From the New York Times blog, “You’re the Boss” by Jay Goltz:
A couple of weeks ago, my production manager asked me a question that I have not looked forward to answering for several years now. “Are we going to be giving any bonuses this year?” asked Dale, who oversees 38 people in my picture-framing business.
For years, I have given an end-of-the-year bonus to everyone who works for me — the exception being when sales have declined because of a recession. Unfortunately, that’s been the case since 2008. I told Dale that there would be no bonuses for 2013. We are doing better, we are almost there, but it would be irresponsible for me to give them out at this point.
My businesses are all home-furnishings-related, which means they rely on discretionary spending, and they are most certainly affected when consumer confidence falls. In our case, and the case of many small-business owners I know, business has not rebounded from this recession the way it did from the previous recessions I have lived through.
Although it has been several years since the recession came to an official end, there have been plenty of other issues keeping things challenging: more competition, changing buying habits, higher expenses, to name a few. I don’t mean to complain. Things are continuing to get better for my businesses, in part because of the (slowly) improving economy and in part because several investments that I made in new products, new equipment and a new warehouse and production building are beginning to pay off. None of these improvements came cheap, and in the short-term, they all had a negative impact on our cash flow. I remain confident, however, that they are starting to help and will pay off in the long term.
I asked Dale if he wanted me to explain the situation at the weekly production meeting? I didn’t take the time to explain last year, and I now know that wasn’t a good decision. But it was easy, which is often a bad sign.
Dale: “You could just skip the meeting. I’m afraid that no matter what you say, people are going to be aggravated.”
Jay: “You know what? You’re the one that has been on the front line with people asking for more money and I think you may be suffering from battle fatigue. I have to believe that most people will understand. And even if it is only some of them who don’t, I think I owe them an explanation.”
Dale: “You’re right. Have the meeting. We’ll see what happens.”
Jay: “I have to tell you, I’m a little frustrated myself. We didn’t lay anyone off, we have gotten everyone back to full hours plus a good amount of overtime, and this year we have caught up on raises. I would have loved to give out bonuses, but the thought of people being mad that they didn’t get a bonus — abonus! — when we didn’t make enough money to justify it, doesn’t make me feel great. If I wanted to be cynical, I could argue that I should have never started giving bonuses in the first place.”
Dale: “I understand, but you know how people are. They are more upset if you take something away than if you never gave it to them in the first place.”
Jay: “I know. But I would like to believe that they will get it. I can tell you this, while I wish we could have given bonuses, I certainly don’t feel guilty about it. It would have been a really bad business decision. We’re growing again, we’re stable, and if everything goes as planned, we should be able to give bonuses in 2014.”
So I had the meeting about two weeks before Christmas. I explained all of the things that we have been spending money on, and all of the good results that have started to pay off. For the sake of those employees who were not here five years ago, I went through our sales history. And I reminded them that they are working at a stable company in an unstable market. And I thanked them all for working together to get us where we were. As they say in sports, I left it all on the field. There were no comments or questions. Everyone went back to work, except for me.
I waited around until the jury came back, which took about 20 minutes. One of the supervisors gave me the verdict: Several people he spoke to said they appreciated that I had given them the whole story. They understood that we have been rebuilding, and they are happy to have a stable job where they are treated well.
Now, do I believe that everyone is happy all of the time and that they think I am the greatest boss ever? Of course not. But we have very little turnover, which is part of the reason I believe that most employees understand and that most appreciate the fact that I appreciate them. And if the rest are justpretending to get it, that’s O.K., too. I plan on giving bonuses out at the end of 2014, and if that happens, it will be a very happy day for me, as well as for them.