By Chris Gandy

One of the more uncomfortable experiences a CEO can have is when an employee asks for an advance to tide them through a personal financial crisis.

It didn’t happen to me too often but when it did the situation was quite icky.

You are not human if you don’t have some level of empathy with the person making the request. “But for the grace of God go I” thoughts flash through your brain. And your knees tend to go weaker when it is a long standing faithful employee that is a blubbering mess in front of you. They then deliver the knockout punch by saying that their only other alternative is to resign and use their accumulated holiday pay to settle their debts. Great, one of your best employees is about to walk all because you decided to play Mr Scrooge!

The situation is even trickier for the CEO of a not for profit. I can recall in my corporate days somewhat callously telling a young apprentice…”We are not a charity you know”. Much more difficult to get away with that one when you are a charity. Fundamentally, your organisation is there to help others so shouldn’t charity start at home?

Eventually you compose yourself, emotions subside and you start thinking rational thoughts.

• What if the loan isn’t paid back?
• Hang on, didn’t we knock back a similar request a year or so ago? Is there an equity question here?
• Are we going to open the flood gates and have any number of employees making similar requests?
• Are we supporting, if not encouraging, poor money management behaviour?

For me it was this last thought that most influenced my response and it was shaped by the following experience.

Quite some years ago a good and loyal employee presented me with the dilemma described above. Initially, we agreed to a cash advance. The money was paid back on time.  Eight months later, another scene and another advance. It was also repaid. Twelve months later a third request.  That was it. Enough was enough. We were treating the symptoms and not the problem. I called the employee’s bluff to resign and told him that the organisation’s help on this occasion would be in the form of a Financial Counsellor.

The employee reluctantly accepted the help and as far as I know is still with the organisation.

I learnt that as a Leader in the organisation perhaps the most constructive assistance you can give an employee in financial difficulties is genuine empathy and support in dealing with the root cause. If they wish to divulge take an interest in their progress and offer further encouragement.

If you are still comfortable to go down the loan route in particular circumstances, can I offer the following advice: Have a firm written policy. Promulgate it widely. And stick to it rigidly.

Remember though your organisation is not a bank and a loan is doing nothing about the cause.

Tell us how you have successfully dealt with similar requests.

About Chris: Chris Gandy is the Principal and Founder of Cause and Effective , a group that aims to help leaders of cause-based organisations to deliver on their mission by providing insightful practical information and linking them with affordable subject matter experts. You can contact Chris here