April 29, 2013
51 of 65
Partnership in Business
This is a difficult essay for me to write. Though I never seem to have much luck in my choice of business partners, I would like to be fair and objective in discussing them. I was president of Clear Creek-Gilpin Abstract & Title Corp. for more than a decade. That is nearly one-sixth of my whole life to this point, and during those ten-plus years the business was the most important thing to me, next to my family. It seems, then, that I need to write something.
Clear Creek-Gilpin had three shareholders, who I will refer to as “partners.” G (I am not using real names) owned the majority interest, while D and I had minority interests. G and D approached business as capitalists, with the belief that whoever was able to furnish the money to start and operate a business should reap the rewards if the business succeeded. I wanted to think of my approach as more Marxist, recognizing that if a business succeeds it is because of the efforts of the employees, and they should be rewarded. In practice, though, my approach was more paternalistic. Looking back, I think that might not have been the ideal style of management.
For example, when I took over the operation of the business, the company did not have employee health insurance or a retirement plan. I quickly contacted insurance companies and found a health plan I thought would work. I was worried, though, that some of the employees might forego the insurance if they felt their share of the premiums was too high, so I set it up so the company would pay 100% for each employee. Spouses or dependents could be included, but the company only paid a portion of their premiums. Perhaps surprisingly – or perhaps not – only about half of our employees participated. The others were already covered by their husbands’ plans and did not want to change.
Not surprisingly, G and D agreed to this only reluctantly since it negatively affected the company’s profitability.
I also set up a retirement plan. It was a SEP (“Simplified Employee Pension”), with most of the contribution parameters defined by federal tax law.
Another example is that one of our long-time employees was a woman in her late 50s who would put on leathers and ride motorcycles with her husband on weekends. One Sunday as they were cruising along I-70, doing at least 60, a deer bolted across the highway and struck her husband’s bike. He was lucky to survive. He was hospitalized until he was out of danger, and then there was a long period of convalescence at home. His wife felt she needed to be with him and informed me she was taking a leave of absence.
The business had not faced such a situation before, and we had no policy to deal with it. I told her that since she had been such a loyal employee, she would continue to receive her full salary so she could devote her attention to her husband and not worry so much about finances. As it turned out, she was away from the office for more than six weeks. After the first two or three weeks, G and D began complaining because, again, it was affecting our profitability. I agreed that we needed to establish a policy that would be fair to everyone, but refused to change the agreement I had made with the employee in this case.
I could give many other examples, but to I won’t.
You might think the employees would appreciate what was being done for them – but, in reality, not so much. Another thing I did was set up a system of bonuses based loosely on profit sharing. One year we spent a lot of money on a new computer system and software, which resulted in diminished profits and diminished bonuses. Everyone did receive their full salary and a small bonus, so I assumed everyone was happy. If I had remembered Chevy Chase in National Lampoon’s Christmas Vacation, I would have known better. Like Clark Griswold, our employees felt they had become entitled to receive bonuses that never decreased. They felt I was forcing them to buy the computers for the business.
The employees’ morale plummeted. They complained not only to me, but to G and D, as well. My partners were more understanding of the benefits of the capital investment, but they were also receiving less money and were not the best of sounding boards.
My work had been mostly satisfying and enjoyable, but differences I was seeing between my financial philosophy and the philosophies of the other partners and the employees began to make me reevaluate the situation. I approached my partners with an offer to buy them out so I could run what I felt was my business in my own way.
The offer was not well received. For the past several years, G had been averaging over $5,000 per month as his share of the profits while he was not actively contributing to the business. He did not want to lose that income.
The business itself remained strong, but I was not happy. I remembered the old adage, “when the going gets tough, the tough quit” – or something like that. I quit and started a new company.
Almost immediately I was sued, G and D claiming I had taken more than my share of the money from the business. That was not true, but I had expected that response. After all, G was a judge and D a lawyer, so they were doing the only thing they knew how to do. It didn’t stop there, though. Years before, G had told me of his philosophy that business is like an all-out war, in which it is necessary to destroy or be destroyed.
Though I did not agree with him, I should have noted his words carefully. Words have power. When a person says something like that, there is a reason the Universe wants me to hear it. I soon received a call from the District Attorney’s office. Judge G had been pulling strings and doing all he could to have criminal charges brought against me for theft. He felt it was necessary to destroy anyone (read, “me”) who might hurt his income.
I contacted the best criminal attorney I knew. We provided a statement to the DA, and we heard nothing more.
That is, we heard nothing more until a year or so later. G had continued to press, and the DA had given in. I was facing multiple felony charges, as well as the civil lawsuit. I was devastated for several months. Could it be that G was going to win and I was to be destroyed?
No.
I will skip over all the details and say that a few months (and $40,000 in attorneys’ fees) later, a new district attorney looked objectively at the case. He announced in open court that he felt G and D had caused the charges to be filed for the sole purpose of gaining an advantage in the civil litigation. The charges were all dismissed. With the criminal case gone, we reached a settlement in the civil case.
