Over the past year we’ve heard a lot about companies who say the Affordable Care Act will force them to cut their number of employees down or, in some cases, nearly all their employees down to part-time. Well as some companies learned from the economic unease of recent years, these kinds of cuts may seem like a good short-term measure, but they have hidden implications that can damage an operation in the long-term.
For most companies, payroll is the No. 1 expense. So when times are tight, it makes sense that many look to cut employee numbers down. But if you look deeper into the issue, as International Business Times did, unless the workload also goes down, this measure can be counter-productive and will hurt you in the end.
Anyone who has worked at a company during tight times knows exactly why. The remaining employees are left with more work and need to spend more time/energy trying to get it done. This means owners are more likely to pay overtime wages, and workers are more likely to become unhappy, get burned out, and/or make mistakes. No matter how you slice it, it’s not good. (This is why a lot of business owners instead assess their operation and look to re-focus back to “The Core,” meaning they cut any business endeavors that are tangential.)
Anyway, these observations got me to thinking about the rumblings regarding ACA and measures to avoid the new insurance costs. I think there’s a solid half-dozen similar hidden negatives for the companies looking to do that.
Immediate Hiring & Training
If an employer cuts their existing employees down to part-time and expects the same workload to get done, it goes without saying that in the short-term they’ll need to hire and train a bunch more new people (who will also work part-time).
More Managerial Duties
If you have more staff (in this case as many as double), obviously it goes without saying that the manager and supervisor roles are far more demanding.
Less Employee Retention
I don’t think it’s a stretch to assume that many workers will not be happy about this arrangement. And as such, employers can’t be surprised when some of their talent leaves to join an employer willing to hire them full-time and with benefits.
Relentless Hiring & Training
If the previous scenario is true, then employers will naturally have to replace talent far more often than before. That means hiring and training become much bigger long-term tasks.
Perhaps the biggest problem in this scenario is created by a combination of the negatives mentioned above -- that being the difficulty in sustaining the quality of product/service that the business is known for.
I wrote this post partially as a kind of warning for any employers considering taking this route, but I also wrote it because if I'm at all accurate with this list of negatives, the staffing industry stands to benefit quite a bit. I say that because it seems to me that staffing companies could potentially alleviate several of those negatives for an employer. They can locate the best available talent, save employers time on hiring and training, and provide some of the benefits that employers don’t want to. So with this in mind it’s not surprising that many staffers reportedly expect the demand for their services to increase with the implementation of ACA.