Chapter 11. “How Much Justice Can You Afford Today?”

What follows is a continuation of a series of articles comprising a book entitled “Passion, Power, and Panties–Confessions of a Businessman” wherein the author describes being raised as a Jehovah’s Witness, spending almost ten years at their headquarters in Brooklyn, NY and then entering the ”outside”  world at the age of 27.  For purposes of continuity, I encourage you to subscribe in the column to the right so as not to miss a post.  It is free and without obligation.

Some of my most painful business lessons came from the legal system.  I was unaware that a large group of under-employed attorneys had invented a brand new field of litigation that came to be known as contract employment versus employment-at-will.  The theory apparently went something like this:  if an employer said something to an employee that could even vaguely be construed as an assurance of continued employment, it could be considered a binding verbal contract.  Let’s say, one day during a discussion with an employee that you, as the employer say something intended to show appreciation and encouragement for recent good work on their part such as “Keep up the good work.  You have a real future here”, and then let’s say that a few months later their attitude changes and their work goes south and you end up terminating their employment; they could now sue you for termination without just cause, because implied in your encouraging verbal statement months before was a guarantee of some sort of continued employement.  From that point on, in the eyes of the law, you could only discharge an employee for “just cause”.  Well , how hard can that be?  Who would want to terminate someone for an unjust cause?  The problem is, “for just cause” in the eyes of whom?  Of course it was appropriate in your mind to discharge them; you were probably fed up with their behavior, or taking a lot of grief from them and spending 80% of your time trying to correct them and taking heat from both your boss and the customer to get the situation fixed.  But the problem is, their discharge is never  for “just cause” in their own eyes.  When was the last time you heard someone say, ‘I got fired today, and by God, I deserved it.’  So now, under this concept of implied employment contract, this discharged employee can challenge his discharge in court, and you are obliged to defend your decision to let him go.  To a jury.  What if you get a jury that buys into the Hollywood stereotype that businessmen are greedy and corrupt and out to get the little guy?  You may successfully defend yourself, but it’s going to cost you money, probably a lot of it, and the plaintiff’s attorney knows that.  So he launches a paper battle that runs up the bill for the defense.  At some point the insurance company will capitulate and pay off, just to contain their spiraling legal costs.

I learned that it was dangerous to tell new employees they were on a thirty-day probation period at the beginning of their employment, because in the eyes of developing case law, a probationary period ending implied some sort of permanent status beginning.  In the absence of written policy to the contrary, it was wide open to interpretation what the exact nature of that permanent status was, but it came to be interpreted that you, as an employer, could not simply tell an employee you didn’t want to work with them any more, but you were now legally obliged to justify, in a manner that would satisfy a jury in worst-case scenario, what the reasons were for ‘letting them go.’

Such case law is an example of how ideas invade a culture by stealth, like a virus.  At the beginning such concepts are perceived as “extreme” but over time they become the norm.  Over time the employment arrangement ceases to be two parties trading with each other, and employment becomes a “right”, an entitlement, and if the employer as the Buyer no longer finds it in his best interests to continue to buy from, and pay for, the services of a particular employee, he has to defend his actions before a third party, because the act of termination is now seen as an infringement of the “rights” of the employee as the “injured party”.  Rarely however, does an employee have any such obligation to defend their decision to leave employment.  Unless there is a written employment contract stating otherwise, individual employees are free to quit selling their services to an employer, for any reason whatsoever, or for no reason.

When you were terminating an employee for a behavioral problem, it was almost always simpler than it was when terminating them for poor job performance.  If someone got in a fight at work with another employee, it didn’t require a lot of explanation why you asked them to leave.  They always knew it was coming.  But when it came to not being satisfied with their performance, it quickly became a lot more complicated.

As my embryonic organization began to grow and take form, I took my best cleaners and promoted them to supervisors.  I, and they, quickly learned that labor and supervision are very different kinds of work.  When you are promoted to supervision, you tend to lose some friends in the workplace, and you are no longer one of ‘the gang’.  I also learned that the longest mile in the world is from the mind to the muscle, and that people with a lifetime labor orientation often have great difficulty making the transition to being a supervisor.  Their initial solution to almost every problem is usually a knee-jerk effort to work their way out of the problem, with physical work, a solution that always worked for them before.  The problem with that is that as the organization grows, you can only work your way (physically) out of so many situations before you have run out of both time and energy.  When you have run out of you, you have run out of future.   Even when you are exhausted by your endeavors, it still seems easier to just work harder and harder, rather than think your way out of a problem, and by multiplying yourself through other people.  Jumping in and rolling up your sleeves and doing the job yourself always seemed to you before to be the shortest line between two points. 

