Up Your Business is an exclusive GEARS Magazine feature in which I share stories, insights, and reflections about real business and life challenges. The names of individuals and businesses in the following story have been changed to honor their request to remain anonymous.
A few years ago, I attended Bob Cooper’s Expo presentation about hiring superstars. One of Bob’s points was that employees quit before they actually leave. As Bob put it, “First the employee’s heart goes and, finally, the toolbox.” I remember saying to myself, “Well said, Bob!”
Have you ever had an employee who quit but didn’t leave? To make matters worse, what if you couldn’t fire him? You’re probably wondering how an owner could find himself in such a pickle, but it does happen and it happens more often than you might think. Here’s one such case from my archives:
Over the years I’ve consulted with hundreds of shop owners. The owners described the symptoms they wanted me to help them fix. But the cause had to be eradicated as well, or the problems would recur and continue to have a significant negative impact on the overall performance of the team and the business.
In this case, my client, Bob, described the circumstances of his business, Bob’s Transmissions, as being so far out of whack that the situation was most likely hopeless.
He claimed that, in the last two years, the business had gone from thriving and clicking on all cylinders to what he described as crashed and about to burn. He went on to say that bringing me in was his last resort before throwing in the towel. I recall thinking, “Wow; what a starting point!”
I have to confess, as Bob and I progressed through the pre-consultation questionnaire, and as Bob proceeded to detail the things that were going on in his business, I wasn’t feeling all that positive either.
Bob’s overview on the phone included high employee turnover, low morale, sagging profits that had spun into consistent losses, increasing customer complaints, low productivity, and higher-than-normal comebacks. He was understandably frustrated and I could see why he felt things were hopeless.
Being very curious about how a business could spiral into such a mess in just two years, and not wanting to abandon him in the middle of this storm, I agreed to go to Bob’s shop and do a “ground-zero analysis” of the business. I told him the analysis would include a physical inspection of the premises, confidential interviews with employees, a financial/profitability review, and a sales and productivity evaluation.
I warned him that he might not like the results, and that I wouldn’t pull any punches… I’d give him my honest opinions and recommendations.
When I arrived at Bob’s shop, the first thing I did was have a brief team meeting with all the employees, Bob, and me. So they wouldn’t be left to wonder what I was up to, I explained that I’d be inspecting the facilities and interviewing each of them to get their ideas on how to improve the company’s overall performance and their work environment.
I started by saying the following: “I believe that all employees want be part of a great company. But the biggest enemy of great is good. Too many companies and their teams settle for good when great is within reach.
“My objective is to identify the things that separate Bob’s and you from greatness. I’ve helped hundreds of companies and their teams transform from good businesses to great businesses and there’s no reason you can’t do the same.
“I’m going to invite each of you to sit down with me privately to discuss how things are going for you. I want to emphasize that whatever you tell me will be strictly confidential between you and me. While nothing is off limits, I’m primarily looking for things that can improve your job satisfaction, your work environment, and overall company performance.
“I want to identify problem areas with the facilities and within the team, so I can make recommendations on how to fix them. My goal is to help you transform this company and your work environment into a place that makes you proud and happy.
“To do this, it’s essential that you be brutally honest and brutally accurate with what you share with me. Again, I promise to keep the things we discuss absolutely confidential.”
As is commonly the case in automotive shops that are dealing with with low morale and low profits, the facilities were unacceptably dirty, unsafe, and disorderly. Much of the equipment was in disrepair and suffering from neglect.
In addition, there was a small fortune in unreturned cores and new parts that had been mistakenly ordered and never returned for credit. Small parts inventories like nut-and-bolt bins, gaskets, filters, seals, etc., were totally disorganized.
The rebuilder’s area was like a cave, with partially disassembled units in boxes stashed in the corners and sitting in piles on workbenches, rendering the benches unusable.
The facilities were simply oppressive. It was hard to say whether the dirty facilities caused low employee morale or vice versa.
For the sake of time and space, here’s a composite of the comments I received from the employee interviews:
- The R&R technicians and the rebuilder all reported that they were totally frustrated by the lack of properly functioning equipment and shop tools. They said that, even though they reported broken and unsafe equipment, nothing was being done to fix anything. They asserted that Bob was too cheap to fix anything.
- Regarding obstacles to productivity, they said they spent a lot of time waiting for the right parts to complete jobs. Often, when parts came in, they were the wrong ones. They blamed Bob for making the service adviser buy the cheapest parts he could find.
- The three R&R techs felt that the rebuilder and the service adviser were both great guys and were doing the best they could under the circumstances. They felt that Bob blamed them for anything that went wrong, and if the service adviser and rebuilder didn’t protect them, they’d be fired.
- Privately all three R&R technicians and the rebuilder told me they’d go to another shop if they got an offer.
- The service adviser said he felt he was fighting a losing battle. He wanted nothing but the best for the shop, but Bob seemed to be bent on sabotaging his efforts.
