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Counting The Cost


Counting the cost

    As we stated in the ARA article, dealing with people who make it difficult to maintain order or keep good employees can be a very trying issue. They can make ours and everyone else’s work experience dreadful or at the very least chaotic.
    Let’s use John, the salesperson, as an example:
    The owner’s main focus may be on the sales numbers that John produces every month.  They often turn a blind eye to the cost of John’s bad behavior.  This is all too common.  We see the dollar of sales for the month, but we fail to calculate the cost of lost sales because you cannot grow, the lost production from new or dissatisfied employees and the impact John’s behavior has on us and the ability to grow our business.
    Now, let’s consider the cost of John to the company.  The most obvious is the inability to grow sales beyond what John can handle.  John does $110k a month, and the other temporary sales person we hire gets up to $40K, before they quit.  Since the company can’t immediately replace sales people every time one quits, their sales are capped between 110K and 140K.
    Because there is no coasting in business, you are either growing or shrinking.  So this scenario will lead the company into stagnation and slowly decreasing profits.  At Counts Consulting we call this "circling the drain".
    Beyond the impact on sales, consider the cost of lost productivity.  The other employees, such as parts pullers; also get fed up with his abuse.  As soon as they can find another job they leave.  Since this happens 2 to 4 times a year, the company is always hiring and training for sales and production.  Some estimates place the cost of hiring, training, and lost productivity and sales to be about 1.5 times an employee’s annual salary and benefits.  Using $25,000 a year as an average for one of your employees and you would be looking at $37,500 for each position you replace each year.  Finally, we find someone who will put up with John’s abuse because they can’t find a job anywhere else due to bad attendance, poor production, alcohol or drug addiction or maybe sticky fingers.  But you keep them because you “have to have someone”.
    Now, consider the time you spend as the owner:
    Thinking about John, and talking to John about his attitude.
    The time you spend answering the phones when the other sales person quits.
    The time you spend trying to convince the other employees to
NOT quit.
    The time you spend interviewing and training new employees.
    All of this time can easily add up to 20 hours a week.  If you consider your time as being worth $25 an hour, that adds up to $500 a week or $26,000 a year.  This is time you should be spending buying vehicles, reviewing your management reports, improving processes, and trying to grow the business.  This is no way to live or to run a business.  Maybe John isn't such a bargain after all.
    Let’s take a moment to think about what you have observed in your life and how you felt about it.  How many times have you been in a situation where you were not in charge and observed or were a part of one of the following?
• A screaming child that is totally out of control;
• A person that is verbally abusive to their spouse; or
• A waitperson that is too involved in their own activities to seat you, take your order, or to ring up your purchases.
If you are like me, you wonder why somebody doesn’t do something!  We have an expectation that the people who are running the place will do the right thing, not only for the person in question, but also for the rest of us. In the work environment there is an inherent trust that management will provide a work environment where employees are treated with respect and that gives everyone the opportunity to succeed.
    The example of John, the fictitious salesperson, is all too familiar. The person in charge of the company avoids dealing with an obviously rude or demanding person and then loses the confidence of the other employees in the company. Leaders, who are respected and people who we want to follow, can be depended on to deal with difficult people and issues quickly and competently.
    Let me offer one more analogy.  When a boat goes through the water it leaves a wake.  The owner of the boat can brag about the horsepower, speed and the water displacement, but you only have to look at the wake to evaluate the truth of the statements.  As you and I go through life each day, we leave a wake. We leave the results of what we have done or not done and the effect on the employees, customers and our business.
The same is true of John.  On the surface his wake may look pretty good.  But his wake also has a huge financial and relationship cost.  He leaves battered and bruised employees. Some employees just float along and some are just waiting for a chance to swim away. We don’t see anyone riding his wake to bigger and better things. You may have heard the saying that a rising tide lifts all boats. This is not only applied to businesses, but it also can apply to the employees inside the business.
    Please, ask yourself these questions:

    Are the employees in my business riding a wake to bigger and better things and are they facing the future with enthusiasm?

    Or are they riding a wake of anger, frustration and looking for a way out?

    Will they trust me and follow me into the future?
    If we don’t resolve the people issues of our business, the employees will quickly learn they cannot trust us to be fair. If this happens, performance will be affected.   So our fear of losing sales if we address John’s issues ends up being realized in the loss of employees, profitability, performance, and the stagnation of the business.
    Let’s be fair. Wouldn’t it be reasonable to assume that both John and the owner have issues?  John, because he mistreats anyone around him, like a spoiled child would.  The owner because he has the authority and the responsibility to handle the situation, but doesn’t.
    I hope you see that our example, John the salesperson, could also be a brother, sister, mother, dad or partner.
    I’m not going to tell you that resolving these situations are easy. As a consultant to hundreds of recyclers I have been involved in many of these situations and sometimes the decisions and actions are very hard. These include one person’s partner, an abusive sibling and a parent who needed to move on to something else or retire. However, I don’t know of one situation where looking back didn’t always bring forth the statement, “I wish I had faced that issue years ago”.
    I also think some of you may have a lump in your throat or tears in your eyes because of what you are going thru or went thru before you finally stopped allowing someone else to control your life and company. I know it certainly brings some very sad memories back to me and, at times, I was just hearing about your stories.
    One thing I absolutely learned when I worked for a corporation. No one is indispensable. Everyone can be replaced. That includes me, and I never forget that point.
    While you are here, look at the other videos and manuals that are available on many different issues that will help you take your business to the next level.
        Thanks you for your time and have a blessed day.
                                                        Jim Counts


All information is copyrighted by Counts Consulting, Ltd.

All information is copyrighted by Jim Counts of Counts Consulting, Ltd.