Shop Operations: Setting Up a P&L Statement for Your Auto Body Shop
Distinguishing between what’s illegal and what’s unethical as well as following good retention practices can help guide you through the aggressive recruiting tactics in the collision industry today.
I approached the topic of recruiting (poaching, stealing, wooing) a competitor’s employees at the behest of a client, an owner and operator of a successful MSO and one of the most honorable men in the industry. He expressed frustration with aggressive recruiting tactics that made it hard for business owners who want to do the right thing and still stay competitive.
When I first entered the professional workforce as a claims adjuster, I was frequently contacted by recruiters or “headhunters” feeling me out about jumping ship to work at another company. The concept of a sanctioned business (recruiting) that could eviscerate a workplace by stealing key people was foreign to me. My dad was a civil servant in an environment where county jobs were posted as a matter of course, and seniority trumped talent in the pursuit of greater opportunity.
What’s amusing to me as I recall my own early experience is the fact that my co-workers and I all worked in cubicles close to one another, but still believed that our clipped conversations with recruiters, which mostly consisted of yes and no responses, could not be decoded. Of course, we were all getting the calls. Frequently, the lure was more money (not that much more) and other squishier intangibles like working conditions, management support and growth opportunities. For the record, I was never recruited – I stayed with my employer until I graduated law school, much of which they paid for.
Later, when I ran a law firm, I frequently engaged recruiters to find legal secretaries. I was aware that anyone I might hire was a vital right-hand person to some hapless lawyer who would suffer miserably, if only temporarily, if I hired away the secretary.
In our industry, in large part due to the aging of technicians and our inability to convince young people (and their parents and their school counselors) that this a great industry to be in, recruiting has become fever-pitched. Not only are businesses deploying headhunters, but larger companies have created staff recruiter positions. Companies have also instituted Employee Referral Programs (EFPs) offering referral fees to incentivize existing employees to bring new recruits to the business. Stories abound about signing bonuses and move packages previously unheard of in our industry, as well as unsavory practices like employees inside of competing businesses conspiring to entice employees to change jobs between their two businesses, all for the purpose of fattening their own referral fees.
To be clear, the act of recruiting is totally legal – even if the ethics are dubious – as is the act of an employee responding to a solicitation for employment. (The 13th Amendment of the U.S. Constitution guaranteed this with the abolishment of slavery and involuntary servitude). Bottom line: every employee is a free agent, absent a contractual exception, such as a non-compete agreement, which, in many instances, may not be legally enforceable.
In fact, any attempts to restrict employees from exploring job opportunities are unethical and may even be illegal. Consider the so-called “gentlemen’s agreements,” actually a variation on the non-solicitation agreement, wherein business owners in a given market agree to not hire each other’s employees. In some instances, they may even give the searching employee’s employer a friendly “heads up” call just to let them know that they may have an unhappy employee who is looking. These “informal” agreements (to which the employee is not privy) where employers collude to restrict employment opportunities may themselves be legally actionable as they restrict competition to the detriment of effected employees.
So where’s the recruiting dilemma? It depends on which side of the equation you’re on and whether you lost or gained a great employee. And how the process took place. The best you can hope for is your own ethical approach to recruiting (whether using a third-party recruiter or internal resources), adequate protection of your company’s sensitive information and creating a workplace people don’t want to leave.
Whether you use a third-party recruiter or an internal “talent scout,” there are practices that, although not legally actionable, can still present a moral hazard by tarnishing reputations and fomenting distrust. For instance, any job interview set up for the sole purpose of grilling an applicant about confidential information on his or her current employer without any intent to actually hire the applicant is unethical.
Whether broached by you or an applicant, think twice about any potential employee who suggests in an interview that they can help you raid their current employer of their best employees. Starting a new employee-employer relationship as co-conspirators to poach from another business can backfire on the employee, who may gain a bad reputation in your workplace. Your aggressive efforts can also affect your reputation amongst your competitors. And remember, any potential new employee who too gleefully offers to gut a current or past employer could just as easily make you their next victim.
