We are a consultancy with six employees. Our income has fallen a lot over the last couple of years; the MD has been very open about the situation and requested suggestions on how to cut outgoings. He has taken no salary for the past year. Three of us have cut our hours and salaries by 20 per cent. Our highest earner’s salary and costs make up more than half our pay bill, but he has refused to cooperate.
At a team meeting, he finally agreed to reduce his hours by 20 per cent on a temporary basis until things improve. But a few days later, he resigned and there are now rumours he plans to claim constructive dismissal. Does he have a case, given the only alternative to cutting his salary was to liquidate the company?
It’s possible. You can’t expect people to accept a reduction in either salary or hours unless you go through the proper channels. That means a proper consultation where they have the chance to set out their objections and consider alternatives. You need to explain the implications for individual roles if costs aren’t reduced. It’s perfectly valid to have a conversation like that in your situation, but employees need to feel they have a degree of control – and it doesn’t sound like they necessarily did in this instance.
I can’t know for sure whether your employee has a case, though his resignation isn’t a great sign. If he contacts you, you’ll need to speak to a lawyer and get a professional opinion. But asking people to commit to reducing their hours during a team meeting is not exactly best practice. It’s fine to discuss the situation as a group, but follow-ups must take place on an individual basis and people must feel able to speak freely and confidentially.
I’d urge you to look realistically at the firm’s situation. I’m not a big fan of owners not paying themselves: it changes their mindset towards their staff – ‘If I can do it,’ they often ask themselves, ‘why can’t the rest of them?’ – and creates a particular set of expectations. It could be worth having a frank conversation about how viable the business really is, for the sake of you and your colleagues – I have come across a few comparable situations over the years and, while it’s possible things could be turned around, more often than not it ends badly.
Manager’s divorce is getting us down
One of our senior managers has become a problem recently. He seems distracted and appears to be in the office a lot less, which has caused him to miss some important client meetings and has led to complaints from his team that they aren’t coping with the workload and lack direction. He has told people he is going through a difficult divorce. How do we deal with the performance issues arising under the circumstances, particularly as he is a well-respected staff member with a strong track record over the years?
At some point in their lives, pretty much everyone will have a blip. Whether it’s a relationship breakdown, a bereavement or a mental health crisis, the way you react as an organisation when an employee needs support says a lot about what you stand for, and enables other people to bring their own problems to the table and have honest conversations.
Given his track record, it makes sense to proactively support your employee at this time. He may not be aware of the performance issues – it’s quite possible he’s distracted at the moment – or may feel that, as a senior individual, it’s a sign of weakness to admit you need some help. The key is to talk to him. That could mean asking someone close to him to reach out, engaging his line manager or just sitting with him as an HR professional and acknowledging you’ve heard he may be having a hard time.
Make it clear you can see things getting worse if they aren’t tackled; often, situations like this spiral out of control as people can’t cope with the emotions involved, and teams grow tired of covering for an absent leader. The solution could be as simple as giving him a week off, reducing his workload temporarily or asking someone to come into the team to help out. But by sitting down with him and talking it through, you’ll be heading off problems further down the line – and doing the right thing, too.