Richard Spencer

Monday, 22 July 2002 09:45

If they want to leave, let them

Noncompete agreements don’t appeal to Mike Moran. They never have.

And despite being in the highly competitive computer consulting business, Moran, president of Affiliated Resource Group, has found his dislike for such legal restrictions to be a competitive advantage in recruiting top-notch technical workers.

That, in turn, has helped him boost sales at his Dublin-based company from $400,000 to $5 million in six years.

Moran credits national consultant, speaker and author John Haskell with helping to show him the hidden value in not using noncompetes.

According to Moran, Affiliated has always had low employee turnover, but in 1997, the company started having trouble hiring the mid-level people it needed to keep the business growing. Moran turned to Haskell, known as “Dr. Revenue,” whom Moran met at a 1995 conference hosted by Inc. magazine.

Haskell helped Affiliated’s management realize the firm needed a pipeline to provide new employees just as much as it needed one to provide new clients. After all, Affiliated doesn’t sell a product, it sells a service, so to keep the company growing, it needs to hire top-notch technical people.

Haskell suggested Affiliated’s management talk to its employees to find out what kept them working at Affiliated in a competitive job market.

As Moran explains it, that helped shine the light on the key: The company doesn’t have a noncompete clause; just about every other computer consulting firm does. Affiliated has never had one, Moran says, because he follows the golden rule — he treats his 55 employees the way he wants to be treated — and provides workers with good compensation, training and opportunities. That way, they want to stay.

And if they ever decide to leave, a relationship of trust has been established.

“Today’s employee could be tomorrow’s client,” Moran says.

Affiliated’s strategy of bucking the noncompete industry trend was compelling enough for Haskell to include a brief write-up of it in his latest book, “Profit Rx,” which was released last year.

“He’s a great help, a problem solver,” Moran says of Haskell. “He gives us the few extra degrees of focus to make us successful. He makes us a better company.”

Richard Spencer (rspencer@donet.com) is a free-lance writer for SBN.

Monday, 22 July 2002 09:46

To catch a thief

Steve Shockley doesn’t like to see employees “get money without working.” Because of that, he spent 10 years helping investigators catch, and ultimately convict, a former employee for workers’ compensation fraud.

His persistence saved hundreds of thousands of dollars for the Ohio employers that pay the bills. It also brought the 54-year-old Gahanna business owner satisfaction.

Workers’ comp fraud is a costly problem throughout Ohio. In 1998 alone, about $80 million was lost to fraud committed by injured workers, lawyers and medical providers, according J.C. Benton of the Ohio Bureau of Workers’ Compensation. Here’s what one Columbus area employer did to fight back.

Benefit of the doubt

For Shockley, who runs his family’s business, S.L. Shockley & Sons Decorating Inc., a painting contractor with about $200,000 in annual sales, the story began in 1986. He hired James Hinerman Jr. as a painter, despite hearing negative reports about him from his previous employer. Shockley’s practice: “Unless someone harms you, you should give them a chance.”

He says Hinerman’s job performance was fine, he was friendly and he didn’t miss much work in his first years at S.L. Shockley & Sons.

In hindsight, however, Shockley realizes he missed the first signs of trouble. A few months after being hired, Hinerman started making workers’ comp claims for medical expenses from minor injuries, like getting solvent in his eye, but never told Shockley; Hinerman’s lawyer notified him by mail instead.

Shockley wasn’t concerned about the claims because, over the years, the system has paid the bills of seven of his other employees for minor on-the-job injuries — as well as for a more major one of his own.

“I fell off a roof myself and collected medical expenses,” he explains.

Besides, Shockley was busy running his 12-employee business, which specializes in painting new houses for custom builders, and didn’t have time to investigate minor claims.

The real trouble started one Friday in July 1988 when Hinerman didn’t show up for work. Shockley talked to Hinerman’s wife, who told him her husband was in jail for assaulting her and resisting arrest the night before. A week later, Hinerman’s lawyer sent Shockley a workers’ comp claim, which said Hinerman couldn’t work because he’d strained his neck lifting a door the day he was arrested. Shockley rejected the claim and started fighting back.

He testified against Hinerman several times and says he discovered “the production line at hearings of lawyers and doctors working together to benefit themselves” and employees like Hinerman. He was also very frustrated with an unresponsive bureau that started cracking down on fraud only in recent years.

Despite his frustration, Shockley didn’t give up trying to prove that Hinerman wasn’t disabled and could work. After all, Shockley says he treats his employees well, providing health insurance, paid vacations and holidays, and he expects them to be honorable in return.

The tip off

Eventually, Shockley started hearing, sometimes anonymously, from people who knew Hinerman and who said he was working — delivering pizzas and even painting again. As Shockley readily acknowledges, this was all hearsay, secondhand information, but in his effort to get the truth out, he passed it on to the bureau.

Eventually, those tips paid off. The bureau discovered Hinerman working for a local painting business.

He was indicted in September 1997 on two counts of workers’ comp fraud and two counts of theft for submitting false wage statements. He was sentenced to 18 months in jail — which was suspended — plus five years probation and 120 hours of community service. In addition, Hinerman must pay back $23,183.98 to the bureau.

By helping to convict Hinerman, Shockley saved the system about $203,000 in potential losses. He also got the last word in July 1998, when the bureau asked him if he’d rehire Hinerman. He said no. The outcome “was very satisfying, one of the most satisfying experiences,” Shockley says.

Shockley’s advice to other employers is to be cautious about new hires and take the time, be persistent — even though you’re busy — to investigate suspicious behavior.

“The light should have come on when Hinerman went to a lawyer,” Shockley admits.

As for the bureau, Shockley says it has made big improvements since 1988 and now does “a damn good job” controlling fraud.

Today, a 125-member Special Investigations Department at the bureau uses computer cross matches to identify potential fraud, according to bureau spokesperson Benton. That’s a far cry from the three bureau employees who were assigned to look for abuses statewide in 1993.

It had no investigators when the Hinerman situation surfaced in 1988, Benton says, because workers’ comp fraud wasn’t considered a crime then.

In addition to extra staff dedicated to identifying and stopping cheats, fraud investigators also train claims representatives in regional offices to recognize the warning signs of fraud. Computer cross-match programs at the Ohio Bureau of Employment Services and the Ohio Department of Rehabilitation and Correction have also located hundreds of workers’ comp cheaters.

Since 1995, nearly $241 million in fraud has been identified and more than 230 people have been convicted on fraud-related charges — a 99 percent success rate, according to the bureau.

Here’s what you can do to fight fraud:

  • Complete a detailed accident report each time an employee is injured.

  • Carefully review the facts on the claim application.

  • Compare emergency room records, if you have them, with injuries listed on the benefit application.

  • Stay in touch with the injured worker and your bureau claims representative.

If you suspect an employee of fraud, call the bureau’s hotline at (800) 644-6292. You don’t have to give your name.

Richard Spencer (rspencer@donet.com) is a free-lance writer.