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Employee Side Work8/18/16
I have a shop with four employees. All are under the age of 24 and started with no experience. My most experienced employee (who has been with me for 5 years) is a good builder and a good installer. I have considered him a trustworthy person throughout his employment and he has never (until today) shown me to be wrong.
Recently, he asked if he could do some side work as a handyman and use some of the shop tools (jig saw, drills, etc. - not CNC or bander) to aide him. I told him he could do so as long as he allow his side work to interfere with what he was doing at the shop. I'ma bit libertarian in that regard- I don't believe in trying to control what my employees do in their off hours. I also felt it may help sharpen and expand some of his skills while not on my dime.
Today, I learned that he is posting ads using pictures of our work and stating in these ads that these are projects "built & installed" by him. When I confronted him about this he told me that if he got one of these jobs he planned to ask me to rent some shop time.
I would like to know what you would do in this situation and if / how you believe this violates the trust relationship.
Feel free to ask follow up questions.
Fire him, today.
He'd be an awfully busy guy if he had actually built and installed the entire output of a 5-man CNC shop.
No doubt he built and/or installed some part of it, but his ad claims tell you a couple of things.
1) He's a liar. 2) He's willing to appropriate the work of your shop and your investment in your shop for his own benefit.
"Renting time" rings hollow after being caught lying and essentially trying to steal.
I'd have fired him on the spot -- I won't tolerate a liar in any business context.
But my opinion isn't important, the question for you may be how good is your #2 guy?
Bearing in mind that #2 through #4 may have known what he was up to. You might want to check that aspect out. People doing stupid things tend not to be able to keep their mouths shut.
If he's of great value to you he might be worth a second chance, but remember that every time he tells you something -- anything -- you now have some reason to doubt it.
Over 30 years of employing people has demonstrated that a very few of them will try to steal anything that isn't nailed down -- reputation, trade secrets, money, customers, merchandise -- the list is endless.
I've had enough experience with employee dishonesty in different contexts and businesses to have arrived at the conclusion that the first time it happens also needs to be the last possible time it can happen.
Which is why I always let the miscreants go on down the dusty trail to vex their next employer.
He might just be in line to very quickly learn all the lessons you did which took years on how to builds a business, document what he is doing cause what you learn next may just be the reason you show him the door,
then you may be paying unemployment while he builds his new business. on what would have been your client.
Been there. One of the better employees started out with cabinets for his house. I encourage doing "homework" as a benefit and a way to improve their homes and learn something about what it takes to design, draw, plan etc. Heck, I will often give them the materials.
So then it was cabinets for his mom. I said it was all ok as long as he doesn't make anything near what we make, and keep a wide berth away from that, please.
Then it was cabinets for a friend, and that is when I said he should think about making a choice - no side work or no job. He said I could not force him to choose - unfair, etc.
Now, the way I let him go matters. All positive. I called him into the office and said I wanted to support him in this new direction he has found and give him all the time he needs to do the side projects. I said I enjoyed working with him here and hoped we would have a chance to work together in the future. I gave him a final paycheck with proper vacation time earned and paid, as well as paid for the day.
It took him a while to recover. He walked out, leaving tools, etc behind. Came back the next day and said he had probably spoke too soon..... I replied that he would get over it, we all do it sometime or another.
As for the rest of the story, I replaced him with a guy for the same (starting) money but was twice the productive worker. This guy set a new pace for the entire shop and we all made more money with him in the shop. We really gained a lot by losing the one guy.
Economics 101- You're absolutely correct. However, there is quite a ways for #2 to catch up to be at the skill level of #1. Trying to find a replacement seems like a daunting task. I have almost given up on finding skilled workers and instead opted to hire young and spend time teaching (which I enjoy doing). It's hard to see 5 years of investment walk out the door.
James- Advice taken. He has received a written warning that states he will be terminated should he appropriate any shop resources for his own personal benefit outside of his employment here.
David- That is EXACTLY how this started. It's encouraging to hear that it turned out as net positive- probably for him as well (he probably grew up a tiny bit).
I know the most straight forward course of action would have been to terminate him but a couple of factors come into play (not saying they should- just that they do):
There are so many issues with side work, hurt working alone, working long hours so not productive when working at regular job, implications to customers that they are more than they say.
We had someone give a business card to a side job, take a deposit, they called the office looking for their job, irate with us.
For a bunch of different problems over the years its basically a policy that we have to approve prior to any work, and no one works alone.
