Can I Reduce Employee Hours Rather Than Laying Them Off?

Elizabeth: Okay we’re back. This question is from Nico in Cloudcroft, New Mexico, and Nico runs a music store. Already I feel like that’s kind of an industry that’s-

Gene: Thinking Breaking Bad, right? You know what I mean?

Elizabeth: Yeah.

Gene: I’m just thinking of like that whole scenery… A lot of empty streets, you know.

Elizabeth: Alright, so Nico asked this question.

Gene: Not Tiko, Nico right?

Elizabeth: Nico.

“I think I need to downsize but I really don’t want to lay anyone off. Are there other options? Could I reduce some people’s hours instead of laying them off?”

Well, yeah. You could reduce hours.

Gene: Yeah you can. I have that situation. Not infrequently because my business is… It goes up, it goes down, it’s feast or famine, sometimes we’re busy, sometimes we’re not… Just like Nico’s situation is, he doesn’t know. So, first of all, no one’s going to want to keep working for you if they’re not making enough money. If you’re going to reduce their hours to two hours week, they’re like, “Dude, I love you but I can’t earn a living off of this, I need to find a job.” So there is a middle ground there.

My recommendation Nico is try and partner with somebody. So, if there’s other people in the business, even I know this might sound… There’s a competitor across town, if there is somebody that maybe’s non-competitive but related in the business or whatever, can you find other work for that employee where you can share the expenses of that employee?

Elizabeth: Oh, I thought you meant combine the businesses.

Gene: No, I would say like “Listen, I can only use this guy for like 20 hours a week …”

Elizabeth: Oh, that’s a really good idea.

Gene: Yeah, “Can you use him for 20 hours a week to do whatever?” Assuming that their work is amenable to the guy or whatever, that way you both get to take advantage of the guy. The guy’s got work and then you don’t have to lay the person off. So, I would share.

Elizabeth: Now, how would you handle this with your employees? Do you have a meeting with them, and say “Here’s the situation, I’m looking for ways to-”

Gene: Transparent.

Elizabeth: Yeah. “I’m trying to decide is anyone here willing to reduce their hours?” I mean you might have some employees who are happy to reduce-

Gene: Yeah, I mean it first of all depends on how big of an organization that you have. For me because it’s only 10 of us, I go one-on-one.

Elizabeth: Yeah.

Gene: You know what I mean? In any business, in any company there’s people that are productive that you’re not worried about. The other people you’re like on the bubble, it’s those people you want to focus on. Like this guy is just not that busy and I can’t whatever. That’s the guy you go to. I say guy, I mean man or woman. I always do that. But you can go and talk to them one-on-one and say, “Could you”

Elizabeth: You do, you always say guy and-

Gene: I always say guys.

Elizabeth: …you make a ton of sports references.

Gene: I know. I’m a guy and that’s just what I do. Is that sexist? I guess it is. I don’t even know. It’s not intended to be.

Elizabeth: No, no, no. It’s just funny, it’s funny.

Gene: I know. It’s funny we get into this conversation. Women call each other guys, don’t they? Don’t they say guys? Like you know…?

Elizabeth: Yeah, I guess if I’m talking to my friends I’ll say, “You guys.”

Gene: Yeah, but not at work.

Elizabeth: Yeah, no.

Gene: We need to talk about gender issues at work as well.

Elizabeth: Not on this podcast.

Gene: Oh is that right? Okay. Well, we’re staying away from gender issues. Let’s close the door on that right now.

Elizabeth: That will be discussed on Gene’s after hours podcast.

Gene: That has absolutely no affiliation with The Hartford whatsoever.

Elizabeth: Alright, so you would go one-on-one with people-

Gene: Yeah, and I would and try-

Elizabeth: …first and then go to your other businesses?

