Are Your Employees Free-Agents?

My 89-year-old mother lives in an independent living facility that has several businesses connected to them. They have a bank, a maid service, and even a beauty parlor as my mom calls it. During a recent visit, my mom was telling me about how her hairdresser was let go because she was in such high demand that the other hairdressers were losing business to her. The owner of the salon, in order to keep the peace, opted to terminate her employment to keep the other hairdressers happy.

This situation was unique because the salon had a captive audience with essentially no competition since most of the residents do not drive and their only option was to use the on-site salon. This story brings up an interesting business lesson I’d like to share.

When an employee at your local grocery store leaves or is fired, the store simply hires a new employee, because their customer’s allegiance is to the store and not the employee. From the perspective of the grocery owner, the customer is more important to the business than the employee.

However, in some industries, the opposite is true and the employee is more important to the business than the customer. For example, in traditional salons, the customer is loyal to the hairdresser, and if the hairdresser leaves, the customer often follows. Therefore, the culture of these types of businesses needs to recognize the free-agent nature of the employer/employee relationship and focus on making sure that the employees are happy.

The mistake that the salon at my mom’s independent living facility made was that they placed too much emphasis on the idea that they had a captive customer base and if they fired the most popular hairdresser, their customers would simply have to use one of the other hairdressers. What they didn’t bank on was that customers like my mother banded together and shared their concerns with the management of the independent living facility and the salon’s contract, which was due for renewal, was allowed to simply expire.

Many small business owners use threats and intimidation to keep employees in line. They make employees sign non-competition agreements and threaten to destroy their reputation if they are not good soldiers for the business. This assumes that the control lies with the business. Yet, as we noted earlier, the control lies with the employee in many industries, and business owners need to understand and appreciate the nature of these relationships. It is a far better tactic for these industries to develop a culture to make the employees want to stay with the company rather than creating fences to force them to stay.

In the movie Shanghai Noon, Roy O’Bannon (played by Owen Wilson) captured this sentiment when he said:

“I’m like a wild horse. You can’t tame me. You put the oats in the pen, though, and I’ll come in for a nibble every day. But the minute you shut that gate, I’ll jump the fence and you’ll never see me again.”

Be different and better than the competition by designing a company culture to make your employees want to stay rather than using a policy to force them to stay.

Do your employees stay with you because you give them oats or because you fence them in?