Personnel Matters

There’s plenty of truth in the old adage, good help is hard to find. And nowhere is this more evident than in the kitchen and bath industry over the past few years. While many industries have floundered in the last five years, the building and remodeling industries have continued to see strong growth, thanks to record-low interest rates, an aging U.S. housing stock and consumers’ growing fascination with all things home-related.

Savvy kitchen and bath dealerships have reaped the rewards, garnering more clients, more projects and more profit. However, all of this growth has created an increased demand for quality employees that the market hasn’t always been able to meet.

As a result, dealers are increasingly reporting difficulty securing top-quality designers, salespeople, installers and administrative personnel, according to a new survey by Kitchen & Bath Design News.

The survey, which polled more than 240 kitchen and bath dealers from across the nation and Canada, showed dealerships plan to increase their staff by an average of 1.2 employees in 2006, with the majority looking to add sales/designers and installers. Many said they would like to grow their staff even more, but are at a loss for how to find the right people (see related Editorial).

“It wasn’t always this way,” lamented an East Coast dealer who responded to the survey by detailing his own struggles to find a quality installer. “My business has practically doubled in the last few years, and other dealers are also growing. [But] there just aren’t enough quality people to go around. You feel guilty complaining that business is ‘too good,’ but it’s a very real problem, not having people at the level you need them to be to handle the jobs properly.

“And it can be a vicious cycle. You get the referrals for doing good work, but then you get so many referrals that you can’t do as good a job, and then you lose the work that you struggled so hard to get and damage your reputation in the process.”

Finding Talent
So, where do dealers go to find talented personnel to handle the increase in business?

According to the survey, dealers are relying more on referrals to ensure quality hires whose work is as good as it appears on their resumés. In fact, nearly three quarters (74.6%) of those surveyed cited referrals as one of their most frequently used sources for new employees (see Graph 1).

“It just makes sense,” said an East Coast dealer. “Anyone can look good on paper, but if someone who personally knows someone else recommends [that person], I feel much better about bringing [that person] on board. “When I’m ready to hire someone, I talk to everyone I know – employees, reps, builders, other business owners, teachers at one of the design schools near me, even friends and family not in the industry. After all, character matters as much as skill. I also offer employees a bonus for bringing in someone who is still with us after six months.”

The classic newspaper ad remains a popular option, with 42% of respondents reporting frequent use of them. Design schools were also a strong source for dealers seeking new employees, garnering 20.2% of dealer votes.

As one dealer explained: “Once, I wouldn’t consider hiring someone without experience. But these days, I’m willing to trade work experience for a quality education at a top design school. Then I can train them the way I want, rather than having to break them of bad habits that they may have learned in other positions.”

Not all dealers agree, however, with many citing concerns that design schools don’t teach practical applications, just theory.

As one put it: “I find design schools and colleges don’t teach the basics of construction. I hired two young people [from design schools], and both knew CAD, but they couldn’t draw cabinet plans and had no real knowledge of how to lay out kitchens.”

Dealers are also increasingly looking to online sources to find quality employees, with 13% of survey respondents noting this as a frequently used resource for finding new employees. “And, as a bonus,” one dealer remarked, “you know that if you find them online, there’s a good chance they’re going to be technologically savvy, which means less hassle training them on CAD programs and the like.”

Additionally, 11.8% of dealers raid their competitors to find top talent, while 8.3% look to employment agencies and 1.2% attend job fairs looking for possible candidates.

Surprisingly, many dealers say their biggest problem isn’t just finding the necessary skills, it’s finding people with a good attitude, plus a sense of loyalty and personal responsibility.

Noted one dealer: “I know I sound like an old person, and I should point out that I’m not even 40 yet, but the kids that I meet today have a sense of entitlement that you just didn’t see 10 years ago. They want to start at the top, and they want to make big money without paying their dues in terms of experience. They will argue with me, the owner, and they’ll argue with the clients, because being right is more important to them than doing the job right.

“We’ve even had some sneak off to play golf or go out with friends when they’re supposed to be working. I don’t want to be a baby sitter, but it’s hard to find younger people with the internal work ethic we want.”

In fact, some dealers said they preferred to hire older people with no experience and a passion for design instead of young design school grads because “we need the reliability and loyalty, and that’s even more rare than good skills. We can train skills, but we can’t train for character.”

Many dealers surveyed maintained that they’d rather be short-staffed and turn down work than hire employees who aren’t up to quality standards. “I keep waiting for the climate to get better [before I try to hire someone],” said a Midwest dealer, “but I worry it’s not going to happen fast enough – if at all.

Other dealers, however, have decided that waiting for the right person isn’t an option. As a result, they’re coping with the shortage of trained personnel by “growing” their own talent, stepping up training offerings and cross-training existing employees to maximize their firms’ efficiency.

When asked what training they currently offered, 87.3% cited product training from reps, “Because knowing product is everything,” as one respondent insisted (see Graph 2).

Another 68.2% noted attendance at trade shows, 42.7% pointed to installation training and 42.1% pay for employees to attend industry education seminars.

