Ask Andi: How do I compensate employees when disaster strikes? During the recent hurricane, we closed business for a day and a half. Most employees were out for two days. One was out for four days because of a lack of power at home. Should employees be using personal or vacation time for this? Or do I continue to pay them and chalk it up to an act of God?
Thoughts of the Day: When disaster strikes, there is no one right answer to employee compensation. First assess the health of the business. Then decide how much, if anything, can be allocated to helping out employees. Make sure your company is prepared for Black Swans.
Compensating workers when disaster strikes
The first job of every business owner is to preserve the company. If you’re positioned to survive then employees will have jobs to come back to. The ability to respond and be there for employees may be driven and governed by the health of the company post-storm.
Evaluate the storm’s impact on the business. Is cash flow okay? Are reserves sufficient? Are clients still buying? If yes, then go on to consider what else can be done for employees.
It’s up to employees to use personal days to cover outages if the company was open. If the company was closed, it’s up to you to decide what to do. Check your policy manual for directions.
Will you still get paid?
Do salaried employees have paychecks docked because the company was closed or they couldn’t get to work? Certainly, hourly workers will lose out because they can’t report hours worked. Keep in mind that hourly workers are generally at the lower end of the wage scale, where they can least afford gaps in income.
Do employees have enough personal days to deal with the emergency? What about employees who need to take care of post-storm issues. When an emergency event happens late in the year, there’s a greater possibility that personal days have already been used for other activities. That’s luck of the draw. But it still has a real impact on personal well-being.
If the company can afford it, consider a one-time increase of a few personal days, available the month after the emergency, to help close post-event needs.
If you planned to pay year-end bonuses, consider them distributing early. That may reduce profit sharing if you have a plan, but the need may be greater for cash now, vs. putting the money into qualified plans that can’t be accessed.
When disaster strikes, most people take cover
What if the company has loads of reserves, and is positioned to help employees in any way possible? Think about offering low-interest loans to help employees rebuild homes or replace cars, clothing, and other possessions. Offer overtime to employees who want extra pay and are willing to work for it. Rent an apartment for people to use to take showers, get a hot meal, and take a break from the devastation.
Reach out to federal, state, and local emergency contacts. Have before and after work talks with employees and their families about what resources are available to help people recover. Bring in counselors to talk about managing in stressful times. Put someone in charge of helping employees figure out and fill out paperwork for disaster relief.
Lastly, get ready for the next Black Swan. Those are events that you cannot predict or control. The only thing you can do is be prepared. Set a plan in motion to build reserves, have lists of how to contact employees in an emergency, and policies on what is, and is not the company’s responsibility.
Hold internal workshops on what people can do to recover from this event and get ready for the next one. Education is the first line of defense. Right now, while people are thinking about the topic, get them involved in building their own personal emergency preparedness plan.