Gene: Yeah. That’s worked for me believe it or not. Only because in my business, because we’re sort of the IT, the technology world. I know in Philly just over the years I’ve grown to know a lot of people in similar businesses, some overlap, some don’t. So, whenever I have slowdowns or I just don’t have enough work for that person, I’ll reach out to some friends of mine that are in similar lines of business and say, “You need somebody for like 10 hours or 15 hours a week or whatever? If you do, then let me talk to this person and see if they might be interested in doing it.” That’s actually worked for me a few times.

Elizabeth: Wow, that’s a really good idea. I never would have thought of it.

Gene: It worked.

Elizabeth: That’s why you’re an experienced business owner.

Gene: You do what you’ve got to do, you don’t want to lose that person because you’ve invested in that person, that person is good, you’re frustrated because you can’t get that person to put more hours into the business. Again, we talked earlier about all of this being your fault. It’s my fault when I can’t keep this person busy enough. I don’t want to lose to person so, what can I do to keep them connected to me? Do you know what I mean?

Elizabeth: Yes, 100%. Now I’m also wondering, because we always like to expand on these questions. I wonder what Nico could do to drum up more business in the music store. I was thinking about, you could rent the space out for like events or something. I mean-

Gene: Could, where is he? He’s in nowhere New Mexico?

Elizabeth: New Mexico, Cloudcroft.

Gene: I don’t even know where Cloudcroft is. Nico, I apologize. I don’t know if this is near Albuquerque.

Elizabeth: I bet it’s beautiful.

Gene: I guarantee you it’s beautiful, I guarantee you. I just don’t know if it’s near a populated area where… Some businesses there’s a limit to the customer or audience. I mean there’s only a certain size that you’re going to attract. There’s only a certain community of people that would go into a music store and buy stuff.

Elizabeth: Well, what if you have like weekly happy hours that would just attract people that like booze?

Gene: Yeah, if I was in music… So you’d be on a plane going to New Mexico. Any store that does something that overlaps with a hobby, you know having music store to me like you have just said it begs to having events, inviting local musicians, having them try out some of your stuff. You’re right, serving some wine and beer or whatever. That’d be awesome to do that.

Elizabeth: Yeah, and that will keep your employees busy.

Gene: Sure. The other thing you can do, is again depending on what kind of equipment you have, maybe you donate equipment to local music venues saying, “Oh, the band tonight is playing on equipment supplied by Nico’s Music Store,” to get some little bit of advertising going, a little bit of word of mouth.

Elizabeth: Oh, so you’re thinking he sells instruments, I’m thinking he sells records.

Gene: Yeah, I don’t know. I can’t tell. I was thinking like, records? What decade are we in? How old are you? I’m older than you. Who’s selling this vinyl thing.

Elizabeth: There’s still record stores out there.

Gene: Yeah, okay. I’m thinking music. I’m he’s selling guitars and-

Elizabeth: Drum sets and stuff.

Gene: Yeah, that’s what I’m thinking.

Elizabeth: Alright. Well, either way I think the advice of partnering with another local business is really great advice.

Gene: Sharing some employees.

Elizabeth: Alright, we’ll be right back with Gene’s Word of Brilliance.

WORD OF BRILLIANCE: Bitcoin

Elizabeth: Yeah. We’re back with Gene’s Word of Brilliance and this I think is going to be a repeat of something we’ve talked about last time with a new-

Gene: Maybe with a little bit of a new twist, Elizabeth. So my Word of Brilliance today is bitcoin. I wrote about this recently, Elizabeth. If you purchased 100 dollars of bitcoin in 2010, seven years ago, it would be worth today, 75 million dollars.

Elizabeth: What? No.

Gene: It would be worth 75-

Elizabeth: Wait, repeat that, 100 dollars’ worth of-

Gene: People you’re driving off the road right now, aren’t you? People are turning up their… You’re turning up your… “Did I hear this right? Is my iPhone broken?”

Elizabeth: Why didn’t you predict this back then?

