I run a small company with about thirty employees. I really appreciate my staff and try to do the best for them and they try to do their best for me. They are taken out a couple of times per month for a happy hour. Lunch is brought in at least once a week. I also give very generous Christmas bonuses each year. I have a very happy and content staff.
The above is to give you a feel for the mood of the company. On occasion one of my employees find themselves in a bind and need to request an advance. I understand that things come up and have always obliged giving an interest free loan with manageable payroll deductions for repayment.
This practice has been used by about half my employees throughout the years. Most have asked for one. Sometimes the same person asks again but usually with months or years in between loans.
Now for my rant. I have one employee that has begun to use this favor as an interest free loan whenever he wants some extra cash. Yesterday he came to my asking for $4000 to pay for his wedding reception. I told him I would get back to him but am inclined to turn him down. This employee has had back to back loans for the past three years. No sooner does he pay one back does he borrow another. These aren’t small amounts, however, $4000 is by far the largest request. There is nothing in our employment policy that address loans and have always been a personal and private favor between the company and the recipient. I am annoyed that he is now taking advantage of something that was meant to help people out. Not so someone could borrow money interest free whenever they want to live beyond their means.
Now I do not want to start charging interest because I am not a bank. I do not want to make a profit off of other’s misfortune and also do not want to do the paperwork involved with charging interest. My question to the masses is should I turn him down and if so, how do I tell him. I do believe he is counting on this money and will be in a bind if he doesn’t have it. He is a valued employee and I certainly don’t want to create any bad feelings. Thoughts?
Hard to say. You may have to do it to keep the peace, but it seems like it is time for an official policy that limits the frequency and amounts of such loans. Some folks just take advantage.
You sound like a great boss. Not like the asshole I work for.
First thought: You’re good people for treating your employes as you do. On behalf of all of the workers out there who have been treated like shit, I say “thank you.”
Second thought: Tell the employee that you’re sorry, but your budget right now doesn’t allow for such a large layout of cash.
You’re taking a big risk with that kind of outlay. What if he quit right after the wedding? Would you have any way of being able to make him pay you back? (A contract of some kind?)
Unfortunately, this man has dug himself into a pit and he’ll never claw his way out if you keep allowing him to borrow more money. You can see the same thing happening at those “payroll advance” places. Now, I know you’re not trying to take advantage of him in the way that these places do, but the end result can be the same. He’s on a downward spiral and he needs to realize it, but unfortunately, many of his kind never do.
I think what you stated in the last two paragraphs is succinct, definitive, and eminently reasonable. I don’t see any change in the wording or sentiment that would improve it. Be polite, but let him figure out his own financing without running to you for an interest-free loan that is entirely at your opportunity cost. If he’s in a bind, let him put it on a credit card or take out a home equity loan. Sure, he’ll have to pay interest on that, but that’s the cost of depending on money you don’t have in your pocket. You are not the Bank of Mom and Dad, and you don’t owe him any loan, or even the expectation of bailing him out; that you have done so in the past reflects upon your generosity and personal concern for your employees, but him to abuse it risks the furture availability and willingness for other employees.
In short, he’s acting like a selfish bugger, and you need to put stop on this expectation now.
Another vote for telling him what you’ve told us. You have agreed to loans in the past, out of kindness and concern for your employees, and been repaid in loyalty and contented employees. He is stretching your resources, as well as your patience. You are sorry if this puts him in a bind, but you are not able (or willing!) to continue to loan him money.
I think you laid it out perfectly. You may want to add that you are going to differentiate between emergencies and extravagancies in future loans to your employees.
Do you mean that most of the half have only asked for one, or do you mean that most of your employees have asked for one and you’ve given it to half?
In any case, I think it’s entirely reasonable to set a cap on the loan, set a limit on the number of loans, and set a limit on the type of thing you’ll loan for.
I’m concerned for you, though. You’re running this through payroll, which makes it an “official” sort of perk for your company, which could maybe mean that someone sometime could use it against you if you turn them down. Please be wary.
It is unfortunate but you do have a point with your last paragraph. This employee is using the money for his gay marriage. I would hate for him to feel discriminated against which has nothing to do with it.
Regarding “half”. About 15 employees have taken advantage of a loan and they have asked for one loan during the course of their employment for an emergency of some sort.
Unfortunately, you have half the blame for creating this situation, Foxy. You have created the expectation in him that he will always receive loans from you, because you have given him loans continually for the last three years. Of course his financial planning problems aren’t your fault (or problem), but he does have a logical expectation that this will continue indefinitely because it always has been this way for him.
I would not only deny this loan for this employee, but I would create a firmer policy on these types of loans so employees don’t take advantage in the future, and they don’t make their own financial plans based on getting loans from you (which isn’t really good for anyone).
The trouble with doing nice things for people is that there is ALWAYS someone who will take advantage. I have a sister who is a taker - she figures that she should just ask for everything she wants, and it is up to other people to say no to her. It sounds like your employee is one of these people.
