Question

workers implication on reduced working hours

Answer 1

It is a juggling act to have the right workforce while keeping employees satisfied on the job which includes controlling their hours. Even for your most successful workers, circumstances can dictate that you reduce working hours. That lowers your operating costs and increases profits. But it may also lead to a loss of revenue or an exodus of workers.

Since hourly paying your workers is a variable expense, a decrease in working hours increases your productivity, with all else being equal. Lowering the employee's salary also reduces the payroll tax section. As an employer, you are required by the IRS to balance Social Security and Medicate tax contributions for each worker. Reducing the hours of workers during an economic downturn is successful in reducing the operational costs. It also allows you to monitor their efficiency by allocating more hours to higher-performing employees, and less hours to less productive staff. A judicious reduction in hours increases the chance to get the best out of the workers.

Reducing the hours of the staff will generate a missed "opportunity expense" of sales missed. With employees working less frequently you can lose a potential sale to a competitor, especially if the business environment improves suddenly. You do face the risk of losing a lower paid employee who is unhappy with it. Dissatisfied employees can get less efficient, resulting in lower sales. Furthermore, a worker could perceive his reduced hours as favoritism relative to other workers, which could affect his morale. Such a scenario produces a bad work environment, which can impact the company as well.

When business is healthy, ultimately giving more hours is easy to justify. It is best to recruit workers as a small business, and increase or lower working hours as required. This includes understanding the current operating environment and aspects in which the small business faces competition. Setting a success benchmark such as monthly revenue, including projected revenue forecasts, helps you to track workers' hours and prepare the work schedules for your employees in advance.