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How to Make Business Decisions Based on Facts Not on Emotions

May 2008

Running a business can be fun, but many successful business owners have come to a tough realization that in a business environment, they have no friends. They have employees that are dedicated to the company and they may have customers that are loyal, but the bottom line of the business is the prime concern they have to watch. One of the biggest obstacles they face in the say to day business operations is their own emotions and they need to leave them at home when they head for the office.

For instance, a business owner is approached by their financial expert who tells them they have to cut half of their workers loose in order to meet expenses. This can be an emotional time for the owner as on one hand, many of the workers are loyal to the company and are very productive. On the other hand the company needs to be able to run leaner to make ends meet.

Simply based on the emotions of keeping the business operating, the solution may seem obvious in cutting half the workforce. However, before making that call the owner needs to look at all the facts and not just the financial ones. Questions need to be asked such as how long wills this lack of income last. If we layoff employees, how much will be spent on unemployment compensation? What are other options in cutting expenses, such as is the finance guy really necessary?

If half of the workforce is let go, what will be the effect on productivity and customer service and will the remaining employees be able to handle everything without the additional help? After thoroughly understanding all of the available options and the effects of instituting any suggested changes it is found that half will need to be let go, then that is the right decision for everyone.

Decisions have to be based on how the outcome will affect everyone involved and not just the ones being laid off. Sure, it is a tough decision but one of the responsibilities of a business owner is being able to make the tough calls, knowing it is the right one for the business as well as for the remaining workers. Unfortunately, there is no hard and fast rule about which employees will need to go away. Seniority may be the deciding factor, but some businesses use productivity instead.

For example, a new hire may produce as much or more as an employee with several years experience, the new hire may be a better fit. Owners should never look at payroll as a deciding factor as getting rid of some of the higher paid, long-term employees is also getting rid of loyalty as well as experience.

The decision should be based on who can offer the most to the business, a decision based on facts rather than the emotions of who needs the job more. From a cold fact point of view, if the worker needs the job that bad, they have probably been a consistently hard, productive asset to the company.

Dock J. Murphy is owner of Plug in Profit Site.com and writes on a variety on a variety of subjects.

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