Practically Speaking is a weekly column that addresses your most pressing business dilemmas. The advice is the opinion of long-time business owner Gene Marks. Send your questions to PracticallySpeaking@fortune.com.
Editor’s note: This piece was updated on May 31 at 5:45 p.m. ET to make clear that age discrimination is illegal. We regret that this piece was published without closer scrutiny.
Frank has been with us for more than 20 years. He works in the warehouse and has done a good job for us. I like him. But, to be honest, for the work he performs I could easily replace him someone younger and… cheaper. Would it be wrong to let him go?
And the costs are rising, right? You’re increasing Frank’s salary every year, at least by the cost of living. And that’s not all. You’re contributing to his healthcare and his 401(K). He’s earning more and more vacation each day that he’s working for you. And as he gets older, you’re increasing the risk that he will cost your company more – maybe he gets injured or needs financial assistance because he’s not putting enough away for his retirement. Sure, he’s got experience. He’s proven. He’s a known card. But he’s costing you. And you know you can get the same job done by someone else for less money. I see this with many of my clients, and it’s a complicated issue. Are you a heartless cad if you let this guy go? Doesn’t loyalty count for anything? The guy’s given you 20 years of his life, and you’re just going to cut him loose? You must be some kind of awful person.
Actually, no you’re not an awful person. I am not encouraging that you should discriminate based on your employee’s age. Age discrimination is against the law. However, your job is to make the decisions. The hard decisions that are necessary to grow your business and ensure it as a going concern for years to come. Why? Because you have employees, customers, partners, suppliers and everyone’s family members (including yours) that rely on you and your company for their livelihoods. And their interests should rise above the interest of any one specific person. OK, maybe you don’t have to be so harsh. Maybe you can ease him out over the next two years. Or find another role for him where he could actually be more productive for you (Driving a forklift? Maintenance? Customer service?) as he gets older. But if you’re letting your overhead get too high and your profitability becomes negatively-impacted because you’re unable to make those hard choices, then you’re hurting everyone who depends on you.
I’m in the service business, and my people frequently go out to clients to do their work onsite. Is it right for me to charge for travel time?
In the service business, time is your inventory. You’re paying for every hour spent and your goal is to bill it all out. Of course, that’s not reality. In a service business, it’s completely normal to have down, non-chargeable, administrative and, yes, travel time. And the best service businesses monitor charge-ability closely. But here’s the thing: if your people need to travel out to the client’s location to get a project done, isn’t it fair for the client to pay for this time? Sure, your employee isn’t actually “working” (in fact, he’s probably listening to Howard Stern instead). But getting there is still part of the project. What’s right?
Here’s what we do: we split it. We build into our contracts that we charge 50% for travel time. And if a client asks, I tell them exactly what I wrote above. I would estimate more than 90% of the time, a client understands and agrees. That’s because it is fair. But for those other 10% I don’t quibble. I tell them fine, I won’t charge for travel. But…I’ll find some other places to bake in an extra half hour here or there to get the money back. Is that ethical? I don’t care. Sometimes unreasonable positions require a response.