Remodeler Joe Pecario Jr. had what anybody in business would consider a bad month. At the helm of a Summit, N.J. siding and roofing firm he and his father built into a perennial Top 500 company, he uncovered a series of employee issues last October that would test the limits of the firm’s resilience.
The first incident came to light as part of an internal audit designed to more effectively utilize the firm’s truck-borne, jobsite trash bins. Percario discovered that a once-valued employee had been carting the bins to non-company jobsites, selling refuse space to other contractors and pocketing the cash. Within a couple weeks he also discovered that one of his sales associates was using the company client list to generate new business for himself. This scheme involved another employee. Both planned to leave the company as soon as their new “venture” got off the ground. All three were immediately dismissed, and one faced possible jail time for felony theft.
Percario says he feels blessed that he was able to uncover the problems before too much damage had been done, but the whole experience left him snake bit on the hiring process. “I considered these people to be like family,” says Percario. “I trusted them that much.”
What happened to Joe Percario is an extreme example of the personnel issues that can and do occur in the remodeling industry every day. Every remodeler can quickly remember their weak hires — the sterling candidates that chronically underperformed, or those whose work was good but whose behavior caused tensions among the team.
On the flipside, every remodeler can also remember good employees that got away — the lost training time invested in employees who show great promise but who quickly move on for greener pastures. The simple truth: Building a cohesive and productive team is the most critical task facing remodelers or anyone that runs a business.
How you hire — the process and the protocol — as well as the efforts you make on an ongoing basis to keep employees happy is worth examining. According to the National Association of Home Builders’ Labor Market Survey conducted in 2003, one-third of all employees hired by residential construction firms leave prior to completing two years at a company. The high rate of turnover is compounded by Labor Department projections that between 250,000 new workers will need to join the construction sector each year to offset for attrition and higher demand for labor.
And the demographics get worse from there. In the next 15 years there will be 50 percent fewer workers between the ages of 35 and 45, despite a 25 percent increase in demand for experienced workers. “This is not a feel good issue,” says small business consultant and QR columnist Linda Francis of Linda Francis Inc. in Redwood Valley, Calif. “You need to have retention as a strategic focus for your business.”
10 retention strategies
Through years of providing consulting services to remodeling firms, Francis has developed 10 strategies for hiring and retaining employees. To Francis the issue of retention is closely linked with solid hiring practices.
- Hiring right.
The biggest trap that remodelers and others in the residential construction industry fall into is hiring too fast. They have an opening, somebody serendipitously shows up on their door step with the nominal skills needed to do the job, and they hire that person without regard to fit within the organization.
- The makings of a good hire begin with a well-crafted and thought out written job description. When crafted well, a job description tells the prospective employee what to expect and they have a better chance of self-selecting themselves for the job. For internal purposes, a written job description helps the hiring manager screen resumes. And during first interviews with job candidates, the job description forms a basic checklist that candidates need to match up with. From there, the interview process should shift in focus to behavior patterns.
- “The job description covers all of the basic requirements; after that we really need to get at all of the behavioral stuff,” says Francis. “The stuff that drives you crazy about employees is on the behavioral side of the equation — not showing up to work on time, not treating co-workers and clients with courtesy and respect. You want to find out, through interview and references if they are the kind of people you want working in your team.”
- One convenient rule of thumb regarding the efficacy of the entire universe of potential employees is the 30 - 60 - 10 rule, says Francis. About 30 percent of all potential employees are sharp, on the ball, the kind of individuals who can succeed in any environment. About 10 percent are slackers, the kind of people you would never want in your company, and 60 percent are the ones who could go either way depending on how you treat them. Because of this, many new hires — the middle 60 percent — perform based on the way they are treated by the company. The logic goes that if you build the kind of environment where the top 30 percent want to work, you’ll keep the other 60 percent. In terms of attracting the top 30 percent, screening and vetting for skills and fit, does not bring that candidate to your doorstep — providing a productive and happy workplace does.
- Orientation checklist.
On-the-job-training is great, but not right away. Human resource studies have shown that the better a job you do during orientation, the longer the tenure and more productive the employee turns out to be. People want their responsibilities clearly spelled out in the beginning, plus they want to learn about how the entire organization works so that they might be able to see opportunities for contributing above and beyond their duties. The orientation program should consist of a list of people to meet and interview on a one-to-one basis including the company president. Company staff must be open to these meetings and provide real meat to the time spent with the new employee, even if they will not be working together on a regular basis.
- Reward managers for low turnover.
Exit interviews at 700 companies have shown that the No. 1 reason why people leave their jobs is due to a poor relationship with their boss. More money is often said to be the main reason, but the research does not bear this out. According to Francis the best way to reduce turnover is train managers to be better communicators and leaders and to reward them financially for displaying an ability to keep employees on board. And this goes to the point of hiring: When you are looking for a manager, a key attribute is people skills. “They have to be reliable. They have to be competent. But they also have to be considerate,” says Francis.