That was it. I have not had any contact with either G or D for nearly 10 years now. Clear Creek-Gilpin Abstract & Title Corp. has gone out of business. Assuming it was necessary, I forgave them. Like everyone else in this world, they were only doing what they were supposed to do. Me, too.
Wheee. Ain’t it fun laying down with dogs and getting up with fleas. I managed to avoid a partner like your hounds, but I had part of your experience when I started my construction company.
I set up a profit-sharing business model which gave a lot of autonomy to my production employees, assuming they shared my philosophy – or would share it as soon as I explained how it would work. The idea was that if the company did excellent work and employees went the extra mile in effort and quality on behalf of the client, we would all thrive.
The practical result was quick and dirty work in the field because the employees reasoned that fewer hours, more jobs, and cheaper materials produced larger profit margins. They were right, except for one thing. Me. I’d started my company because I’d worked for companies that did that. I’d made a decision not to support their ways and means any longer. I determined to do good work for good people at fair prices, and that was my mission statement. I’d assumed my employees could relate to that. But, as you observe, people do what they do in order to learn their own lessons because that’s what they’re supposed to do here, really.
I’d sold a lot of work in order to support a payroll and it was originally intended that my wife and I would manage the business side – sales, design, costing, drawing, accounting, scheduling, etc. while the employees performed the field work. I had taken great pains to qualify our hires, but they were good liars and I was willing to accept them at their word until proven otherwise. It didn’t take long.
I started doing morning work inspections and found myself issuing correction orders galore to my employees. They complained that the time and materials required would hurt their profit sharing. I explained crappy work would kill the company goose that laid their breakfast eggs. They didn’t get that and over time got surly. I fired them all. Wheee.
I rehired one “carpenter,” reduced his status to laborer, and worked both our butts into the ground clearing the projects I’d contracted. When we’d cleared the boards of the large projects we started in on the smaller ones, and after months on the job I needed a break. I gave my laborer a week off, caught up with the office, and decided to go to the coast for a couple of days. I thought he was able to handle a small job on his own by then. It was replacing the screening and battens on a beautiful old sun porch. I made a step by step list for him, including a ton of what I considered to be idiot-proof drawings. I reviewed the process with him at the jobsite, getting a lot of nods and yeah yeah yeahs. As soon as I was convinced he understood I left him on the job site with an expensive pile of clear cedar, a table saw, and a locker full of the tools he would need.
When I got back three days later the cedar had all been cut incorrectly, was useless, and no work had been performed. I met him there, calmly reviewed the process we’d gone through to make his understanding of the work clear, patiently explained how much time the instructions for him had taken, told him the dollar value of the cedar kindling he’d produced, and then respectfully fired him. He protested. I couldn’t believe it. Karma is karma, so I gave him both barrels. It was a classic verbal ass-chewing that would have left a sentient being with a psychological limp requiring therapy. I don’t think he registered it any more than the instructions for the job. He just knew he was fired for sure when I got done. I guess that was all he needed to know.
I never cared for non-working self-superior materialists like your partners. Before I started my company I had enough exposure to the type to last a lifetime. As a valuable company employee I attended the dry chicken and cheap wine networking banquets at country clubs and restaurants and was repulsed by the power-tripping, unconscious ego dance strutting there, the puffed up feathers, the wily machinations of small minds in collusion for profit and power. The honorable contractors I knew about rarely attended those soirees. I certainly didn’t resonate with the vibe, that was for sure.
Eventually my wife and I embraced the classic business model and became a “mom and pop” operation. The office work satisfied me, and carpentry fulfilled me. Balance. It’s a great thing to find in work and livelihood. The zen of Samu, manual labor, and the path of karma yoga was what we chose together. It’s not a complicated thing. It’s a simple thing. We love, live, serve, work, think, act, speak. We chop wood, carry water. It’s not about materialism, it’s about spirituality. My wife and I share this path and have been, for nearly 30 years now, in a sense our own satsang, a place where two have gathered together as truth seers and seekers. The material dispensations have been sufficient to our needs and little more. What we have gained in true “wages” is priceless, and rarely understood or recognized.
My wife and I each in our own way voluntarily chose to participate in earthly existence rather than the contemplative life after “getting” what a spiritual life is all about. We chose to be in the world because there was no truthful separation present living our lives as a spiritual presence in a mundane and temporal experience, and any illusions we perceived were there to learn from. And we have learned, and continue to learn every day.
For instance: now when I encounter an inspirational opportunity to deliver an incisive ass-chewing with my verbal incisors the worst I might be able to do is something I learned from my daughter when she was a teenager, the “pity stare” followed by an exasperated eye roll. And even that seems to be too much trouble these days.
You’re right. People are here to do what they do.