Our handbook also addresses who owns what and has a trade secret clause ( we sign a lot of non disclosure agreements to work on projects) but basically we one the employees work product so they can't use "pictures" of our work as their own or think they own it.
All that said we will give "honey do" projects that come in the door to employees to do on their own as a side job from time to time, it keeps a customer happy and keeps junk jobs out of the shop.
Any person with talent and drive that you hire will feel the need to go out on their own. These qualities that you strive for in a good employee are the same qualities that make a good business person.
If he's doing good work for you and his jobs aren't interfering with his work on your jobs then you might want to accept that.
Him taking your pics and using him to sell his work is a bit shady. But if the projects that he built for you and installed for you are the same ones he's using in those pictures then technically he did do the work. If there are lots of others in the mix then he didn't do the work.
You have two options. Both of which will lead you to likely losing him as an employee.
Option 1 is to fire him now. Just be done with him. You'll have to replace him and train the new person. Your production might be hurt some but you will recover.
Option 2 is to reprimand him, put a warning in his file and then make financial arrangements governed by rules you both agree on to let him use your machinery. You'll keep him as an employee and he will feel better about it. You should both be able to clear the air and deal with the arrangement you came up with together.
Eventually he will leave the company as his side work grows into a real business.
How many of the other crew members are working with him on the side? Just curious to see how deep the problem is. If he is successful, will he take them as well when he leaves?
Friendships are one thing. I am friendly to my crew, but sometimes they take that as they can get away with things. I am still the one signing the checks. It is my responsibility to my business and my family to protect my business. Sorry, but that has to come before employee-employer friendships.
He also crossed the line of friendships to taking advantage of you. Telling you that he would approach you about "renting shop time" is highly suspicious. I would say he got caught and is now trying to cover for himself. Essentially I think he lied to you.
I am in the "fire him now" camp. Find and keep copies of all the "advertisements" you can find so, when he files for unemployment, you have documentation for just termination. (Remember, I am not a lawyer.) Also, the unemployment folks might be interested to know that he might be running a business while he is trying to collect benefits. That's just not right.
Terminating someone who is untruthful to the owner may have results that will surprise you. The other shop members will definitely observe what just happened. They may be very happy that someone who is trying to rip off their boss got caught and is gone. Morale may actually improve. And, it may keep others from trying to rip you off in other ways.
You may want to reconsider letting anyone do any side jobs to prevent a re-occurrence. You may want to put this in writing in the employee handbook. If you do not have one, this may be a good reason/time to make one.
It's interesting that it hasn't been pointed out how much easier this might be if the guy had just been honest in the first place.
Come to you and said "I want to use these pictures of our work to try to sell some jobs (probably small, but maybe not) and then use the shop to produce them."
You could then have said something like "Great! You want to be a salesman for us, too! Wonderful! You're a great employee, I wish I had more like you! I'll be happy to pay you X% of the gross job (or whatever may be appropriate) when the job is complete."
See where this is going?
"Gosh, no, I don't want to sell jobs for the shop, I just want to produce this stuff myself after-hours at my (much lower) price, not your usual shop-rates. I'm just trying to make a few bucks on the side."
"Well, that's nice, but you're using pictures of my shop's work and my CNC and shop to produce it and I'm not going to be undercut by my own shop.
You wanna do that, you have to either pay for your own shop or rent time elsewhere. And if you do either, you're a competitor and no longer an employee. I'll certainly be happy to pay the appropriate commission on any work you bring in."
All assuming that you're comfortable essentially letting him conduct what amounts to a marketing campaign for you, which is doubtful and probably not a good idea without very close oversight.
May be that he can't generate any work that you care about anyway, which makes it all largely moot.
But, you already know his inclination is to go behind your back. Not good.
I wish you luck in working it out so that at least you're happy with the result.
I will guaranty you this fellow is far more interested in his business than he is in yours. The fact that he is using photos of the work your shop sold & produced just means that he intends to launch his own shop and go into direct competition with you. As soon as one of the bigger jobs comes through he will either partner up with another shop or find a way to create his own. He will eventually recruit his crew from some of his co-workers in your shop.
You should congratulate him for his ambition and let him know how much you appreciate what he has done for you then you should give him his final check, your best wishes and send him on his way.
He is already out the door mentally. You're not going to lose much that isn't already gone.
I'm blown away by all the guys who would simply fire him based on the information given.
He's under the age of 24!! I don't know about you but I did some pretty stupid stuff when I was under 24 and am thankful for having people in my life that showed me what I did wrong and gave me a second chance.