- Provide opportunities for career development.
The second major reason people leave companies is a lack of a career path. They view themselves as having reached their potential at a certain company and move on to broaden themselves. Simple steps like increasing the level of responsibility within their current job as well as enrichment opportunities and tuition reimbursement often go a long way to keeping career-oriented, motivated people. Maybe a production manager could be tasked with researching new kinds of materials. Or they might be trained on how jobs are bid. You can enrich jobs if you can’t move them up. Francis says she counsels her clients to say to their employees, “Quit your job, but don’t leave the company.”
- Offer good benefits.
Health, dental, retirement plans, these are all very important to existing and prospective employees. But beyond covering these basics — and they do need to be covered — is creating a broader list of extras. Some small companies offer a $600 live/work allowance for pursuing a hobby or craft or outside activity that enriches their life. These funds can be used for rock climbing classes, piano instruction, etc. The key is to find creative ways to truly make them feel appreciated. Francis says that some of the best benefits keep a worker’s spouse and family happy. You want employees to say: “My wife would kill me if I left this job.” If an employees works a lot of overtime and cuts into family life during a week, develop a program where the company pays for a night out on the town for the couple or family. But the offers can also be more substantive. One remodeling company owner Francis worked with, realizing he needed a larger facility, created a limited liability company to purchase the new land onto which a new building was built. Shares were then offered to employees. Many of them took advantage of the offer and they now receive rent checks from the company for the land the building occupies. For each of the employees that own shares, the company also helps them prepare their taxes each year.
- Offer training.
Happy employees feel challenged and enriched. The best companies to work for in the remodeling industry offer tuition reimbursements, etc. But mostly they have a culture of training that is ingrained in the company. Individuals that attend seminars and trade shows are expected to come back and present that information to the rest of the employees at a breakfast meeting. Again, creativity helps, says Francis. One plumbing contracting firm that she worked with would allow employees to spend $400 with another plumbing contractor in town on their home repairs. The employee would be required to be present during the repair so a report could be brought back to the company on what they do well. Offering English as a second language courses can be particularly effective toward this training goal, especially in an industry where many workers are native Spanish speakers.
- Regular open communication.
Individuals can feel like they work in a vacuum. They don’t know why certain decisions are being made; they just have to live with them. People want information about their company; the more information they get the better they are in making decisions that can benefit the company. If a crew is made aware of logistical goals, at the start of week, they can look for opportunities to pick up time during that week. If a team is aware of financial goals, they might be able to look for productivity enhancements or cost savings that could help the company achieve those goals. Francis advises her clients to have formalized communication within their companies. These can include detailed quarterly financial updates, weekly meetings about production activities; the goal is to keep everyone in the loop.
- Value work/life balance.
Remodelers can show that they value their employees simply by demonstrating an interest in, and acknowledgement of, their lives outside of the company. Small businesses can demonstrate this value in many ways says Francis. On average Americans work 300 hours a year more than their European counterparts. Burnout can be a risk. Remodelers can make them take their vacation time, no cash for unused time, but with an emphasis on reconnecting with their families. The company can also offer use of vacation home for a weekend and other similar perks to ensure that an employee has downtime with loved ones and friends. Some companies offer $5 for each A on a child’s report card. Longevity — 10 or 15 years with a firm — could mean an all-expense paid trip to Paris.
- Create a fun workplace.
Levity and light-heartedness go a long way to making a workplace a good one to work in. This does not mean that remodelers should bring in stand-up comedians for the office. It means taking an interest in company softball teams. It means outings to professional baseball games or movies. Again creativity is the key, says Francis. At the outdoor clothing manufacturer Patagonia, based in California, surfers on staff are notified when the waves are up and are free to clockout and go surfing. Southwest Airline’s CEO Herb Kelleher was well known for arm-wrestling and other spirited events that kept spirits high among his rank-and-file employees. Sam Walton was famous for doing a hula dance at the front of new stores that exceeded their numbers.
- Do performance reviews.
Individuals need feedback in formalized and nonformalized ways. Recognition, status and belonging to a group are hugely important to the overall job satisfaction that an employee feels. There are many wonderful sources for performance review materials on the Web. (A good place to start is smallbusiness.yahoo.com.) Above all, pains should be taken to show a review process is fair and nonjudgmental, says Francis. Informal reviews involve lots of positive reinforcement for good behaviors and good results. Remodelers and owners have to make a point of catching their employees doing things right.
Remodeler Joe Percario says that he will be a lot smarter about how he interacts with his employees in the coming years. Percario feels responsible for creating an atmosphere that allowed individuals to act against the firm and he is focused, now more than ever, on implementing better hiring and retaining practices. Says Percario, “I never want to experience this again.”