Critical Juncture

During periods of economic downturn and budget cutting, building service contractors may fixate on their bottom line. Extreme number crunching is understandable, but it often comes at the expense of other important business matters. One key issue — managing business relations — often gets back-burnered and, unfortunately, the relationship usually ends up getting burned.

Making sure employee, vendor and client relationships run smoothly also can pay off and has its own trickle-down effect on most account ledgers. For example, a high level of employee morale often drives service quality; a collaborative distributor might provide value-added services that boost sales or improve efficiency; and satisfied customers might willingly endorse the BSC’s quality of work.

On the other hand, when business relationships break down, so can the level of business success. If a relationship is worth saving, BSCs need to know how to put the pieces back together. But, if it’s time for the relationship to end, it’s equally important for contractors to know the correct way to say goodbye.

The weight of a bad employee
Managing the employee/employer relationship is a challenge unlike other business relationships because one side has more authority over the other. Thus, all the responsibility in finding ways to improve employee performance falls on the employer’s shoulders. Rehabilitating employees can be frustrating, and if disciplinary measures fail and the employee must be fired, contractors need to handle the situation carefully to avoid lawsuits or violent confrontations. And after an old employee is terminated, time and money must be spent to find and train a new employee — a process some building service contractors would rather avoid.

“The employee market is so bad that if someone has some redeemable qualities we keep him because he still may be better than the next hire,” says Dan Draper, president and CEO for Nationwide Janitorial in South Bend, Ind. “We don’t have qualified people waiting in the wings.”

Other BSCs are leery of the termination process because labor laws and unions make it difficult to jettison people from jobs and usually demand a long, painstaking review and arbitration process. Michael Milstein, president of Lewis & Taylor Building Maintenance, a union company in San Francisco, doesn’t fire a lot of employees because doing so makes a difficult situation even worse, he insists.

For example, if the union isn’t satisfied with Milstein’s decision to fire an employee, it will set up a board of adjustments consisting of two union members and two representatives from company management. The four then vote on the decision to keep or fire the employee and if there is a tie, then a formal arbitrator is brought in to make the final decision.

Challenges surrounding employee termination notwithstanding, procrastination in eliminating problem employees is also wrought with drawbacks.

“It is a bigger problem to keep a bad employee,” says Walter Simpson, owner of Simpson Service Co., Carmel, Ind. “You hope to turn them around rather than get rid of them, but it doesn’t work that way.”

“To keep a poor employee and pay a poor employee is demeaning and you may lose good employees who don’t tolerate it,” adds John Kerlish, president of Human Resource Management Associates, Lancaster, Pa. “It hurts morale and could end up hurting the total business.”

When the morale of a company erodes, the quality of work can suffer. Customers may notice the dip in performance and question the value of the services they’re receiving.

Firing is not done overnight
Disciplining and firing an employee should not be a knee-jerk or arbitrary process. Document all disciplinary meetings with the employee and any other attempts made to make sure the employee was treated fairly. The company should consider publishing an employee handbook and outline the termination process in it. Also, consider consulting a lawyer.

For problems such as tardiness or absenteeism, one option for employers is a progressive approach. Progressive discipline is a multi-step method for reprimanding employees and allows ample time to fix problems.

“Progressive discipline not only evaluates our ability to train and manage people, but also the employee’s ability to follow instructions,” says Draper.

Employers can determine the number of steps they feel are necessary to effectively deal with a problem employee. Reprimands are handled verbally and are accompanied by written warnings including deadlines for correcting the problem. Each stage of discipline ultimately leads to a decision to either retain or terminate the employee. The last stage in the progressive process obviously depends on whether or not the discipline itself is enough to justify keeping an employee.

“This method allows reasonable opportunity for an employee to change behavior,” says Kerlish. “The progressive way shows that the conclusion reached was an obvious one.”

Using the progressive-discipline approach helps avoid the potential firing from being more traumatic than it needs to be for the employee and can hopefully eliminate the possibility of confrontations between the employee and employer.

For more serious problems such as theft, violence or time-card manipulation, employers may want to move directly to the termination process. But, don’t fire the employee right away. Suspend him immediately to remove him from the workplace. Employers should allow themselves time to investigate the situation. This “cooling-off” period might eliminate the potential for the employee to damage property, harm other employees or commit other “criminal” acts.

When all issues surrounding the problem are examined, the employer can either allow the employee to come back to work or terminate him.

Regardless of the situation, discipline and firing should be handled personally, rather than by phone or e-mail. The firing should be done in private at the company’s office — and not on the job site.

