I have a situation that I could use your input on. I have a small Internet marketing business that offers software and services to help webmasters get higher search engine rankings. I started this business in 1999.
At first I just resold software for another merchant. Eventually I hired a programmer to do work for me on a contractual basis. I would give him the specs on a software program and he would give me a price. He did okay, but after a while he couldn't keep up with the workload (he had a day job) and his skills weren't all that great.
In 2002 I hired an ASP/VB/SQL programmer full time. He was still kind of green, but was better than the other guy. I paid him $40,000.00 a year to start. Within a year he had developed several good software programs for me which helped increase my sales, so I gave him a raise to $50,000.00.
In 2004 we completed an online project that started doing very well for me. As with all of our projects, I gave the programmer the specs, and he developed the project. When he saw my sales increasing (he programs the database so he sees everything), he started asking for a raise. He told me that senior software developers were making $100k, and that he would like to hit that mark someday.
My sales went from $300,000.00 in 2002 to around $600,000.00 in 2005. Since it was only he and I working for the business, I decided to bump him up to $110,000.00 (big mistake). He was very happy, but I didn't notice his productivity get any better. He was working 40 hours a week from the luxury and privacy of his own home, and he never worked any overtime at all (no weekends or holidays either).
In 2006 my business sales slumped to around $500,000.00. From 2004 to 2007 we didn't create any new projects. I retained the programmer at the same salary to maintain our existing projects... which kept us fairly busy along with other new project ideas that I would throw at him. In 2007 our sales slumped to around $350,000.00. I knew it was time for a new project, because many Internet fads come and go.
We started on the new project in September, 2007. It took a full year to develop. When we started the project our sales had slumped to around $250,000.00, so in December of 2007 I cut my programmer's pay to $70,000.00 a year. He didn't like it, and would frequently gripe and complain that he wasn't getting enough. His attitude also started to become very argumentative and obstinate. I promised him that once our new project was released I would bump his salary back up.
When we released the new project on September 2, 2008, it didn't take off right away like I thought it would. By that time my business sales had slipped to around $160,000.00 a year, and I had taken out several loans to cover expenses, including my programmer's salary. To date I have taken out $200,000.00 in business loans to cover expenses. I recently moved out of my office back into my home office, and have cut several other expenses in order to stay within budget.
On September 23, 2008, I told my programmer that the money had run out and that I couldn't keep him on any longer. However, the next day I realized that my business would basically fail without him, since I don't know how to fix bugs or glitches that occasionally arise. So I offered him $600.00 per week for 24 hours of work. That is what he is getting right now, but I have no idea how many hours he is actually working for me.
After the first paycut my programmer's attitude became really sour. He was always obstinate and negative whenever I asked him to make changes to our systems, but this seemed to escalate with the paycuts. Now he is looking for work, and I have no idea if he is giving me 24 hours a week or not. He has been studying different programming languages to take tests for the new job opportunities, and I think he has been doing it on my time. He doesn't respond to my emails promptly like he used to, and I am not seeing much productivity from him at all.
I have a plan that I am getting ready to implement that should turn my business sales around and get us back in the black again. I am considering offering my programmer $1,000.00 a week ($52k/year), which I feel is a fair salary for a VB/ASP/SQL developer in our area (central Illinois). However, his attitude has become so sour that I don't look forward to working with him anymore. He gripes about every project change that I ask him to make, and just does things at his own pace when he feels like it. I am very concerned that even with the $52,000.00 a year salary, I won't be getting an honest 40 hours a week from him.
It scares me to think about finding someone to replace my programmer. We have huge projects in place that would take a long time for a new programmer to figure out. I think this guy is salvageable, but I don't know how to get him back to being productive and focusing on my work again. I asked him numerous times to become a partner in my business, but he doesn't want that responsibility. He tells me that all he wants is to work 40 hours and get paid a reasonable salary based on his skills.
What would you do in my situation? Anywhere he goes to work is going to be a 65-mile drive for him (he lives in the middle of nowhere), and I know he would prefer to work at home. But how do I get him to realize that $52k a year is a reasonable salary for his skill set? How do I get him to stop arguing and being obstinate every time I ask him to make changes to a project?
I realize that I spoiled this guy. I treated him like a partner because I wanted him to become that. But he has been getting the best of both worlds: The benefits of being a partner without any of the responsibilities, the luxury of working from home, and the simplicity of working only 40 hours a week with nights, weekends, and holidays off. I don't get to enjoy any of those perks myself!
Here are the three options I have been considering:
1. Offer him $52k/year for 40 hours a week and hope that his attitude gets better.
2. Offer him $52k/year for 40 hours a week and require him to work in my office where I can oversee his work instead of allowing him to work from his home.
3. Allow him to work out of his home, but get bids from him on every project and treat him like a subcontractor. (Note: I doubt he will be open to this option since he wants the security of a set amount of pay each week.)
Any help, advice, or tips would be greatly appreciated. This seems like a great forum!!!