I had an incident this week where a third-party administrator (TPA) suggested very strongly to an insured client that she have her windshield installed by a particular glass company. When the insured told me the name of that company, I was confounded. I simply had never heard of them. The customer said that the CSR had assured her that the company was one of their “most favored vendors and was very well established.”
When placing an order with a glass distributor, within the hour of hearing those words, I had to ask, “Who are these guys?” The reply came quickly that they ordered glass from several of their outlets and had various installers come and “will call” the orders. The fact was, this company was not a “real” brick-and-mortar corporate entity but a recipient of insurance glass claims that farmed out installs to a select group of self-employed installers. The “company” paid for the glass centrally and processed claims as well. So with a certain amount of irony, installing auto glass is also evolving into business models that use the third-party definition as well. Like so many things in the AGRR business, it is a sad trend for both customer and installer.
Why is it sad? For one, it is a sure sign of a disconnect. How much real responsibility (as in legal liability) does a cyber-company actually have and retain? How much is a consumer protected in the event of a rust issue that was created three years earlier by a lazy or incompetent sub-vendor?
I acknowledge the economic truths of contract workers and sub-vendors. I just don’t like them installing auto glass. If a company wants to compete against the giants of our industry or one-man mobiles, there has to be a better way rather than farming out installs (most likely to the lowest bidder). Some call it capitalism. I call it cowardly. Building a brand or company should involve people that have something more invested than a service fee remuneration, a keyboard and a fax number.
No doubt, what we do in the auto glass business is not on par with brain surgery but it does require some technical expertise and physical skill. Having a conscience and personal pride in your accomplishments certainly helps in making a technician a complete package. Yet why does this industry keep embracing practices that encourages a death spiral in quality and accountability?
I “get” pay for performance. If you do more, you get paid more. It’s an easy concept to understand. Yet, what does that do for the overall quality of our practice? We have invented all sorts of labor and health-saving devices that either will shorten removal or install times. What kind of pressure exists on technician employees to maximize installation numbers? For me, that is the weakness in the method.
The independent contractor system used in the AGRR business is a hoary dodge against paying benefits, insurance and taxes. One pays a person a fixed amount to do installs. In my area of Central California, this practice is evolving into a fine art and has grown significantly due to the maturation of the Internet. We have companies that exist in a living room that offer quick and low prices quotes on auto glass that use a network of freelance installers. We also have brick-and-mortar companies that have built up a clientele of body shops and car lots based on low prices that would not be able to compete unless they evaded the employer mandated responsibilities of workman’s comp and social security taxes by calling their techs “independent.” Now we have third-party installers making deals.
The question I want answered is: where is this trend going? I would want myself and my company name associated with quality workmanship. How can I do that if I lack control and oversight over people associated with that brand? I have and remain critical of several of our largest corporate installation companies with their preoccupation with numbers and metrics but at least they actually have real employees
The cost of maintaining a workforce is substantial as any owner knows. Taxes, insurance and ancillary benefits add substantial costs to doing business. What I find reprehensible is the ongoing and evolving method of evading such costs by some and attempting to gain a pricing edge by skirting the law or in some cases purposefully ignoring it.
California (along with many other states) has a substantial underground economy. Under-employment, high taxes, cultural acceptance and an ineffective, overworked, politically neutered regulatory system are just some of the reasons that make such a situation so conducive for growth. I am motivated by self-interest to buy business liability insurance that costs more $3,000 a year. I wonder how many installers I see waiting by a distributor’s fax for a new job carry such coverage and are saddled with just that cost of doing business. What do they have to lose if sued? A 15-year-old mini pick-up? What about the “company” that sent them the job? Claim the person’s laptop as the most viable asset in the event of a judgment? All in all I have witnessed several cases where an owner or an installer has gone out of business one day and re-started the next under a different name or credit source.
I understand that the “easy entry” (exit as well) fact of our industry cannot or will not cease any time soon. There are too many powerful forces in and outside the AGRR business that find that condition beneficial to their own interests. With that said, it mystifies me when TPAs give out names of preferred shops which in reality bought their way onto that list with favorable pricing, no matter their status actually is. In short, there is very little background investigation it seems when being approved for vendor status. I presume a TPA (if not the client insurer) wants deniability; after all, one very prominent reason TPAs have come to exist is the fact of separation from a an insurer to the insured’s claim. The onus of liability weighs far more heavily on the referring or dispatching party than the actual insurer.
On a personal note, it just truly bothers me to see this new form of “doing business.” Both a physical and emotional disconnect exists. On one hand, you have a facilitator who gets the jobs and dispatches work, usually all digitally. Some buy the glass or sell the lead. They actually can exist anywhere on this planet. The installer is local and his qualifications are what? His charge for completing the job is the cheapest available? It is the perfect response to a consumer market that is deluded into thinking that having a windshield installed is like shopping for a box of cereal—that everything is equal but the pricing. Most of us who are called into fixing someone else’s butchery can and will attest differently.
So let’s hear it for the employee-less installation company. It the latest devolution within the AGRR business. The Internet has brought so many new twists to auto glass from how it is sold then to being installed in vehicles. There are so many third-party constructs occurring that I am waiting to discover third-party installers farming out work so they can collect a piece of the pie without actually performing the work. If the AGRR business continues in this race to the bottom jettisoning both quality and accountability we are going to find that pie completely inedible due to the crows that have made it so.