“[Firing] is not adversarial,” says Draper. “We are not telling them they are a bad person.”

Distributor dilemmas
The relationship between building service contractors and their distributors can be just as challenging to manage as their relationships with employees. BSCs ideally get more than just products from their distributors; value-added services such as training sessions and pertinent product information can provide a competitive edge that the products alone can’t provide.

Many contractors have multiple vendors. Some building service contractors spread their business evenly across all of their vendors while others utilize one primary supplier and work with others for backup or specialty services.

Ending a BSC/distributor relationship can get tricky when it is based on issues other than pricing. If costs are the main concern, then contractors can ask if a price adjustment is possible or they can switch to a distributor with better prices. But if collaboration is more important, then BSCs need a distributor that provides value-added services that help their business grow. The latter type of partnership may be harder to measure with tangible figures, but may be just as important to salvage as the relationship based solely on product price.

Contractors should invite a couple of people from the supply firm to spend the day talking about customer problems and ways to fix them. These brainstorming sessions help move the relationship away from a buy-and-sell mentality, says Mark Dancer, vice president of Pembroke Consulting in Philadelphia.

“If you’re interested in developing a relationship, you owe it to the relationship to communicate your frustrations early on and give it a chance to work itself out,” he adds.

Sometimes it is best to determine how a relationship should end before it begins. If you sign contracts with distributors, make sure up front that the termination provisions are well understood, advises Dancer.

BSCs and distributors should decide if either party can terminate the relationship without cause, or if there should be a work-out period to give both sides a chance to air grievances and present possible solutions.

To manage the ongoing business relationship, the contractor and vendor should have agreed-upon performance expectations, says Dancer. For example, if delivery is important, establish lead times and fill rates. If training is important, call for a set number of visits and training demonstrations. These details may not be in the contract, but the contract should allow for corrective action or termination if required.

In the case of an irreparable business relationship, both parties should meet face-to-face and, hopefully, clarify the primary reasons for the need to end the relationship. A contractor might have a need to work with the same distributor again down the road. Severing business relations with strong communication may at least allow both parties to walk away feeling they were treated fairly.

Unruly customers
There are times in business when even customers fail to live up to a win-win business commitment.

“It’s important in business that you need to know when to accept a client and when to ‘quit’ a client,” says Draper.

“Usually, if you have an unreasonable customer, they have you pinched so tight that you aren’t making money,” adds Barbara Whitstone, business development manager for CleanPower in Milwaukee. “That’s not a relationship you want to have.”

In order to find out if it is worth dropping certain clients, contractors should weigh the cost of doing business against the cost of the relationship, says Eric Fraterman, principal for Customer Focus Consulting, Toronto.

Sometimes the cost isn’t always measured in dollars and cents. If a customer is picky and quick to complain or requires an extra amount of labor above and beyond normal business practices, it may not be worth the investment of time and resources. Other factors to weigh include safety concerns, late payments and client treatment of the cleaning staff.

“There are times when an inordinate amount of time spent on a client isn’t worth it,” says Simpson. “Sometimes, you need to let the client go.”

“The energy spent on problem clients could be better spent on someone else, including current accounts, adds Fraterman.”

In any case, as with other business-relationship scenarios, try to solve the problem personally before dissolving the relationship. Have a one-on-one meeting with the client to fully explain the problem and offer suggestions on how to fix the issues.

“Don’t drop them one, two, three,” says Fraterman. “Do everything to remedy the situation. Find the root cause.”

If the situation can be worked out, then the client will more than likely be grateful, he says. Strong communication from vendor to customer will demonstrate commitment and dedication. The big “but,” however, is that the customer has to be open to resolving the BSC’s concerns about the account.

When the decision to end a business relationship is made, don’t stop providing services right away. Instead, give the client time to find a replacement. Show some consideration to prevent damaging the client’s business, says Fraterman.

“It is a matter of protecting your own reputation,” he adds. “You don’t want other clients to hear about bad relations. You don’t want other clients to know you didn’t try everything you could.”

“You don’t want a reputation of being a hothead or less professional,” adds Draper. “We treat everyone with respect as we expect everyone to treat us with respect.”

The best way for building service contractors to avoid the shaky moments in a business relationship is to address any problems early on. Don’t wait until situations get to the point of no return. Voicing concerns from the start can keep a relationship healthy and productive. And healthy, productive business relationships can have a dramatic effect on the company’s bottom line.