In the last issue, the president of an Ottawa-based marketing agency wrote to ask PROFIT-Xtra readers: “Just before the recession started last fall, I hired a young account executive who is quite promising. She’s bright and works hard, although she still has a lot to learn to achieve her potential. Unfortunately, we just lost the account she was working on, so I’ll have to lay off three employees. I’d like to hang on to this account executive, because I think she’ll be a great asset within a couple of years. But until then she’ll probably be less productive than my more experienced account people. What should I do?”
Best reader responses
Marnie Pertsinidis, Modis International Co., Toronto:
Instead of layoffs, perhaps you can consider other cost-cutting options. There may be people in your company that would welcome the opportunity to take an unpaid leave of absence, or extra unpaid vacation time. Alternatively, you could offer the option of job sharing or reduced hours where appropriate. If it’s clear that you are trying to avoid cutting staff, this will leave most employees feeling more committed to the team and company.
Moscou CÃ´tÃ©, Voyages Constellation, Montreal:
Do the math! If you hire someone to replace her in a few years, how much will it cost you? By cost, include the ramp-up stage whereby a new rep is not productive, and makes mistakes—and you’ll need to put a value on those, as well. Then calculate how much your rep will cost to keep for a few years minus what she might manage to bring in. If it costs you less to keep her than to replace her later, keep her. Otherwise, let her go.
A new employee always tries hard to please when they start working. This is often coined the “honeymoon” period. It takes at least a year to get a sense of the employee’s long term potential. But basing your decision on this factor—knowing that it might be a few years until the employee becomes productive—is not as precise as simply doing the aforementioned math.
John Shafi, Telus, British Columbia:
You need to either retain the person or let them go. One should never keep someone because of unrealized potential. They are either an asset now or a liability. If you really value them, then try to find them other jobs to do around the firm. Be honest, though, and tell them why you are changing their job description. Explain that you see their potential, but they need to hone their skills in that area to be able to work as a full-time account representative. Let’s face it—good people are hard to find. So put the onus on them to do other duties and work hard to get back into the account rep position as soon as the client base justifies the expense. Maybe they could be mentored by one of the more senior people in the firm.
Otherwise, you need to lay them off if you can’t justify keeping them. Do so gently, keep in touch with them and stay on top of their progress. You may end up hiring them back when you can justify it on your books.
Jeremy Lichtman, Lichtman Consulting, Toronto:
Sounds like an excellent opportunity to get your sales force in gear to find a replacement customer for the lost account. During the last recession, my partners and I would take any free time or lack of business as a signal to literally go knocking on doors to drum up business. Rather than laying somebody promising off, I would look around to see if there is something else (something profitable, mind you) that they can do while you (or your designated shmoozer) are riding up and down elevators leaving business cards.
Kelly Ramsay, Montreal:
You are in a highly competitive market in which marketing budgets are rapidly decreasing, making it extremely difficult to land new accounts, never mind keeping your existing ones.
Putting all emotion aside, your primary concern should be for the business that you have worked so hard to build. If this recent hire “could be an asset in a couple of years,” then she might be a liability today. Furthermore, there is no guarantee that after you have invested more time and money in developing this person, she will not leave for another firm—which will then benefit from your investment.
My advice would be that if you really need to cut costs during these tough economic times—and that means head count—then let her go now and focus on keeping the team and customers you have.
For his answer, Kelly Ramsay will receive a copy of Creating Competitive Advantage by Jaynie Smith.
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