The Morning Eclipse

Friday, March 28, 2008

It is better to contract out employees of a company

After doing some soul searching, I have finally accepted- guilt-free- that a company's employees should be contracted out.

For one, my talks with businessmen give me the conclusion that we have a big pilferage problem in most business operations. A thief in a business spells the death of the businessman. Having a contract makes firing so much easier.

When it comes to the relationship of the employee to the owner, well, the young undereducated worker is such a pain in the neck. He demands so much- minimum wage, double pay, overtime pay, SSS, etc and yet doesn't have a bit of loyalty or honesty. Why suffer the potential consequences of ingratitude. Contract them out. They're used to it anyway.

Yes, a big majority of our young labor workforce is very used to contract work. The dozens of applicants I have interviewed for our secretarial and sales positions have worked at least once or twice under a fixed 5- month term contract.

Third, our ever increasing minimum wage just spells trouble for us. Having a contract erases the wage problem. The employee doesn't complain since he understands that he is under contract at this pre-determined pay.

Fourth, there will be ZERO labor cases. You don't know how wasteful a labor case is until you get slapped by it from an ingrate. The minute a case is filed, the case is already in the employee's favor. This is how the system works. Our law, in its socialist streak, supports the "weaker" party a.k.a. laborer and justifies the bias as only fair.

Now, I may sound like the worst employer in the Philippines but this is only one half of the story.

To really be successful in business, one must have trustworthy and reliable employees. You can't build up a quality workforce by simply treating them as units of labor. You have to treat them with dignity and many more.

My tips are:

1. Share the vision with them. Let them see what's the plan for the future and where they fit in it. e.g. "Our company plans to expand to 6 branches next year. Work hard and be honest. If I find you capable, next time, it will be you training the new hires. You'll be my assistant.." From my experience this is super effective on the young workers (18 to 21 yrs old).

2. Pay them on time. Sadly, the majority of our workers live on a hand-to-mouth existence They don't save up. Their pay on the 15th will only last them until the 29th. So pay them on time and be a reliable employer. Most expect this so take note.

3. Extend credit. The poor lack access to credit. This has been the mother of all Philippine revolutions. My Ateneo professor once explained that the farmers of Central Luzon revolted when they couldn't eat. The hacienderos were not extending credit to them in order to buy rice. Rice was abundant but due to the seasonal harvest, the planting season was a financially lean season and thus also became the "vale" season.

In my experience, my employees just had to "vale" every week. Without any rules, they would have wanted to get their pay daily. Once, I saw one guy buy a new DVD player the day after payday only to sell it a few weeks later when he got short on cash.

In their minds, the money they borrow is theirs already so they demand the "vale" even though passively.

For me, better to have rules set on when to "vale" or else you'll keep on running out of cash for your operation. You may extend "vale" on special occasions but it is always better to control the money for them and just hand it to them on payday.

4 Bring them food from time to time. Everyone is happy with food! This makes them feel happier and appreciative. This also makes them feel part of the company family.

Wrapping it up. It is better for the employer to be two steps ahead in labor issues but in practice there are some things that have to be relaxed. Contracting the employees protects the employer but has the downside of dampening morale. Concessions still have to be made in order to build up productive and reliable people.

A business is an operation done by an organization. The employer is the leader. Just lead it and you'll be fine!

Success is 1% inspiration and 99% perspiration. Never tire.