Gene Marks: What to do about supply theft, medical-marijuana employeeBy on
Business Practices | Education | Legal
Editor’s note: Repairer Driven News regularly features pieces by prolific national columnist Gene Marks. While despite not being directly related to collision repair, they should still prove valuable to the small-business owners and employees which make up much of the industry. Here’s some advice from Marks’ “Practically Speaking” columns, originally published by Fortune magazine June 20 and July 4, that might be of interest to both. None of this constitutes legal advice — simply the perspective of a business owner — and employers should consult with a qualified attorney to determine proper human relations actions and policies for their own workplace.
By Gene Marks
I’m aware that a few of my employees are bringing home office supplies. To me, this is out-and-out stealing. What do I do?
There is a long, storied history of employees who have stolen office supplies, and you’re going to fool with tradition? You’re not the first business owner to go through this, and you certainly won’t be the last. Taking home a few extra sticky pads isn’t exactly a capital crime. So unless you’ve got someone walking out the door every week with a MacBook or a copy machine, I wouldn’t let it trouble you.
Still, I do recognize that leaking this stuff is an expense and the expense can mount up over the year. And yes, technically, it’s stealing. But there are two simple ways to combat this.
The first step is to lock up your supplies. Find a closet, stick a padlock on the door and give the combination to your office manager or someone else entrusted with the security of the inventory. It may seem draconian, but locking up these supplies will take away any motivation someone may have to walk away with them. You don’t have to make this a formal announcement. Just quietly do it. The less temptation, the better.
Secondly, put someone in charge and have a requisition process. Without adding too much bureaucracy to your business, just come up with a procedure for requesting supplies. It may be a simple knock on the door of the office manager or it may be a requirement to fill out a form. In either case, make the employee go through a step or two to ask for what they need and put someone in charge of doling out the inventory. This now creates a transaction where two people are involved, and unless there’s an office-supply plot to destroy your company, you’ll find that the extra pair of eyes to add a new level of internal control.
I run a privately held company and don’t like anyone to know my business. And that includes my employees. How much financial information should I be sharing with my staff?
I have a client, a roofing company, whose owner believes in full disclosure and transparency. He distributes his company’s sales and profit information monthly to his managers. He posts sales numbers by product lines on a big whiteboard in the employee lunchroom. He talks about how well, or not well, the company is doing. He freely shares the costs of his products and sales prices. He believes that to run a good organization, the entire organization must know the data. And he pays bonuses based on this data. Does this work?
In some ways, it does. His employees do feel more involved. They know their financial goals and what they need to do to achieve them. Their results are more quantifiably measured. They know where they stand among their peers. They’re aware of how well the company is doing and also sensitive to when things aren’t so great. They appreciate the trust given to them by the owner.
But there are also drawbacks. My friend has experienced some resentment, particularly when the company is doing well and people start thinking, “Hey, he’s making a lot of money here, and I deserve more.” He has also suffered when employees leave his company and go to a competitor knowing full well his selling prices and margins.
A few times, he told me there are heated debates about how overhead costs are applied to sales because they reduce margins and their commissions. He’s even been accused of deception — “I don’t think you’re not showing all your profits so you can avoid more bonuses,” one employee once told him.
So what’s the answer? Full disclosure or no disclosure? It’s a compromise. Sharing your full, detailed income statement with your employees is too much information. But sharing sales data is important. And using margin percentages is also helpful so people know how profitable it is to sell a product or provide a service.
Base your bonus calculations on these top-line numbers and avoid disclosing the bottom-line income you’re making as much as possible. You’re not a public company, and there’s no reason for your employees to know just how well (or not well) you’re doing. That’s one of the perks of running your own shop.
Should I be making my key employees sign noncompete agreements?
A long-time salesperson leaves you and goes to work for a competitor. He brings with him all of your customers and pricing information. Suddenly, your competitor is taking away business from you. Catastrophe! So how to solve this problem? A noncompete agreement, right? Maybe.
I have lots of clients that make their employees and contractors sign noncompetes. And I admit my company has a noncompete clause in our agreements with our contractors. But shhh, don’t tell anyone: There’s almost zero chance I would pursue this.
I own a small business, which means, by definition, that my resources are limited. And if my resources are limited it’s a safe assumption that my employees and contractors likely also have limited resources (translation: savings).
So let’s go down this road. A contractor stops working on my job and immediately goes to work for a competitor on a competing job even though he signed a three-year noncompete with me. What am I going to do? Sue him? Do I have the money, time and mental stamina to go through this process with everything else going on? Can I afford a lawyer? And even if I win, does that guy have any money to pay me?
Go after the competing company, you say. Well, my competitor may disavow any knowledge of this noncompete and dig in for a long, protracted fight. Or my competitor may be much bigger with more resources and better lawyers to fight me.
Attorneys will tell you to have a noncompete agreement with your key people. And technically, they’re right. It may provide some form of recourse for you. But in reality, noncompete clauses are triggered by and fought between big companies. For most small businesses, it’s usually not worth the effort.
I was interviewing a prospective employee and she said she has a medical condition (glaucoma) that requires she smoke marijuana. Medical marijuana is legal in our state. But I’m concerned that she would be coming to work under the influence. What do I do?
Tread very carefully. Marijuana is like the wild, wild West. Twenty-five states and the District of Columbia have legalized it in varying degrees, with four states (Alaska, Colorado, Oregon and Washington) allowing recreational use.
Under federal law, it’s still illegal and therefore marijuana use isn’t covered by the Americans With Disabilities Act. That means, if an employee is suspected of being under the influence and tests positive for any drug, including marijuana, he or she could be legally terminated.
Talk to a lawyer, who can give you more specific guidance in this case. You don’t want to get yourself in trouble.
These Q&As were first published in Fortune June 20 and July 4.
Gene Marks is a columnist, author, and small business owner. http://genemarks.com. Gene writes every day on business, politics and public policy for the Washington Post and weekly for Forbes, Inc. Magazine, Entrepreneur and the Huffington Post. Marks has written 5 books on business management, specifically geared towards small and medium-sized companies. His most recent is “The Manufacturer’s Book of Lists.” Nationally, Marks appears on Fox News, MSNBC and CNBC discussing matters affecting the business community. Through his keynotes and breakout sessions, Marks helps business owners, executives and managers understand the political, economic and technological trends that will affect their companies so they can make profitable decisions. Marks owns and operates the Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium-sized businesses. Prior to starting the Marks Group PC, Marks, a Certified Public Accountant, spent nine years in the entrepreneurial services arm of the international consulting firm KPMG in Philadelphia, where he was a senior manager.
“So Your Employees Are Taking Home Office Supplies”
Gene Marks, “Practically Speaking” Q&A in Fortune, June 20, 2016
“Why Non-Compete Agreements Aren’t Worth the Effort”
Gene Marks, “Practically Speaking” Q&A in Fortune, July 4, 2016
Who would steal these stubby pencils from an office? (FotografiaBasica/iStock)
Columnist Gene Marks. (Provided by the Marks Group)