A recent Service Roundtable discussion focused on the perils of moonlighting. Owners scorn moonlighting for the theft against and liability on their businesses. Before we go further, let's clarify what I'm talking about.

THEFT Moonlighting is theft. Every dollar of gross profit earned from moonlighting is a dollar pilfered. Wear and tear on a company vehicle while doing side jobs adds to the theft. Gas and company parts, if not replaced, compound the larceny.

LIABILITY Risk is worse than theft. Owners may be liable for moonlighters' actions when using company vehicles, warranty expenses when work is passed off as company work, and damage to name and reputation from substandard performance. Employees exhausted from a weekend's moonlighting are injury prone. If injuries occur during moonlighting, they may get reported as onthejob accidents, driving up worker's compensation costs.

Why Employees Moonlight
Moonlighters rationalize their actions. In their minds, they do no wrong. You will not persuade them otherwise, so save your breath. However, by understanding their motives, you can influence their behavior.

Employees do side work for control or money. All other reasons are a subset of these two.

CONTROL Moonlighting leads to the advent of many companies. An employee suffers an entrepreneurial fit and believes he can out perform the guy who signs his check.

Fortunately, employees with free enterprise fever are the least larcenous moonlighters. Entrepreneurial wannabes want to establish their own companies, with their own customer bases, trucks, tools, and so on.

MONEY Love of money is the root of most moonlighting. Some employees see side work as easy income. Others think owners rake it in and want their share.

Battling Moonlighting
Many contractors apply technology to control moonlighting. They use GPS equipment tracks trucks. They buy better software systems and use bar coding/RFID tags to track inventory.

However, technology is not a slam dunk. Unless used with tact, the Orwellian aspects of tracking and control technology may damage morale more than suppress side work.

Ultimately, the battle against moonlighting is a contest of hearts, minds, and economics. Clandestine capitalists are unlikely to be dissuaded from their entrepreneurial initiative. Don't try. Instead, teach them to be good competitors.

CONTROL MOTIVATION Teach employees how to price, the true cost of overhead, the difference between mark-up and margin, how to read a P&L, and so on. Knowledge will give some pause, and lead others to price more intelligently if they insist on hanging out their own shingles.

Keep enterprising employees on the team by making an open offer to help employees establish a business. Offer the use of your infrastructure (e.g., call taking, purchasing, accounting, etc.) if the business is set up outside of your service territory and you receive a piece of the action. Instead of forcing enterprising employees into competition with you, set them up in cooperation with you.

MONEY MOTIVATION Most moonlighters aren't motivated to see their names on trucks. They simply want more money. There's nothing wrong with the desire for more money, though there is something wrong with companies that can't afford to pay a living wage.

To be able to pay more, you must charge more. To charge more, you must deliver more. To deliver more, your employees need to perform at a higher level. They must understand the relationships of price and production, and pay and value to price. Ask your employees what they would like to earn. Show them how their wages are a function of price and volume. Work together to determine how they can boost the value delivered, revenue generated, and profit earned. Do this and eliminate the reason for most moonlighting.

After suffering an entrepreneurial fit of his own, Matt Michel became president of the Service Roundtable (www.ServiceRoundtable.com), the world's largest private contractor group (membership is only $50 a month). Email Matt at matt.michel@serviceroundtable.com and ask him to send you the FREE ebook, "50 Comanche Marketing Tips for Building Your Service Business."