Employee loans pay dividends

    Ms. Ferguson, my loyal office manager, was on the intercom. The tone of her voice, dripping with intrigue, told me that she knew something I did not.
    "Are you busy?" she asked. "Wayne wanted to know if he could see you for a few minutes."
    Wayne was a warehouse employee who on the average spoke 12 words per year. He was a very good worker, but communication didnít interest him. And now he wanted a private meeting with me.
    It could mean only one of two things. Either he wanted to personally tell me he was quitting, which in Wayneís case was very unlikely, or else he needed money, which in Wayneís case was very likely.
    The Bank of Hoppe was about to open its doors once again. "Send him in," I said, sighing.
    If I think about it long enough and hard enough, Iím happy to give long-term employees interest-free loans to help get them through their most recent financial crisis. At one time or another, at least half of the 45 employees in my company have borrowed from me and then repaid the loan through deductions from their paychecks.
    I have found that itís not only a relatively inexpensive way to increase employee loyalty and morale but also an excellent avenue for getting my hands on the latest juicy gossip.
    Word seems to get around that thereís easy money to be had if you can come up with a decent sob story. I simply ask the employee why they need to borrow any of the scarce funds that the company has available to avoid entering bankruptcy proceedings. To date, no one has answered "none of your business."
    On the contrary, I get stories that would be too bizarre for daytime soap operas. Iíve often wondered if a group of employees get together every few months just to concoct some new tales.
    "Yeah, thatís a good one, Sheila," the leader will say. "Thatís worth at least $800. Make sure you find a really sleazy guy to play your boyfriend and then try it on him in a few weeks. Weíve got to give him time to recover form Fredís story. How much did you get again, Fred?"
    "$1,200!," Fred will say. "He even bought the part about my drug-crazed roommate stealing my fatherís car and smashing it up."
    "Good work, Fred. Close to a record. Anyone else?"
    I doubt Wayne made the meeting. His story was without doubt one of the weakest Iíd ever heard. Iím a guy whoís used to loaning money to pay for dead grandmothers to be flown back to their homeland for burial (a common request). I expected something of equal emotional distress from Wayne.
    But no, Wayne told me he had bought a car and couldnít make his first two payments.
    "Wayne, thatís pathetic," I cried. "You are asking me to loan you money so you can continue driving a car you canít afford?"
    "Itís a really nice car."
    Iíll bet it is, considering it was costing him half his monthly take-home pay. He had apparently convinced a very true (and naÔve) friend to co-sign the note enabling him to make the purchase.
    After giving him a lecture about the advantages of having enough money for things like food or a place to sleep, I gave him the loan. Thereís no way heís going to be able to keep the car, but thereís a good chance heíll land a couple of dates in the time before heís forced to sell it or itís repossessed.
    "Thank you," said Wayne. "Youíve saved my life."
    I think he was exaggerating, but then again, friends who co-sign become much less friendly if the car is repossessed.
    As Wayne happily left, ignorant of the future despite my warnings, I reflected on the Bank of Hoppeís loan portfolio.
    Over the years, I have made countless loans to employees. All were repaid except two. In both cases the employee was let go and the unpaid loan became part of the severance package. So Iím claiming 100 percent collection rate.
    Compare that to my few loans to friends, in which my collection rate is hovering around 2 percent.
    Thatís why I gave the loan to Wayne, despite his weak sob story. He wonít ask again until he pays this one back, and pay it back he will. And when the last amount has been deducted from his paycheck, there will be a mutual respect and sense of loyalty between us.


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