Protecting Your Company
Under certain circumstances, non-compete agreements and negotiated non-solicitation agreements (prohibiting solicitation of employees after someone has left the company) may be beneficial. Keep in mind, however, that the effectiveness of these preemptive tools is very fact-specific and varies under the laws of each state.
At very last, it is good business practice to have an employee handbook with a signed acknowledgement requirement that restricts use or distribution of confidential information or trade secrets when people leave, although again, what is deemed “confidential information” is subject to interpretation. For instance, customer lists, pricing lists, profit and loss data, and workflow processes may be deemed confidential and/or trade secrets. Factors that may determine whether such information is protected from disclosure include the extent to which the information is known outside the business, the ease with which the information can be duplicated or obtained from other sources, and the extent to which the employer actually guarded the secrecy of the information.
Also, when hiring a new employee, make sure to ask about whether the employee is subject to any restrictive covenants (e.g. non-compete, non-solicitation, confidentiality or trade secret). While these agreements are frequently unenforceable and far less common amongst lower-level, non-managerial employees, some employers still require that new hires sign off on them for their perceived deterrent effect. Besides, it’s easier to ask up front than have to respond to a letter from a lawyer soon after welcoming a new employee.
Focus on Retention
By now, you’ve no doubt figured out that the best offense is a good defense and that you should be focusing on retention and making your company a place people don’t want to leave. This means regularly checking in with employees to ask how they feel about their work. Don’t wait for them to come to you or worse, wait until they give notice of their intent to leave.
The top three reasons people leave a job are: compensation (money), they don’t like their boss (management), and they don’t like the work they’re doing (meaning). The beauty is that all three of these reasons are totally within your control.
It’s important to find out if your wages are competitive. That doesn’t always mean top of the market, but on the high side of the middle is a good place to be.
Very often, what it takes to keep an employee happy is minimal. Does that mean you feed the beast every time the beast says, “I want more?” Absolutely not. But if the employee is valuable to you, especially if you’re under market, it may be worthwhile to give the employee a monetary bump, or perhaps come up with a plan to justify the raise such as assigning additional responsibilities to the employee.
You may be the boss or you may employ the boss. In either event, look for patterns of feedback relative to your/their management style. Without realizing it, the work environment may have become very negative with little or no positive feedback or celebrations of wins. It’s very easy for managers to become so focused on the bottom line that they fail to look at the team that makes things happen. Today’s workers are looking at more than money. They want to feel good about where they work and who they work for.
People also want to feel good about what they do. If someone is wavering because the work they do isn’t meaningful or challenging or helping them build a skill base for advancement, that’s worth exploring. Are the tasks the employee is working on boring or repetitive? Is there an opportunity to mix-up the tasks or move the employee to a new job, whether immediately or down the road with additional training or education? These are all things to consider. If you have a dedicated employee with a good work ethic who needs to be challenged, wouldn’t you want to know it?
The very act of “checking in” with employees is a valuable component of an employee retention program. Failing to do so is like whistling past the graveyard. If a bad situation exists or is getting worse, ignoring it won’t make it go away. And for goodness sake, if you do lose them, conduct exit interviews ato learn precisely why they wanted to leave.
Goodbye, Job for Life
In the beginning of this article, I mentioned that I started my professional career as a claims adjuster and was often contacted by headhunters but chose to stay with my employer who paid for much of my legal education. (Specifically, they paid for classes like torts and contracts that applied to my work, but not classes like constitutional law and criminal law, which had little to no relevance to my work).
Since I ended up leaving the company to begin my next career as a lawyer, some may read that as an “I told you so” – you invest in them and then they leave you. But I would submit that something quite different actually occurred. Even though a law student is the most insufferable form of legal know-it-all on the planet, for the four years I went to law school at night and on weekends, my employer directly benefited from my ever-growing knowledge of the law, which enabled me to handle more complex matters for them. Plus, in a work environment where job-hopping was fairly common, I was loyal and hard-working. And after I left and began working with many people in the insurance industry, I was a walking billboard for the company.
The days of a “job for life” are long gone. Employers can’t promise them, and employees don’t expect them. The best we can hope for is a long and mutually beneficial relationship where both employer and employee feel they’re getting at least as much as they give.