- He said that Bob would come and go without letting him know when or if he’d be back. Some days Bob wouldn’t show up until late in the morning or would call to say he wouldn’t be in at all.
- Bob made him buy the cheapest parts he could find, even if it took extra time to get them. And Bob insisted on taking care of the inventory and return of parts. Addressing the disorganized inventory and pile of unreturned cores and new parts, the service adviser gestured toward the shop area and said, “You probably noticed how well that’s working.”
- He felt that Bob interfered with the sales process, often interrupting sales and making promises that couldn’t be kept, just to save jobs. Then Bob would leave him to deal with the customer heat.
- He said Bob had also developed a short fuse with customers in general, so he dreaded whenever Bob got involved in a comeback or customer complaint.
- He admitted that he was actually beginning to feel fearful about selling jobs because it was just going to turn into a new problem.
- The consensus of the team was that the service adviser and rebuilder cared more about the business than Bob did.
- They felt Bob was the problem and, if he’d just get out of the way and let the service adviser and rebuilder run the business, things would improve dramatically for the business, for the team, and for Bob.
- They feared for their jobs. They felt that Bob had given up on the business and was only buying time to either sell it or close it.
He quit but didn’t leave, and he couldn’t be fired.
DIAGNOSIS AND PRESCRIPTION
To cut to the chase, my diagnosis was consistent with that of the team: Bob needed to make some changes if he really wanted to see his business thrive again. He either needed to start paying attention to the business and acting like an interested owner with a plan for success, or he needed to find someone who would.
When I met with Bob, to get his attention, I told him that I believed he had a capable sales and production team, but he needed to fire his general manager or he was going to lose his entire team and, most likely, his business. I added that it appeared as though the general manager had already quit and just hadn’t left yet.
Bob more or less got my drift right away, but he wanted to confirm with a rhetorical question, “I don’t actually have a general manager, and since my service adviser isn’t actually a GM, I’m guessing you’re referring to me, right?”
I smiled and replied that he was correct and suggested that, as I saw it, because he owned the building and land free and clear, he had four reasonable alternatives:
- He could simply close the business and liquidate the physical assets. Then he could sell or lease the building and land.
- He could put the business up for sale and get as much as possible for a business in its present, diminished condition. He could sell just the business and become the landlord, or sell everything, real estate and all.
- He could lease the business as an operating transmission or auto repair shop. He might not have to look any further than his current service adviser or rebuilder to find a taker.
- We could design a strategic remediation and ongoing operation plan to revitalize the business and restore it to the success it once enjoyed. Bob could be the point man, leading the implementation and managing the process, but that would require a major change of attitude. Or he could hire a general manager to do it with Bob stepping aside and assuming some other supportive role or no role at all.
With this scenario, once the business began thriving again, he could still consider other options like selling or leasing it, but he’d be in a better bargaining position to get top dollar.
WHAT BOB DID
Bob went with alternative number 4. We started by designing a strategic remediation and operation plan, beginning with a $10,000 investment for cleanup, renovations, and repairs. What’s interesting is that he made back 20% of that investment immediately, just by selling old scrap and returning cores and unused parts.
Next, he hired a general manager who did a great job of implementing the plan and restoring Bob’s Transmissions to its former glory.
Bob learned to let go of control and limited his direct involvement to maintaining financial records and creating business reports to help the general manager. The shop never had an outside sales program, so Bob took on that role as well, calling on shops and businesses about 20 hours a week.
After about three years of continuous improvement, the rebuilder and the new general manager purchased the company for top dollar, and they purchased the building from Bob on a land contract. The income from the land sale provides Bob with added income as he enjoys his retirement today.
WHAT CAN WE LEARN FROM THIS STORY?
The key lesson in this story is that it isn’t just employees that quit but don’t leave. Even for owners, the heart goes first and then the toolbox.
You can see some great examples of this type of business failure on the TV show Bar Rescue , which airs on Spike TV; a show I was introduced to by GEARS Senior Editor Steve Bodofsky. It’s an interesting look at some business owners who’ve given up on their businesses without actually closing their doors. Check it out when you have the time.
Share Your Stories
If you’ve personally experienced a weird or unusual customer dispute and wouldn’t mind sharing it to help your industry, please contact me. You just tell me the story and I’ll do all the heavy lifting to write it.
We can make it an article about you, or you may remain anonymous. The main thing is we want to share stories that will help others avoid similar problems. Call me at 480-773-3131 or email me at email@example.com.
About the Author
Thom Tschetter has served our industry for nearly four decades as a management and sales educator. He owned a chain of award-winning transmission centers in Washington State for over 25 years.
He calls on over 15 years of experience as a certified arbitrator for topics for this feature column.
Thom is always eager to help members of our industry and continues to be proactive in pursuing ways to improve your business and your life.