When I was speaking at a contractor’s conference in Sydney, Australia, a question from the audience was what to do about moonlighting, proving that contractors everywhere hate moonlighting. The question is what to do about it.
The reason it’s hard to combat moonlighting is becasue it's the very way many contractors started their businesses. When I asked, at the same conference, for a show of hands of the contractors in the room who started their companies after moonlighting themselves, nearly three out of every four contractors raised their hands. Yikes!
We write policies banning it. We put threatening language into the HR manual and make the techs sign it. Yet moonlighting still happens. Clearly the stick approach fails. Is there a carrot option or two?
I believe moonlighting happens for three reasons:
- Techs really are testing the waters and trying to build up a customer base so they celebrate the proverbial entrepreneurial seizure;
- Techs want extra money and moonlight to get it; or
- Techs are honestly trying to do a favor for a friend or family member.
To stop, or at least reduce moonlighting, we should address the causes.
Techs Want to Start Their Own Business
If a tech is ambitious and truly wants the joys of self-employment, working for a true knucklehead, you will not stop him. Don’t even try. Instead, let all of your techs know that you will help them start a company down the road if they commit to giving you three or more years of good work.
Offering to help a tech get started changes the incentive structure for him. It now pays for him to play it straight and can get you several years of high performance. Meanwhile, you can show him how he won’t be a financial dunderhead when he hangs out a shingle. Teach him how to price. Teach him about overhead. Teach him how to read a financial statement. Teach him about the government reports, the risks and liabilities, and so on. At worst, he will become good competition — and he might even decide it’s not worth it once he fully grasps the downsides of running a business.
If you are still worried about creating competition, limit your offer to technicians who are willing to set up shop outside of your service area. Other options are to finance his start-up for an equity position or to set him up running a branch operation in a nearby community with an equity stake in the branch.
Techs Need More Money
Contracting Business Hall of Fame member Steve Miles likes to say, “If your techs are not the highest paid techs in your market, it’s not their fault.” Steve built a profitable business paying techs so well that they had no reason to moonlight. It was profitable enough to attract a lucrative private equity buyout.
Since moonlighting occurs after-hours, make sure any tech who wants more money can get as much on-call work as he wants. If you price right and your overhead is spread across your standard hours, there’s no overhead left for after-hours work. You can afford to pay double time.
Performance pay is another way to help ambitious technicians make more money. Instead of getting paid for time, they’re paid for production and efficiency.
If your techs are paid well and are still broke every week, it’s probably because they don’t know how to manage their money. They don’t know because no one ever taught them. So teach them.
More and more contracting companies are adding life skills training to their training curriculum. The top of the list is personal financial management. Third-party training courses, like those offered by Dave Ramsey and others, are available to help.
Techs Want to Help Family and Friends
Service techs, by nature, like to help people. This is an admirable trait that makes them better at their jobs. They really aren’t moonlighting when they fix Mom’s furnace or their childhood buddy’s heat pump, but by not banning them from helping, you’re forcing them to moonlight.
Let your techs know that you will allow them to use a company vehicle and parts at cost on a case-by-case basis if they do the work after-hours on their own dime. They aren’t making money doing this work, and they aren’t costing the company money. Require them to approach you and make the case, or let them name, say, three people at the start of the year that they will do repairs for, at the cost of material, on their own time.
If They Still Moonlight
If you’ve addressed the causes cited above and someone still can’t help but moonlight for whatever reason, then enforce your policy. Terminate them. They are untrustworthy.
