Retain Experienced Personnel in an Economic Downturn

"One of the biggest mistakes a business owner can make is to think about letting go the highest paid, most experienced employees for a less experienced yet less expensive replacement," writes Ricci Victorio in a recent Expert Business Source post titled "How to cut back without crippling your organization."

Victorio points out that your team is one of the most important investments you can make. Downgrading your talent in an attempt to save money in a tough climate can have disastrous economic consequences.

All small-business owners know employees are expensive. Each person on your staff represents a significant cost to the organization that must be weighed against the benefits and revenues that person brings to the business. Yet a simple cost/benefit analysis can be deceiving when it comes to measuring the contributions of highly compensated employees. You’re benefiting not only from their direct contributions to the bottom line but also from their training, experience, judgment, productivity, loyalty, and possibly even their positive influence on the morale of the business.

In trying to save some cash by hiring a less expensive replacement, you may ultimately pay much more to train and integrate that person. Less experience may mean more supervision and hand holding on your part—which can be expensive, especially in an environment where your valuable time may already be stretched.