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Four Greatest ideas for Staffing Your Business • 55

Idea 36 - Keep people in your variable costs

Firing poor performers is an expensive business, as is letting people go because you
do not have the level of work for them that you were expecting. And do not under-
estimate the negative affect that this will have on morale. There is much less em-
ployee loyalty around now than was the case, mainly due to the behaviour of em-
ployers who, in reacting to very fast changes in the business environment, have
themselves being showing markedly less loyalty in the other direction. This means
that people are more than willing to move to a competitor to build their careers.

So, if you make wrong decisions in staffing and have to put them right, you may
find yourself with a morale problem leading to the loss of the people you desperately
needed to keep.

One way out of this dilemma of'Do we need another person and is this the right
one,' is to use temps and contractors. (Be very careful of the tax position on contrac-
tors, especially in the IT business. The government is bearing down on contractors
who use their employer's equipment and have only one customer. They regard such
individuals as being in reality employees and want the tax and National Insurance
contributions appropriate to that status.)

But temps and contractors are not in fixed costs. You can dispense with their
services whenever you want and they are never regarded as full members of the
team. This means that their departure is met with more equanimity than if they
were. The two disadvantages of this approach are cost and the fact that you have no
hold over the people either. But remember leverage, Idea 32 - the more you have in
variable costs, the more efficient use you make of fixed costs.