Whilst I'm not condoning at all what he did I do think he is worthy of redemption. He probably worked on those things that he sent pictures of and made a poor choice in advertising with them as his own work. It wasn't totally clear how you came to find out and the nature of HOW he advertised that work. Perhaps you could elaborate on this.
He is ambitious and that is great. I have always felt that the guys (like most us here) who want to run their own shop are always going to AT LEAST NEED to try that. No amount of bribing, pay increases, threats or whatever you can think of will extinguish the burning desire to forge your own path and run your own show.
So I think you need to have a tough conversation with him and ask him what his 5 year plan is. If he has that desire then don't stand in the way, he is going to leave some day no matter what. Talk about an exit strategy that will allow you to prepare for his departure and give him the support that he needs while building up his business. Maybe he could give you three months to prepare and then 3 days a week for a few months, then 2 days ect. ect. Mind you if he drops his bundle in this period then it would be time to tell him to shape up or ship out.
Otherwise you can start talking about his progression in the company. Where he want's to go, where you see him going, his strengths, his weaknesses.
My policy on side jobs as follows.
If managed well it gives your guys a great insight and appreciation of what you go through on a day to day basis.
Chipbored- My employee started asking me questions about a specific job we had done (How much did the client pay? How much did it cost me? etc.) So I asked him why he was so inquisitive about this particular job. He replied, "Well I know a lady that wants the EXACT same thing." I asked how she had seen it and from where he knew her and he hesitated. That's when I knew I had to drill a bit deeper. Ultimately, he's the one who told me about me about this but he did not intend to until I pressed the issue.
Borad- Why does his location have any bearing on the worthiness of his opinion?
"Better to remain silent and be thought a fool than to speak out and remove all doubt."
His choice, either the side work goes or he goes. Business is tough enough without worry about shop tools, what he says to others about your company, shop rental, etc.
We had a situation once in our shop where, as Chipboard recommends, we negotiated an exit strategy for one of our workers.
We agreed that he would continue working for a specified time until he got a different program put together. That gave him some funding to work with and supposedly helped us with the transition on our part.
The problem was that he had already checked out mentally. His work started to suffer and his demeanor started to cause problems with his co-workers. They eventually came to me to ask if we could scoot this process along. So I did.
He promptly ended up at the state unemployment office and collectively they concluded I had violated our employment agreement. He ended up drawing unemployment for a full year and I paid increased employment taxes for an additional three years as a result.
When he has checked out mentally he has already checked out. Time now to help him develop conviction for his new game plan.
hmmmmmm, that does sound pretty shady.
I'm sorry to hear your number 1 has gone that way. Cabmaker has a very valid point about the detrimental effect a bad egg can have on the whole team.
I guess my point about being under 24 and doing silly things could go both ways considering the whole crew is under 24. Even if he took one guy with him and they went and did a miserable job of running a business it's still going to hurt you.
How is the situation going shop owner?
I'm not terribly worried about him starting his own business and taking guys with him. He only has a basic tool set and I happen to know that he couldn't afford much these days due to some debt he's gotten himself into. I think he knows that that would be a trip into disasterland as well.
He has received a written warning and we have talked pretty extensively about the issue. He knows that another instance of this type of behavior will mean termination.
In the mean time, I have begun documenting our companies policies. My guys have now all received an Employee Handbook that addresses all sorts of issues such as this. Had I been smarter and more diligent before this I believe I might have prevented this from happening in the first place by being more clear.
I have also begun working on learning a bit more about best hiring practices, interviewing, where to find more qualified applicants, etc. My hiring strategy before this wasn't much of a strategy at all. When we grew to be short handed, I simply found someone that I knew who was looking for work, hired him as the bottom-of-the-totem-pole guy and moved the others up a notch without much consideration.
I have found that although the typical Help Wanted ad on Craigslist is mostly fruitless (hundreds of replies with maybe a single okay one mixed in) there are other sites like Indeed that seem to attract the more competent.
Your employee is going in to business on your nickel and reputation.
Ray, heard one of your home inspectors is performing side inspections on your dime and reputation. He's telling prospective clients how outrageous your prices are and he can do it for less. Wait till he approves a recent boiler installation only to have clients move into their house and have the boiler explode, rocket through the roof, careen of the neighbors solar panels before it comes to a stop plunging through and destroying the illegal meth lab in the back yard causing $875,000 in damage... then see what happens.