Also supervision of necessity involves at times trying to get people to do what they don’t want to do.  It can be as simple as trying to stop your cleaners from yanking on vacuum cleaner cords because they are too lazy or rushed to go over to the wall plug and pull it out properly.  By yanking on the cord, they break off the third ‘ground’ prong, requiring a replacement of the plug, and place themselves at risk of electric shock by continuing to use a piece of now damaged equipment because they are in no hurry to tell their supervisor that they damaged it.

Since most of my cleaners were women, most of my supervisors were women promoted from the ranks.  Most of them were mothers, and they invariably tended to supervise in exactly the same manner as they had parented:  endless, usually  fruitless repetition, until they got mad and raised their voice with the subordinate, out of sheer frustration.  They would frequently make threats of dire consequences if the subordinate did not shape up, but they rarely carried out their threats.  I called this the “Baby-sitting Theory of Management” or Mom-ism.    Eventually, when under pressure from above to correct a situation, they–you guessed it–rolled up their sleeves and did the job themselves.  “If you want a job done right, you have to do it yourself.”  Well, it might work with a kid or two, but when you are responsible for dozens of employees, it quickly becomes evident there aren’t enough hours in a day to “pick up” after them all; problems multiply, quality deteriorates, and the overworked supervisor starts to burn out.  It is at this point that they either learn to manage, or drop out.

A problem develops when a supervisor’s ego is heavily involved with his/her position and status in the organization, particularly when they have been promoted to their level of incompetence and you have to do something about it.  In a rapidly growing organization, it is frequently possible for a manager’s job to outstrip the manager’s ability to keep up with it.   This is a classical performance problem.  Men and women may handle this situation differently, but in my company, most of my managers and supervisors were women, because they were promoted from the ranks of the women who came into my business as cleaners. When this lead person is a woman, you can expect to see what I call “Queen of the Herd” syndrome.  I gave it this name from the behavior of cows.  Every herd of cows selects a member of the herd to be queen, and it is this same cow that leads the herd out to pasture in the morning, and back to the barn at night.  When the Queen eventually gets deposed by a younger, up-and-coming cow, she gets neurotic and stops giving milk.  That’s when she goes to the butcher.  Humans behave similarly, especially in the cleaning business, which is labor-intensive, and is composed of mostly women.  Status within a group, any group, is extremely important to most people.

I had such a situation with a young lady who had been with me a number of years.  She had started as a cleaner with me when I was tiny, and due to very hard work eventually ended up as an Operations Manager with half a dozen supervisors reporting to her over an area of over a hundred miles.  She was still baby-sitting rather than managing, and was either unwilling or unable to make the tough people decisions that management requires.  She did not hold her people accountable for results.   Management is bloody and is no place for wimps.  When you talk the talk, but don’t walk the walk, your subordinates figure this out, just like any teenager does.  They keep you on their radar screen, but don’t really bestir themselves until they know they have to.  She had become too close personally to her subordinates, and had lost whatever objectivity she might once have had.  Quality problems and customer complaints were proliferating, and it was clear to me that while she thought she deserved kudos for being exhausted from putting out all the fires, she was in fact, my arsonist.  I met with her and told her I wanted to divide her job in half, that there would be no loss of pay or benefits; that we were growing, and that the job had become too big for one person.  She could not accept this, and the perceived loss of status that this change would entail.  I told her the alternative was to continue as we had been, but if the business issues did not turn around, I would have to terminate her employment.  She would not accept my suggested alternative, things did not improve, and I terminated her.

She apparently persuaded her supervisors, who were also her friends, to walk out with her, and for one horrible night we had massive confusion and even a few poor cleaners locked into their customer’s buildings.  During the next few months she began a telephone campaign to my cleaners and customers, neither of whom wanted to be involved.  Finally, she sued me for wrongful termination.

Our small company, now about one hundred strong, ended up hiring a very high-priced labor law firm out of Washington, D.C. to handle our case.  At the time this type of lawsuit was rather unusual.  We ended up paying about $15,000 in legal fees to defend ourselves, and the former supervisor finally dropped her suit when we began asking too many questions about her past dealings with Welfare.  At the time we were doing almost $1 million in business a year, with a 3% profit margin before taxes, so defending ourselves in this lawsuit wiped out about one half the profits earned by the entire company for a full year.

The business lesson I learned is that people’s ego and self-esteem and self-image can become all wrapped up in their job status, and when this happens they are far more traumatized by a change in their job status or the loss of their job.  They can be very vindictive, highly emotional, and unpredictable in their behavior.  They can even be violent and physically endanger others.

