Monthly Archives: September 2013

Proprietism and Employee Rights

Western “cowboy” Capitalism has had more than its fair share of casualties. If I had to pick a low-point, I’d say the Homestead Strike of 1892. In the late 19th century, and throughout the 20th century, workers rights increased and became the norm. I have a controversial theory as to why this occured: The Communist Manifesto was a self-defeating prophecy. True Marxism involved the workers overthrowing the owners in a highly industrialized capitalist society (The Bolshevik revolution and others were NOT this). The viral spread of Marx’s ominous ideas in the middle and late 19th century caused business owners to lighten up a little. The bug entered their heads: “I could either make some reasonable financial sacrifices that would increase the happiness of my workers, or I could continue to exploit them until they kill me.” Whether coerced or voluntary, employers over the last century and a half have given far greater respect to their workers and their rights.

Hopefully we’ve matured as a society to the point of understanding that worker’s rights are not just something you honor because the government is forcing you to do so. Extending rights to your workers makes the most sense for your business, because happy workers are loyal and productive. As proprietism continues to emerge, most “employers” will grant considerable and fair rights to their workers without coersion from a higher authority. Those who do not respect their workers rights will face a threat akin to the one discussed in The Consumer-Regulated Business.” Remember that proprietism is built off the Internet–“employers” who treat their workers poorly can be exposed easily in a connected world, which may have a devestating impact on their business.

That answer will definitely not satisfy everyone. What if someone who hired badmouths you even though you treated them well? They will probably be exposed for who they are soon enough. What if someone hires you, treats you poorly, but systematically holds you back from speaking freely? Try to get a different job. What if you were treated poorly by an employer, spoke up about it, but nobody cares? Eventually, people will care. If it sounds to you like I believe that karma exists in the business world, you are right. Bad business is bad business, and the only ones who can get away with it are the ones who exploit a system like our current one.

Customers Are Your Employer

I find the proprietist model interesting because to the sole-proprietor, there is no difference between customer and boss. Both are paying the proprietor an income in exchange for a service performed.

Customer service is a big deal to me. Without customers, your company would have no revenue, and therefore would not exist. This seems like a straightforward concept, yet it must not be. At many companies, it is common for employees to feel that only personnel from sales and customer service should ever have to interact with customers. I don’t believe that “the customer is always right,” but I do believe that customers should be treated as what they are: your company’s source of income. This means neither treating them like a pain in the ass, nor kissing theirs. A sales manager I know puts it to his customers well: “I work 49% for you, and 51% for my company.”

I was recently in a dispute with DirecTV regarding a hefty cancellation penalty. I started service with them because there were no other providers at my former residence. When I moved, a DirecTV customer service representative told me that I would have to pay a $260 cancellation fee unless I continued the remaining two months of my one year agreement. (Note: I never actually read my terms of agreement, something about which I was very honest throughout the dispute.) After moving in, my first bill was $30 higher, which I paid because even though DirecTV’s bills are are cluttered with ambiguous and meaningless credits and debits, it appeared as though I was paying a pro-rated dish installation fee. Desirable? Not really. Fair? Sure. When I called again to cancel service at the end of my alleged one year contract, a CSR told me that I would be paying a cancellation fee of $280 (went up for some reason) because my contract was actually 2 years. He also told me that my dish installation was free, but my bill went up by $30 to $75 per month because I was getting a “special rate” at my old apartment. The one year rebate was for $20 off per month, so basically I was about to be paying $95 per month for the middle package and no Internet.

I cancelled service and drafted a letter to dispute the cancellation fee (which ended up being $225). I kept it very short and objective, stating that any terms in the contract are no longer valid because DirecTV materially altered the contract by changing my rate. Minutes before dropping it in the mail, my wife texted me.

“Did you pay DirecTV!?”

“No wtf why?”

“Check the account.”

DirecTV did in fact remove $231 (changed again) from our checking account. To be clear, we never opted for any sort of automatic bill pay. I let my bank know what was going on, redrafted the letter, and copied the BBB. The office of the president at DirecTV responded to my complaint and defended the company’s actions, while their credit department continued to pursue the fee from me with increasing aggression. I don’t want to belabor the point, so let’s say there were a lot of priceless exchanges between myself and representatives of the company, and I kept my rebuttals free of insults and criticism staying (mostly) objective. Ultimately, their inability to pull the phone conversations I had with CSRs was the technicality by which I won. Oh yeah, and I guess the cancelation fee changed once more; they reimbursed us $260, not $231. I brought that to their attention because to me the dispute wasn’t so much about getting paid as it was about right and wrong. They did not respond so I kept the $29.

I understand contracts, and I understand setup costs, so I understand cancellation fees. I think what was so outrageous to me was the notion of any company assuming that they possess the authority to subjugate their customers. Sustainable income comes from open and honest relationships with customers, not imposing and enforcing rules upon them. DirecTV should have given up the moment I involved the BBB. You can never prove this, but among the circle of family and friends and coworkers aware of my dispute, several mentioned that they might never chose DirecTV after hearing how everything went down. The company possibly lost tens of thousands of dollars in future sales over the pursuit of $231.

“The customer is always right” maxim was quite purposefully an extreme over-exaggeration. Marshall Fields coined the phrase around the turn of the 20th century in order to boldly set a contrast to the existing customer service paradigm at the time, which could most accurately be described as “buyer beware.” The phrase raised awareness to the fact that customer satisfaction leads to loyal customers, who offer both repeat business and word-of-mouth promotion.

In my opinion, you should never be afraid to do extra work to make a customer happy. Focusing on what you can do rather than what you can’t do is a tad cliche, but I believe it should permeate your every interaction with customers. The ones who don’t complain much are always worth the extra work, no matter how large or small they are. Medium to large customers who do complain but could legitimately move a large portion of their business somewhere else are usually worth it. Small customers who complain are worth one or two reasonable attempts to please, but if their complaining continues and they do not increase their business with you, set ‘em straight.

In a b2b relationship, the decision might look like this: Alex could spend one hour talking to a customer account that spends $12,000 per year with his company while they agonize over every reason his company sucks, or he could politiely ignore them and spend that hour asking a $390,000 account how they’re doing and if they need anything. If his calls to the big account result in a 3% increase of the big customer’s sales, that would completely wash any loss from the smaller account. Truth be told, no matter how bad you piss off pain-in-the-ass customers, they more often than not don’t drop you entirely.

Most of this article has been information that would be true in any business, but the proprietist model gives it a bit of poetic justice: your customer is your employer–they swap you cash for a job-well-done.