Gene: Why didn’t you predict this back then? Why are you pointing at me? bitcoin is a digital currency. It is a limited amount, it is manufactured. They used a very complex algorithms to manufacture bitcoins and then it’s out there… In 2010 it was worth .003 of a dollar and just recently, now it fluctuates. So by the time this podcast is being listened to it could be down to .003 again, but right now it’s approximately 25 to 27 hundred dollars per bitcoin. So hundred dollars’ worth of bitcoin in 2010 would be worth about 75 million dollars. Is that-

Elizabeth: Wow, you can use Dr. Evil voice there.

Gene: Is that crazy? The reason why I bring that up is that yes, it as we’ve known expands it in popularity. It’s been driven by global events, political events, it is not backed by any governments, so you don’t have to worry that if a governments debt is going to collapse or if a government is poorly run. Bitcoin has got its own market. It’s primarily used for digital purchases of stuff online and you can convert it into dollars. There are market makers out there where you can buy dollars for bitcoin. The reason why it comes up is people still ask me, “Well Jesus, bitcoin people are using it.” It became more popular recently because of the ransomware attacks and you’ve got to pay the ransom in bitcoin. So, I have clients asks me, “We sell stuff online, should I start accepting bitcoin?” I mean it’s definitely for real and it is for real, but particularly if you’re a small business, don’t be accepting bitcoin online is what I’m telling my clients. It’s just still too volatile. You know what I mean?

Elizabeth: Yeah.

Gene: So if you sell something for $2,700 and they pay you with the bitcoin, and then literally like two days later before you have a chance to change it in it could be worth $2,000 because it’s that volatile. The last thing you want to worry about is being a currency trader and your business, you’ve got other things focused on.

Elizabeth: Yeah.

Gene: But having said that, if you want to have some fun-

Elizabeth: You want to take some risks.

Gene: Who knows, bitcoin it could go up 10 times in value over the next two years. You never know.

Elizabeth: So you never invested in any bitcoin?

Gene: Never because I’m an idiot and I don’t take risks, but if I had invested $100 just 7 years ago, I would not be sitting with you right now.

Elizabeth: Oh yeah.

Gene: We would be doing this podcast from a resort and I would be flying you down, we’d be hanging out and you’ll be hearing the seagulls in the background, but no we’re just sitting in this little studio in The Hartford.

Elizabeth: Oh well. Alright, we’ll be back in a couple days with our next episode, stay tuned.

6 Responses to “Can I Reduce Employee Hours Rather Than Laying Them Off? (Podcast) | Ep. #056”

  1. John Kermott

    Consider very carefully the effects you will have on your employees before changing the deal on them. My brother had a warehouse job for a major athletic shoe manufacturer. He was stoked that with a full time position he qualified for a company match on a health plan. Within the quarter, the great recession hit. The company actually had the same amount of work. However, due to high unemployment, the company decided to make some changes. First, they hired many of the unemployed as part time employees. This was a victory for the company and those workers. Second, however, the company reduced hours for my brother and all the other full time employees so they were now part time. The damage for them was treble. They lost wages. As fast as you can say swoosh, they lost the company match on their health plan, reducing their take home pay even further. They were not eligible to change or drop their health plan until the next open enrollment period, several months away. Since our was a recession, there was no other opportunity for work. It was a nightmare.

  2. Too tedious to follow in conversation format. Just compress and write the gist of it as an editorial piece.
    We are all business people and get it. No need for fluff or to stretch stuff.

  3. I totally concur with Joanne, Kurt. I understand the need to provide the whole piece as resource reference. However, at the very least, provide an “Executive” synopsis of what your article intends to deliver. There is way too much bread in this sandwich, show us the meat!

  4. This situation reminds me of a time I had to reduce my employees hours but I did not want just one or two of them to suffer so I had a company meeting and there were all 9 of us there. I asked if they would work one hour less each day as a company TEAM and they all got on board with it. One thing to note is if a persons wages are reduced by 25 dollars or 25% of there weekly earnings they can file for unemployment which will cost you in Unemployment Insurance.

  5. Elizabeth Larkin

    Hi Brad and all,

    This piece of content is actually a podcast so we’re providing the transcript. We will take into consideration your comments to provide an exec summary.

    Elizabeth

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