I learned even more from another, rather similar lawsuit that came along later, when another supervisor we had discharged also sued us for wrongful discharge.  It eventually went to trial, and on the day of the trial the jury was selected, and I am seated in a small room with my lawyer, who informs me the judge wants me to settle with the complainant.  The judge suggested we offer the plaintiff $3000.  My attorney explained to me that we would spend more than that per day in the trial, which would probably last three days.  I was outraged and said no, I didn’t want to settle for any amount because neither I nor my company had done anything wrong.  My attorney explained that it was a matter of economics, not of justice.  I said I’d rather spend the money.   I was offended by the whole issue.  I thought it clearly was a matter of extortion.  Well, my attorney took my response back to the judge, and when he came back said the judge was not happy with my decision and was not accepting it.  He “strongly encouraged” me to rethink it.  I knew my arm was being twisted, and I also knew that if I refused to go along with the judge, he would find ways to punish us in the courtroom; my attorney made it clear there was no reasonable alternative, so I agreed.  He went back to the judge, and a few moments later reappeared, said the matter was handled, and now we would proceed to the trial!  I said What!!!  He explained the judge was up for reelection, there were twelve jurors who were prospective voters out there in the courtroom, and the judge wanted to put on a good show for them.  So court would convene, the jurors would be given their instructions, there would be a brief recess, and then the judge would inform the jurors that a settlement had been reached and the case was over.  He wanted to put on a dog-and-pony show for the jurors before we left.  And that is what he did.

Once we had a contract with a racetrack.  We were making money and we thought we had a good track record (no pun intended) with the client.  We never actually met the owner(s), but their representatives that we did do business with sometimes left the impression of being sleazy.  One day we got a very brief, and totally unexpected letter from the General Manager of the racetrack canceling our contract.  When I followed up with the client, I asked them who they were going to hire to replace us, he gave me a name of a competitor I had never heard of before.  Within a day or so, one of my managers who oversaw our operations at the racetrack resigned from our company.  I thought this was quite a coincidence, and after a little investigation found out my manager had formed his own company and had cut his own deal with the customer to replace us.  The only problem was that we had a written non-compete employment contract with our manager prohibiting him from doing exactly this.  Our contract with our client also prohibited them from doing this.  Both of these contracts had been entered into voluntarily.  Since the racetrack was in another state, I was going to have to hire an attorney from that state.  I called the state attorney referral service, and as luck would have it, we were referred to an attorney who had retired a couple years before as the State Racing Commissioner.  This guy knew the racing business in his state inside out!!

When I went to see him, we had a conversation I will never forget.  He said to me, “So what’s your complaint, Johnny?”  I told him.  He gets up from behind his desk, walks over and closes the door to his office, goes back to his chair, and says:  “Let me tell you about racing in the good ol’ state of —.  You can have anything you want at the racetrack.  If you want drugs, you can get it at the track.  If you want sex, you can get it at the track.  If you want to play some numbers, you can get it at the track.  If you want someone murdered, you can get it at the track.  All it takes is money.  Now you say you want justice.  For $2000, I’ll see to it by 4 p.m. this afternoon that the judge signs an order forbidding your manager from working at the racetrack, and if he does, he’ll be thrown in jail.  For $5,000, your manager will never work at the track again as long as he lives.  And for $10,000 I’ll get you your contract back.  Now, how much justice can you afford today?”

I told him I could afford $2000, and he kept his promise.  By a few minutes after four that afternoon, I had an order signed by the judge prohibiting my former manager from working at the track for another six months, the time period specified in my contract with him.  I couldn’t afford the $10,000 to get the contract back, and I couldn’t think of anyone I wanted to have murdered.  When I went back to see the General Manager of the racetrack (who was also the Law Director of a nearby city) and presented a copy of the judge’s orders to him, he said, “All you’ve done is prevented me from doing business with who I want to do business with.  That won’t get you your contract back.”  And of course, he was right. 

