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My employees say they are underpaid, and the thing is, they are right. Salaries are rising, and I cannot keep up. (I’m not one of those CEOs making millions — my take-home pay is less than my vice president’s pay.) Pre-pandemic, their salaries were at market rate, and the business was profitable. But the continued shutdowns hurt us, and now I don’t know what to do. Close the business? Hope my employees stay and we regain what we lost? Give them raises and take no salary myself? (I have bills too!) Help!

This story is part of our November 2021 issue. To subscribe, click here.

Give away the company.

Depending on how your company is structured, this may be easier said than done, but it’s a real possibility. Right now, finances are tight, but everyone understands the impact the pandemic has had on many businesses. You can expect (and so can your employees) that things will improve if you all work together now that the government has lifted most pandemic restrictions. So, offer your employees stock in the company. The more you give, the more powerful this incentive is. 

When people talk about greedy CEOs, they forget the CEOs like you who are desperately trying to keep businesses afloat and paying people more than they themselves take home. Lots of startup founders don’t take salaries while trying to get things off the ground. But as you know, you have bills as well, and not taking a salary is only sustainable if you are independently wealthy.

Here are some other ideas for saving your business without going broke.

Consider shutting down your offices

You didn’t mention what your business does. If it’s a manufacturing facility, then shutting down won’t save you money. But if it’s knowledge work and everyone can work from home, you should strongly consider closing the offices forever and saving rent money. 

You can still get together from time to time — meeting space is relatively inexpensive. If you go this route, you will need to decide if you want to allow employees to move out of state.

California is notoriously expensive, and lots of remote workers have fled to cheaper areas and kept their California salaries. Some big companies have looked at lowering wages based on location (which may help you) but may turn your employees off. Keep in mind if you allow employees to move out of the state, you’ll have to make sure you comply with all the laws in the new state. Employment law depends on where the employee works, not where the company is headquartered. It’s perfectly reasonable to tell people that while they can work from home, they need to stay in the state or even the area to attend monthly meetings.

Ask your employees how to cut the budget

It won’t surprise your employees that salaries are rising and their paychecks aren’t. Don’t worry about saying to them, “I want to pay you more, but we don’t have the budget. Suggestions?”

Your employees may have suggestions for budget cuts in places you never considered. Sometimes it’s small things that seem insignificant on their own but can add up. During boom times, many companies felt pressured to have perks that companies like Google had and provided free lunches, sparkling water and beer on tap. Who needs on-site dry cleaning if everyone works from home?

Ask your employees what’s more important to them than money

This isn’t a stupid question. People want raises, but that’s not the only thing they want. Flexibility? Good management? Opportunities for growth and development? These things all have very real value, and if you’re honest with your intentions, employees will support you if you can provide these things.

You must not be just all talk. If you promise growth opportunities, you better create plans for your employees and follow them. If you promise flexibility, you can’t yell at them for taking advantage of it. While you probably can’t afford management training to improve your staff’s managerial skills, plenty of free online resources and libraries have tons of management books. 

Make sure you have a vesting structure so they can’t take their stock and walk out the door today. A 3-5-year vesting structure can be a powerful retention tool, especially when you combine it with making your business a better place to work.

You aren’t the only company that struggles with keeping employees right now. The “Great Resignation” is a real thing! And competing with companies that can offer big salaries makes it even harder. But you can compete by making your company the best place to work, cutting the fat and listening to your employees.

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