Others include CAD training (29.3%) and outside sales training (28.7%) among their offerings. Still others pay for classes or CKD/CBD prep seminars (28%) and NKBA chapter meeting attendance (23.6%).

Interestingly, when asked where their employees most needed training, the second most frequently cited area was not a traditional skill at all: Rather, it was time management. This was cited by 44.8% of those surveyed (see Graph 3) as a major weakness among employees.

“It’s just a result of being bigger,” a Southwest dealer explained. “With more clients, everyone has to be better at multi-tasking, and you need to manage your time to do that. This has been a challenge for a lot of our employees who are used to being able to focus on one thing at a time.”

Sales was the number-one area where dealers felt their employees needed more training, with 45.5% reporting this as a major concern. Another 37.7% cited design skills, while 29.2% pointed to client relations. Still others named controlling costs (28.6%), installation (23.4%), CAD skills (22.7%) and business management (21.4%) as weak areas for employees.

One of the training conundrums dealers pointed to was the growing need for training at a time when their firms were busiest and least able to provide it. In fact, only 15% of respondents said they currently offer a formal training program (see Graph 4).

However, a full third (33.5%) said they’re planning to offer a formal training program for 2006 (see Graph 5).

“It’s difficult to find time to do it, but we know our firm will be better for it, so we’re making a real commitment to having a full training program for all new employees in 2006,” noted one dealer from the Southwest. “We’re also going to have formal training for existing employees to expand their skills,” he added.

Indeed, cross-training of employees is a growing trend in the kitchen and bath market, as a still-growing market sparks the need for employees to be able to do “just about everything,” as one dealer puts it.

“A small firm doing one or two jobs at a time could maybe get away with everyone having one distinct and separate job,” the dealer elaborated. “But we’ve gotten too big for that, we need everyone to know how everyone else does their jobs, and to be able to pinch hit when needed.”

This dealer’s opinion seems to reflect that of the majority of the industry, with 81.7% of dealers surveyed saying their cross-train employees as a matter of course (see Graph 6).

Retaining Staff
However, if finding and retaining good employees is a challenge, retaining them can be even tougher, dealers maintain.

Many respondents cited employees’ lack of loyalty as a virtual epidemic. Some even said they were loathe to invest in training when employees “are gone in a year’s time.”

Others believe that corporate culture has changed, so much so that it’s become the norm for employees to jump around during their career, rather than stay at one place of employment for any length of time.

Retaining employees can be even more difficult for small firms. A number of small kitchen and bath dealerships surveyed claim their size limits their ability to pay competitively, or offer health insurance and retirement benefits.

These dealers indicated that this is severely compromising their ability to retain staff.

Other dealers noted that potential employees often have a bias against small firms because they assume they don’t offer good benefit packages, or use the most up-to-date technology, even when they do. “But, often, they make assumptions and don’t give us a chance to show how gratifying it is to work for a small firm,” stated one dealer.

Other dealers reported finding themselves competing with home centers for employees – and the big chains’ ability to offer strong benefits packages which often allows them to steal the best employees. “They can’t compete with us on our jobs, but they do get a lot of the best employees. And that could pose a real problem in the future,” a West Coast dealer noted.

It’s even more difficult to hang onto good subcontractors, lamented dealers, because they aren’t on salary, and if you don’t keep them busy, they will find work elsewhere – and then may not be available when you need them.

“It’s also hard to find quality subcontractors who know the specifics of kitchen and bath work. Some are jacks of all trades, but masters of none,” a dealer from the Northeast pointed out.

Many dealers believe retention is about simple math: “If you want to keep your best people, you can’t pay them less than they can get at your competitor.”

But for those who may struggle with pay scale, offering flexible schedules, benefits that are important to employees, long-term growth opportunities, and a warm, family-type environment can make all the difference.

As one dealer explained: “More than anything else, people want a job that’s interesting and challenging. They want to feel good about going to work each day. If you give them that, they will generally stay long term, even if they can make a bit more money elsewhere.”

Future Challenges
As for the future, most dealers agree that labor shortages will likely continue to be a concern. Currently, nearly half (48.5%) of dealers surveyed believe finding quality personnel is more difficult than in the past (see Graph 7). Furthermore, most believe that as long as the industry continues to grow, this will not see dramatic improvement any time soon. In fact, most anticipate the problem getting worse before it gets better.

“As the population increases, [availability of] raw materials decreases, and labor and insurance costs increase, we have an ever-growing supply-and-demand issue,” explained one dealer. “All of our employees are home-grown, and it takes two to three years to train a viable candidate into a productive employee. Unless we make provisions to train more aggressively, in 20 years, we will not be able to build custom homes at a reasonable cost.”

How to address these challenge effectively is still up for debate. Some dealers are turning to interns, hoping to “pre-train” students while still in school so that when they’re ready for full-time employment, they’ll already be ahead of the curve. In fact, some 15% of those surveyed have started using interns in some capacity, and many say they plan to grow these programs.

Others are looking toward profit sharing as a way to get employees to feel more personally invested in the business. Still others talk about changing the commission structure to ensure that they keep their top people.

But one thing is for sure: Dealers will have to put more time and thought into recruiting, training and retaining employees in order to stay competitive in the future.