I had just learned another great truth of free enterprise:  no contract will ever keep a customer if they no longer want to do business with you.  I had also begun to learn another important point:  Business trades hands for lots of reasons.  I was in the janitorial business, a very mature industry, a commodity business.  We always had so many competitors that it was easy for our clients to replace us.  So generally our clients wanted to do business with their buddies and often their own ethnic groups.  I was learning that you do business with individuals, not companies, and they wanted to deal on a regular basis with people at their own level, from similar backgrounds, someone they could relate to.  This carried at least as much weight, and sometimes a whole lot more weight, than say, what level of service your organization was providing.  This was very hard for me to handle.  All my life I had been an idealist, and this didn’t fit with my vision of how the world should be.  I thought that if I worked hard and produced a better quality product or service, the rewards should go to me and my company.  We were committed to excellence and believed that if you accept mediocrity you’d never get past it.  It hurt my feelings to find our hard work and determination  thwarted by the mere fact that my client or prospect was looking for someone Italian, or Jewish, or whatever.  I mention these two ethnic groups, because in the areas where I worked, these are the two groups where I bumped into this barrier  the most often.  But never directly, never in so many words.  It was a bitter pill to swallow, but the fact of the matter was it was their money and they could trade with whomever they wanted, for a good reason, for a bad reason, or for no reason at all.  Unlike my employees, I had no special rights.  In most cases my customers came from middle management of their respective organizations and they were playing with someone else’s money.  So it is understandable that they would use their position of power over purchasing to send business to their friends.  It is a very disciplined organization that seeks value over fraternity.  The good news is that when you finally get such an organization as a client, if you do provide superior service, you are far less likely to lose their business for some frivolous reason.

Some organizations, in an effort to create and maintain value-driven purchasing, resort to mind-numbing bidding procedures, with huge RFPs (Request for Proposal).  Buying from the lowest bidder was not done merely to get the best price; it was most often an effort by a customer to keep their own organization honest.    Some even thought that by replacing human judgment with a number, the amount of the bid, they could guarantee objectivity in the awarding of contracts.  My experience is that one should never underestimate the ingenuity of managers intent on thwarting company policy to achieve their own personal ends.  Once I had a customer threaten me with the loss of our contract with them unless I joined his new church.  I didn’t join, and sure enough, he canceled our business with his company.  Sometimes a Buyer would let us know, with a very careful choice of words, how much money would have to pass under the table in order to get a contract.  This most often happened with government contracts.  In Northeast Ohio it happened so often we stopped bidding on government work altogether.  There was enough honest work to go around without getting our hands dirty. 

In one town we served, there was a very prominent Italian mall developer, and his organization would repeatedly ask us for quotes on the cleaning of his headquarters organization.  We would inquire of the middle manager handling the matter for the developer why they were considering making a change, and the answer always was that they were dissatisfied with the quality of the service provided by their current vendor.  Well, everyone in town knew the current vendor was another Italian who had grown up with the mall developer’s son, and they were close friends.  A little more investigation would reveal that they had recently quarreled, and the developer’s son was pissed, and wanted the cleaning contract to go out to bid.  We, and any number of other interested contractors would submit bids, only to be told eventually that the developer had decided to stay with his existing vendor.  We all understood what this had meant:  they had kissed and made up.  This happened repeatedly with this one organization over the years, and so after a while we quit providing quotes.  But we heard through the grapevine that this same Italian competitor, when competing against us at other locations where the client was Italian would pointedly ask the client if they wouldn’t prefer to deal with a paisan, and the answer was frequently yes, they did.  Mom had lied.  Life did not always reward hard work, and who you knew frequently was more important than what you knew.  Eventually we heard through the trade association that cleaning was 25% of our business, and the politics of business was 75%.  We also heard that “a dirty building could lose you a contract, but a clean building wouldn’t necessarily keep one.”  After all these years in the business, I wouldn’t disagree.  There are many reasons other than the stated ones why business changes hands.  As a footnote to this, I have to say that there were enough companies that really did value excellence over fraternity that we grew and prospered, and eventually dominated our market.  At one point, the Italian contractor mentioned above sent word to me through a third party that if I didn’t leave his contracts alone, I was going to end up wearing cement shoes in the local river.  We ignored this threat and stayed focused on business.  A few years later he went out of business, for reasons unknown.

 By relating these experiences, I am not implying that most of the people we dealt with were dishonest or corrupt.  The fact of the matter is most of the business people I dealt with over the years were excellent, principled, and a joy to work with.  We got pretty good at picking our customers, just like they picked us.  We realized that not all business is good business, and some of it is simply not worth the hassle.  However, pain can be an excellent teacher, and we always tried to learn from our failures and painful experiences.   After a while you get a pretty thick skin, and you also gain a lot of confidence as you learn how to handle adversity.  As my friend Dick McKee once told me, “Sons should not be deprived of the adversity that made men of their fathers.”  Building a successful business was one of the most challenging things I have ever done, and every day you start all over again; it  requires a lot of self-discipline and the willingness to delay gratification, patience, people skills, critical thinking ability, the capacity to think on your feet and the courage to act decisively.  Emotionally it can be both frustrating and enormously rewarding.  It is not for the weak at heart, and if you are looking for love, I strongly recommend getting a dog.