Small business owners sacrifice to reward employees: Survey

Owners take pay cuts to give employees extra time off and holiday parties

Canadian small business owners are sacrificing their paycheques and bonuses so they can spread some holiday cheer to employees, according to a survey.

More than one-half of 414 small business owners surveyed said they will make some sort of sacrifice to recognize employees and clients this year, such as foregoing raises (25 per cent) and bonuses (23 per cent) or taking a pay cut (16 per cent), found the American Express Small Business Holiday Monitor.

However, employers are still cutting back on recognition. Fewer small business owners will be giving their employees bonuses this holiday season (32 per cent this year compared to 44 per cent last year). They are also less likely to make charitable donations (33 per cent compared to 40 per cent), give employee gifts (37 per cent compared to 42 per cent) and give client gifts (31 per cent compared to 35 per cent).

But small business owners recognize the importance of showing their appreciation to employees, and are finding less expensive ways to do so. About one-half are still planning to treat employees to a party or dinner this holiday season — the same proportion as last year.

Another lower cost way to recognize employees is by giving them extra time off. This year, 43 per cent are planning to give employees extra time off over the holidays, up from 39 per cent last year.

“Small business owners know that their employees are key to their company’s success,” said Howard Grosfield, vice-president and general manager of small business services for American Express Canada and International.

“They are willing to make sacrifices to ensure their employees feel valued and appreciated. We’ve monitored that trend throughout the recession and owners consistently put the needs of their staff and business first.”

But while small business owners attempt to shield their workers from the effects of the year-end slowdown, the reality of the recession has made cost savings a priority. In response, about three-quarters of respondents have introduced some form of cost reduction policies in the last year.

Measures include longer working hours (48 per cent), pay freezes (47 per cent), reduction in spending allowances (45 per cent) and pay cuts (23 per cent).

But 48 per cent of owners took at least one cost-savings measure that impacted themselves only — not their employees. In companies where pay had been cut, more than one-half of owners took the reduction themselves without asking the same of their employees. Another 32 per cent cut their own spending allowances without asking staff to follow suit.

For those firms that reduced working hours, 59 per cent of the cuts were to employee hours only, with owners extending their own hours to pick up any slack.

But employers foresee better times ahead, with more than two thirds stating they are “optimistic” that their financial position will improve in the coming year.

“Clearly, 2009 has presented small business owners with a number of challenges, as evidenced by the half that have experienced a downturn in their business,” Grosfield said.

“But small business owners have been careful to plan for the eventual turnaround, and it is encouraging to see they are hopeful about the future of their business.”

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