Who Generated The Lead?

One of our clients sent a note recently asking for advice on dealing with a subcontractor. He brought them in to build a deck as part of a larger remodel project.

“After the deck was complete and we were working on the tail end of the project, I had some neighbors approach me and ask if the deck guys were around. I said that we were the ones building the deck and they looked a little uncomfortable and said, ‘I mean the guys who were working on the deck. They’re suppose to be doing some work on our place.’

Am I out of line in thinking this was very inappropriate? I have been in the same situation, working for another general contractor in the same trade, and anytime I was approached by potential clients I deferred them to him. His job, his leads.

What would you suggest I do in this situation? Your thoughts are much appreciated.”

Yes, their conduct is inappropriate. It’s also dishonest.

If I may misquote John Wayne: “They aren’t ignorant, they just don’t know any better.” You need to educate them on how business should be done. Operating ethically isn’t something that’s taught, and many business owners, especially those new in business, believe that all’s fair.

I am reasonably sure these guys think that picking up work from the customer or neighbors is okay. It isn’t. They did not pay for the lead that put them on that deck, in contact with those neighbors. When they were approached, they were obligated to notify the general contractor who brought them there, and let him handle the lead.

That’s why you need to educate your subcontractors and employees, and then you need to put it in writing.

Let your employees and subcontractors know they aren’t to discuss or do any side jobs for your clients (or their neighbors). Make it clear right up front that if they’re approached by any client, or the client’s neighbors, or the client’s friends, that they are to refer that lead right back to you.

When your employees or subs do side jobs for your clients, they’re taking work away from your company. I don’t care what spin you put on it; they are taking work away from you, your company, and your other employees. It’s not right. They aren’t entitled to a free lead because of a lead that you paid for and a job you sold. If you find someone violating this policy (after they’ve been informed), send them packing on the spot. They aren’t trustworthy.

This needs to be included in your employee manual and in your subcontractor manual. Educate, then put it in writing. Review those manuals with your employees and subs annually.

One more thing. When your employees or your subcontractors bring you a lead, even if it’s a lead generated on your job, pay them a finder’s fee. It’s always appropriate, and it rewards honesty.

Now let’s talk about the neighbors. The reason they approached your subcontractors, and the reason they looked a little uncomfortable when you spoke with them, is because they want to get the work done cheaper. They also knew that what they were doing was questionable. Most people have a moral compass that lets them know when they are doing something that isn’t quite right.

You can’t stop the neighbors from asking, but you can educate your clients so they know, for sure, what’s right and what’s wrong when dealing with your subs and employees. This happens when you sell the job, before they sign the contract. Tell them that they aren’t to contact your subcontractors or employees about doing work outside the contract. Language like this should be in every contract you write. This is from our Fast Track Proposal Writer software, and it’s not all of the language from that section but it’ll get you started:

Owner(s) understand and agree not to affect any side arrangement or separate Contracts with any of CONTRACTOR‘s employees, vendors, or subcontractors performing work on this job, for additional work on this or any other job for a period of at least one year following the completion of this job, except as provided by agreement with CONTRACTOR pursuant to the terms of this Contract.

Any such agreement must be approved by CONTRACTOR prior to such agreement or Contract in writing. If a separate agreement is made between the Owner(s) and others, the Owner(s) may not hold CONTRACTOR responsible for the quality of workmanship and materials utilized by these persons, or their time schedule or job cleanliness.

Michael Stone

The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations as needed.