BEST OF THE WEB: My Employee, My Competitor

One day an employee is earning a paycheck and the next he’s low-balling a job estimate and nudging his former employer out of the market.
    
 It’s not an unusual scenario, according to landscape contractors frequenting the Lawn & Landscape Message Board. One of the greatest risks contractors, or any entrepreneur for that matter, take in cultivating new workers is having skilled and talented people strike out on their own. Often this comes into conflict and in direct competition with his or her former employer.
 
Janice Waterman, the owner of Friendship Garden Landscaping & Lawn Service in Fairhope, Ala., recently hired a worker who after five months took an active interest in business procedures and how a landscape company functions.
 
Waterman questioned the employee’s motives behind his queries, to which the employee swore up and down that he was not planning to strike out on his own. Waterman didn’t learn until after the employee left that he had already opened his own landscape company.
 
“Now he’s putting out flyers that state between him and his partner they have 10 years of experience working for other landscape companies,” Waterman says of the new competition. “I’m wondering if he is telling people to go look at the jobs I designed and installed.”
 
Waterman questions whether future employees should sign non-compete agreements.
 
Many contractors post to the message board that they have all new employees sign non-compete forms, and they suggest consulting an attorney if they believe a former employee has breached this agreement. It’s also a good practice to consult an attorney when drawing up non-compete agreements, contractors post, because many states have varying right-to-work laws that dictate the limitations a non-compete agreement between employer and employee.
 
George Iannaccone suggests landscape contractors keep the agreements basic and to the point.
 
“For example, for management and sales people, don’t touch customers for six months to a year, don’t touch prospects for three to six months and stay away from employees for six months,” says the director for operations at Innovative Designs & Maintenance in Syosset, N.Y. “For production employees, I wouldn’t even bother. Let’s be real. If your biggest problem is maintenance foreman Mike stealing your customers, then something is terribly wrong.”
 
Some contractors post they regularly open their books or post the company’s monthly expenses for employees to see. While they won’t post income or profits, it’s important for workers to gain an appreciation for the cost in running a landscape business.
 
Other contractors believe non-compete agreements do very little to curb competition from former employees in the landscape market.
 
“A non-compete isn’t going to stop people,” says Andrew Aksar, president of Outdoor Finishes, Walkersville, Md. “It would cost tens of thousands of dollars to pursue this in court. And even if the judgment is in your favor, that doesn’t mean you’ll get anything.”
 
Non-compete agreements inform new workers that they cannot chase their own business pursuits behind an employer’s back or steal his or her customers, posts Chad Stern, owner of Mowing & More in Chevy Chase, Md. Just the threat of legal action may be enough to extinguish an employee’s entrepreneurial ambitions, he says.
 
“Having a non-compete is good but it is probably not worth trying to enforce,” Stern says. “It is better to specify a geographic area where employees cannot compete. If you say they can not compete anywhere, you are denying them the right to earn a living. So you might want to say they cannot compete within so many miles from your shop.”
 
Of the four former employees that left his business to start their own landscape companies, only two are still active and doing well, says Bill Smallwood, owner of W. I. Smallwood Landscaping in Salem, N.H. Entrepreneurs emerging at the expense of their former employers is not unusual in the landscape industry, or in other industries for that matter, he posts.
 
“You are always training your competition,” Smallwood says. “Train them to bid properly and you can compete on quality and ability. Train them to be deceptive and that is what you will be bidding against.”
 
Chasing after former employees who are now competitors is a waste of time, revenue and resources, posts Rick Brauneis, owner of Vision Designs in Orlando, Fla.
 
“If they grab an install or two then let it be,” Brauneis says. “If they took a customer or three from you, then those customers really weren’t keeping you around for your services.”
 
Other landscape contractors adopt a “they’ll get what’s coming to them” philosophy when former employees become competitors.
 
For example, Dave Reynolds, the owner of Alpine Sprinklers and Landscaping in Kalispell, Mont., posts these individuals will eventually make mistakes and show their inexperience.
 
“I would send out a letter to my customers and explain to them what’s going on,” Reynolds says. “If they were bidding against our company on a project, I would make sure that the people involved understood clearly how long they really have been in business.”
 
Nicholas Esposito, the owner of Mohegan Country Gardens in Mohegan Lakes, N.Y., believes many of these former laborers turned landscape business owners are, for the most part, short-lived operators.
 
“What kind of equipment, uniforms, trucks or money do they have? How professional are they” Esposito says. “Sounds like a short-term thing to me.”