Low staffing creates delicate balancing act for small business

By Joyce M. Rosenberg

Associated Press

Published: Wednesday, May 9 2012 9:25 p.m. MDT

When the recession hit Milio's, a 35-store sandwich chain in the Midwest, Mike Liautaud told his 470 employees they would need to make sacrifices.

Associated Press

NEW YORK — If you work for a small business there's a good chance that, since the recession, you have taken on additional responsibilities and are working longer hours. Some of the work that used to be done by fellow employees may be getting farmed out to freelancers or other independent contractors.

The U.S. economy is growing, but at a sluggish pace. Companies are cautious because they don't know what business will be like in the months ahead. Europe's lingering debt crisis and uncertainty about the outcome of the November elections is adding to the anxiety. It's a recipe that makes many employers reluctant to bring on new staff.

Certainly, small businesses are taking some of the same steps as larger companies to avoid hiring new workers. But for small business owners, finding a way to cope with less staff is an even more delicate balancing act because they already have fewer workers to pick up the slack when an employee leaves.

"Many of them are just at the margin of surviving," says Michael Gibbs, an economics professor at the University of Chicago Booth School of Business, who has studied and written about human resources and how organizations are structured. "There's an enormous amount of uncertainty in the economy."

Asking workers to do more

When the receptionist recently quit at Klemchuk Kubasta, the Dallas-based law firm decided to not to hire a replacement. Instead, staffers — but not attorneys — take turns doing the job for a half a day at a time.

"We're being careful about how many people we add," says senior partner Darin Klemchuk. "One way to lower costs is to not hire a receptionist."

It's a similar tale at Milio's, a 35-store sandwich chain in the Midwest. After the recession hit, employees were trained to do different jobs. For instance, now a bread baker can also slice meat and run the cash register.

"This keeps employment numbers down because of more staff versatility," says Mike Liautaud, the company's president.

But Milio's didn't stop there. Two administrative workers were laid off. Salaried staffers work three to five hours more each week.

Liautaud says he's concerned about employees getting overburdened. Two weeks ago, he held a brainstorming session at the company's Madison, Wis., headquarters to determine which tasks could be shifted away from workers in the accounting and operations departments.

"I'm seeing they're now started to get taxed," he says of those workers, some of whom were losing their tempers in meetings. So the company plans to make changes.

Liautaud also looks for ways to get help from his vendors. He's arranged with food suppliers to have their workers, rather than his own, unload delivery trucks.

Letting technology do the work

In 2003, Steve Synnott had a staff of just over 50, the most people his company, PRO Group, ever employed at one time. Today, the business, which runs the marketing campaign for 600 hardware stores, has 19 full-time employees and three part-timers.

Synnott is finding high-tech ways to hold off on hiring. In the last year, PRO Group invested in what's known as voice over Internet protocol, or VOIP, the technology that lets people talk over the Internet rather than regular phone lines. Synnott says VOIP has lowered the company's teleconferencing costs, which used to total about $800 a month. That has allowed PRO Group to have more frequent teleconferences. And that in turn has cut the amount of time that PRO Group employees spend on the road, allowing them to stay at the company's Greenwood Village, Colo., home office and get more work done.

PRO Group is also revamping the database that hardware store owners can access to see their marketing plans. The changes mean PRO Group needs fewer staffers to give owners product and price information.

The database "will allow our company to expand by 25 to 30 percent before we need to hire additional staff," Synnott says.

Hiring freelancers, not employees

Many small businesses use freelancers instead of their own employees to get their work done. Freelancers, or independent contractors, are common in industries like media, construction and public relations where business owners often need someone with specific skills for a short time. Freelancers often cost less than employees because companies don't have to provide benefits or pay Social Security and Medicare taxes for them.

Jen Brady had three employees last year at her public relations firm, Fred & Associates, but she let them go and is now using only freelancers. Business is slower this year, but "I've been able to be profitable because I've been able to take on freelancers."

Brady also says the time and work that went into being a boss was hurting her Chicago-based company.

"I was focusing more of my time on human resources and training" instead of work for her customers, she says.

Because of the economy, she says she doesn't expect to hire employees again for at least several years.

"It would take a couple of clients that are on long-term retainers and my being able to build up the company's (cash) reserves," Brady says.

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