Conventional: Do more with less

On the Contrary: Don't ask people to pay more for less

If you've taken an airport shuttle in the last five years, you know firsthand what's wrong with reclassifying low-wage workers as franchisees or contracts: The quality of the service goes to hell.

Not so long ago, taking an airport shuttle was a good experience. Yes, you had to sit with strangers, but the vehicle was clean, well-maintained and punctuality mattered. I was a loyal customer.

The Cost of One Ride

But my last few rides were so bad that I started looking for alternatives, and haven't scheduled a shuttle pick-up since. The vans needed repairs, the seat belts were all broken, the upholstery was old, and we waited for 45 minutes as the driver drove around and around loading passengers to fill the van to bursting before we were able to leave the airport. The experience got me wondering what had happened to cause the shuttle company to be bound and determined to destroy the customer experience.

The answer was a broken strategy, one with no room for accountability: The shuttle driver was not, in fact, an employee of the shuttle company.

The Real Cost of Penny-Pinching

A recent Wall Street Journal article highlighted the case of SuperShuttle, which was "renting" vans and demanding licensing fees from so-called franchisees, who were mostly former contract drivers. In their greediness, SuperShuttle and similar companies made it more difficult and, in some cases, impossible, for their drivers to afford to run the business properly.

Pushing the cost of ownership to drivers--or house cleaners, construction workers and yes, even strippers-- is unethical and should be illegal. But what business owners and customers should really be pissed about is the fact that all these "creative" reclassifications leave customers paying the same price for less.

Quality goes downhill, and what about the basics, like checking driving records and monitoring insurance coverage? In an industry so focused on short-term profits that they're squeezing themselves out of existence, I'd imagine there's not a clear answer. And when accountability is uncertain, the risk is ultimately on the customer.

Take the High Road

Fortunately, not all businesses are declassifying workers. The CEO's of on-demand service providers Shyp (package-delivery) and Alfred (home concierge services) are moving contractors to employee status as part of customer service initiatives. Like shuttle drivers, the employees of Shyp and Alfred meet customers at or in their homes, making security and accountability paramount. Both companies have reported revenue gains and jumps in customer loyalty since adopting a stable, full-time workforce. Shocking.

Before you buy into the latest budget-busting craze, or get "creative" with your payroll, spend some time thinking about what a cut means to customers. If you're passing the costs down the line, then your savings aren't savings--they're an invitation to look elsewhere.

Published on: Jul 3, 2015