"How Do Dealers Manage the Expense of Social Distancing?" - 06/24/20 Edition
Stephen Says Column




Dear Stephen,

I own a furniture dealership in a major city in the northeast — it's the city that never sleeps (except for the past few months). And we are one of the largest dealers for a major manufacturer. You have heard the story about the cobbler whose kids don't have shoes. We provide beautiful environments to our clients, but not for ourselves. We have lots of people crowded into a small place. Not exactly what you would call the appropriate amount of space for "social distancing" under today's circumstances and rules.

My own office has the most amount of real estate which I will soon partially relinquish. It's the size of a golf course, which is not unusual for many of the dealer owners I know. The sales and support people are squeezed into tight quarters, in part because we have had such growth in sales and in part because we wanted to keep costs down. Rent is a fortune here, so we're careful about every square foot. It hasn't been a problem from a client and visitor point of view because we rely on the manufacturers we represent for the customer experience showrooms, not our sales office. Most of our customers never come here, and we take full advantage of the manufacturers' showrooms.

Historically, until the pandemic hit us all, the financial and space equation has worked out. We have commissioned salespeople and to give them a generous amount of the gross profit and keep commissions high, I need to keep expenses low. It has been to their benefit. Now my cost of doing business while social distancing is going to increase substantially so I am asking our VP of sales to come up with solutions. He sells but is also paid on P&L.

He suggests we may have to cut sales reps' commissions as a way to control overhead that is going up as we roll out all the "safe office" steps. They will not be happy. It gets more confusing because I have a mostly mature salesforce, and they are afraid to get back on the subway or make sales calls in person, so many of them have already told me they do not even want to come back into the office but want to work from home. The good news is there's zero office cost for that, but I think it's important people come into the office (OK, call me old-fashioned).

So what do you think of the logic of my explanation that our cost of business is going up, and there's no way we can move to less expensive space right now because we're stuck with a long lease. I just have to do more with the space I have. That may mean letting people go to make more room or figuring out a work-from-home scenario for certain positions, which doesn't really appeal to my business sense.

I like to run a tight ship. We have already let some support people go because we just don't have the work for them, and we've let go of a few salespeople we should have released a long time ago, but that doesn't solve the space problem.

And it is not just the real estate cost. We are buying face masks, hand sanitizer, gloves and plexiglass screens and incurring extra cleaning service costs. It all adds up. We want everyone back to work, preferably in the office, safe and making money for themselves and their families. My great VP of sales jumped on all of this to help me, but how do we pull this off — the balance between profit and empathy?

Signed,

Dealer in A Pickle, Trying to Save a Nickel!
 

Dear Nickel,

Your own office is the size of a golf course? Well, at least you admit it. Funny, Mike Bloomberg worked in an office not much bigger than him, both as mayor and as CEO of Bloomberg LLC. Social distancing is a real new cost of doing business today, like it or not.

You are right that you may eventually require more real estate as business rebounds, and you need to hire people back, and that eventually means more rent. When that time happens, adjust your costs accordingly and explain it to your people. That is not your problem today. The problem today is downsizing support people, keeping the ones who will work hard and socially distancing your office accordingly.

That's your problem, not your employees and the cost of doing business in the modern world today. I can't help but think if a company today decides to squish employees into the tiny spaces of the past (Remember how we used to say "You don't need a big workstation because you should be out on the road"?) sooner or later a whistle blower will report you. Yes, your salespeople may gossip to the manufacturers you represent, there may be complaints to your own HR department or worse, your name showing up on a site such as www.glassdoor.com. "Nice place to work but we are more crammed-in than a Trump rally." Guess how many companies are already being reported when someone is not wearing a mask in a state like California, where it is required and employees start fighting with and shaming one another? Productivity goes down when employees are arguing or reporting each other's safety blunders. Fix the office, eat the cost and take a pay cut yourself if need be. Pay cuts are not just for people who work for you. Got that?

And as far as the outside salespeople who do not want to return to the office at all, this is going to happen more and more. People are understandably skittish about public transportation, yet for many that's the only way to get around the city. I like salespeople to base themselves in the office myself, but I have to be open to change. Salespeople in the office keeps them focused and you and your sales manager involved. So the way you do that is to lead by example. Be sure the two of you are in the office first thing in the morning and stay engaged the whole day. When someone is "working from home" call them and let them know you are in the office — and they're not. Mostly have a strong CRM like www.saleforce.com and track it closely.

Some people will just not want to be in outside sales anymore. Toward the end of the summer, I predict a number of outside reps will just quit the industry. And age has nothing to do with it. Young and old, some people just do not want to take the risk to sell a piece of furniture, so let them find a new job where they think they will have less chance of being around so many people.

You need to make it clear by Labor Day 2020, or pick a date right for your company and geography, that you expect everyone back working at the office. If they cannot do it, find out why and evaluate the working conditions on a case-by-case basis. A person who has proven their value and importance to your company may merit flexible working arrangements. But if an employee decides to leave, they are easier than ever to replace. And as for you, the boss and owner, consider being a little more trusting and think about evaluating your employees on results, not where they sit all day. Do not lose a big producer just because they want to work from home. Let their sales make the decision, not your out-of-date trust issues.

Stephen
 

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Stephen Viscusi is a bestselling author, television personality, and CEO of The Viscusi Group,
global executive recruiters located in New York.
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