I think you have to check what this is for. If it’s for a whole wedding, that’s different than if it’s to double the amount, i.e, that he is putting in $4k of his own. In that case, he can pare back his plans based on his own savings and you would be doing him a favor by loaning less than the total. Even if he’s got no savings, which seems likely, giving him half a loan makes more sense. And I think you should say that it’s the last loan, that “I am not a bank. I can’t keep bailing you out.”
Another vote for telling him no. I used to work for a guy like you. I hated doing it, but I asked for an advance on my pay once or twice from him. An advance (as in “hey, could I cash my paycheck on Friday instead of Wednesday” – we were paid on the 1st and 15th) not an actual loan. I was fully aware of the fact that I was asking for a favor, and would have had to figure out what else I could do if he (as was his right) said no. I would say that this employee is taking advantage of his interest-free loans and is probably not going to stop if you keep giving in to it. Where will you be if he skips out on you after cashing his paycheck? Doesn’t sound good to me.
Refusing the request is certainly justifiable but if I’m reading it correctly you (a) have created an atmosphere where it’s not an unreasonable request and (b) don’t want to create hard feelings with him. I’d consider granting the request or possibly offering to do half the amount or whatever number you are comfortable with.
Defining a policy that sets maximum amounts and frequencies is attractive but realize that that may encourage more people to take advantage of it more often. Unless you have strict payback terms and/or interest payments it’ll be a lot easier for people to ask for loans that are within pre-approved limits than when they are a favor.
Are you more concerned about agreeing to another loan to this particular employee, or more concerned about the amount he is asking for?
If it’s more about the amount, why not compromise and tell him you can front him $2000, not the full $4000. This way you are not refusing him a loan…I can see where refusing the loan could create problems because so many others have received them.
Maybe in the future you can put some sort of cap on the emergency loan program…“up to $1000” or etc.
Wish there were more bosses in the world like you!!!
While we can say this, if the OP posted in the Pit about how someone got a loan from her and then quit and never paid it back, there’d be a ton of Dopers laughing that she got what she deserved.
The reason there aren’t more bosses like her is that there are tons of employees like him. Try to do something nice, get taken advantage of, stop doing the nice thing. That’s generally how it ends up working.
Just to be a voice of partial dissent, this guy does have one thing going for him- he has paid back all of the previous loans. That does establish at least some sense of reliability. Not that the OP is in any way obligated because of this, but it’s a point that can’t be entirely ignored.
You do, of course, have every right to refuse this loan- you’re doing him a favor, and he’s already asked for a lot of favors. If you want to be more diplomatic than a flat-refusal, you could offer him a lower amount, especially if no one else has ever asked for such a large amount. You might also consider warning him that this will be the last loan you’ll be willing to give him for at least a few years.
Nobody has addressed this yet, and **Foxy40 **is right that it puts a certain spin on the situation. She (?) has loaned him money until he asks for a loan for his gay marriage, and here decides to draw a line in the sand. I don’t know if I’d have the diplomatic acumen to say no in this situation, especially with a subordinate. I’d probably loan him the money, then institute a policy for future loans.
Oooh, saved by preview – I can delete my rambling response and simply say “what PoorYorick said.”
I think giving advances to your employees is very nice, and I think this guy is maybe a little overenthusiastic in his willingness to participate (to put it mildly), but you’d probably be protecting yourself if you gave him this advance as you have in the past, and then put out a more clear policy about the amount and frequency of the advance.
It is funny about the guy. When I hear about employees like that, I always think “oh my gosh, the nerve of some people” but on the other hand, he probably thinks everyone else is failing to utilize a benefit that is available to them – in his experience, he has asked for, received, and paid back advances, so as far as he’s concerned, the system is working exactly the way it is supposed to.
To address some of the above comments: First, it isn’t the amount of money. Giving half would be on prinicipal and not because the business can not afford it. Second, yes, I realize I created this situation which is very sad. I didn’t think anyone would take advantage. Last, I really am not worried about him leaving and not paying it back. Of course that is a possibility but he has been with me many years, makes a six figure salary when others in his field make much less and sincerely loves his job. I have no doubt he will pay it back. I was thinking that maybe I should just set up a stricter repayment policy. Generally I have had the accountant deduct $100 per pay period (biweekly). I was considering raising that amount for a $4000 loan to $300 so it is paid back in six months which has been the standard in the past. Of course no one has asked for such a large sum. This way he can decide if he wants to be in debt $600 per month or scale down his affair to something more financially manageable.
I know this is terrible but I really don’t want to give him this money. It burns my butt that he is taking advantage. I think as others have posted that I may be better off just doing it. I hate to have to create rules and a “policy” regarding company loans. One, I am not a bank and don’t want to encourage all my employees to use the company as their lending institution and secondly, I want to be able to help when help is what is needed, not money for champagne and a wedding cake.