Employees vs. Subs

Whether you hire your own employees, subcontract your work or utilize a blend of the two, each has its benefits and drawbacks.

Norristown, Pa.-based Volpe Enterprises does a lot of exterior work—roofing, siding, windows and doors. “In this industry, particularly roofing, it is almost all subcontractors,” states Andy Miller, sales manager. “We are one of the few roofing contractors who uses our own employees. Of course, if we do plumbing and electrical, we will hire subcontractors.”

Miller recalls a painting contractor who was looking for work. “He said they would wear our shirts, put our magnetic stickers on their trucks and tell people they were our employees,” Miller states. “However, we don’t do business that way.”

The upside of having your own employees, Miller believes, is you can control quality better because you can hold employees accountable. “Subs tend to focus on speed,” he states. “We want our guys to work efficiently, but we are not promoting speed through how we pay them.”

One downside is workers’ compensation rates for roofing workers are very high, so the company has to pass that cost on to its customers.

Although Volpe Enterprises prefers to hire its own employees, Miller personally has nothing against qualified subs. “There are a lot of qualified, bona-fide independent contractors out there,” he states. “My grandfather was a union carpenter, worked as a subcontractor for 50 years and did amazing work. He worked by himself, was fully insured and had an accountant do his taxes every year.” What concerns Miller is the influx of low-quality labor these days. “There is also the undocumented worker component,” he adds.

Subs Only

As far as Steve Crowdus is concerned, working with subs is the best way to go. “It has a lot of advantages,” states Crowdus, founder and president of Ballwin, Mo.-based Crowdus Custom Homes & Remodeling. While some contractors hire their own carpenters and subcontract everything else, Crowdus subcontracts everything, including carpenters. On his projects, he operates as a general contractor, managing all the plan details and customer directives to ensure quality and satisfaction.

One of the most important benefits of working exclusively with subs is not having to deal with the challenges associated with keeping craftsmen as employees—payroll and taxes and always feeling obligated to keep them working constantly. Eliminating these concerns allows Crowdus to focus on serving customers. Another plus is he believes subs often work harder and more diligently than employees.

The arrangement has been working for Crowdus. Although some of his trades have been with him since the establishment of his company 17 years ago, the majority of today’s team has been in place for the past decade. “They are very hard workers, and they are committed to doing quality work,” he states.

Of course, if there are problems on the jobsite related to quality, Crowdus, as the general contractor, will step in and make sure they get corrected. However, he doesn’t directly supervise the subs. “Each subcontractor has his own employees, and he supervises those employees on his own,” Crowdus says.

Working with subs allows Crowdus to keep his overhead low, a savings he passes on to his customers.

Combination

Nashville, Tenn.-based Huseby Homes LLC employs its own carpenters, and Owner Craig Huseby has built his team on a lead-carpenter model. “However, we do some subcontracting, such as for framing,” he states.

Huseby finds a number of advantages to having his own employees. “One advantage is having someone at all of the jobs who promotes our company culture: a high level of customer care, clean jobsite, having positive energy and enthusiasm, and adding a personal touch,” he says. “It is personal as much as it is professional.” That is, he can have his protocols for setup, cleanup and construction techniques. In addition, it is important to have someone who understands the client’s emotional cycle, such as being excited when things start, getting worn down as the project continues and so on. “We surveyed 50 clients last year, and 100 percent of them said they would use our company again or refer us to a friend,” Huseby states.

Not all of the company’s carpenters drive company trucks, but four of them do, which is good branding. “People tell me they see our trucks everywhere,” Huseby says. “This gives people the perception we are working more jobs in more areas than we actually are, which leads them to believe we are a successful company.”

Also, by having lead carpenters on the job, the company isn’t management heavy with people who aren’t producing on the job.

Craftsmanship is also an advantage. “There are definitely good carpenters who are available to subcontract,” Huseby says. “However, when you get into more complex projects, there are some jobs I don’t think I would take if I didn’t have the guys that I have in the field. I know them, and I trust them.”

A remodeling company with its own employees enjoys the advantage of building a closer relationship with customers and encouraging repeat business. “Subcontractors who are being paid a set price to get something done want to work quickly,” Huseby says. “As a result, they may unintentionally get a bit impatient with customers.”

There are disadvantages to having employees, however. “If you hire carpenters, you need to make sure you have enough work to be able to carry them,” Huseby cautions. “It is difficult to keep a good team of carpenters if your work is too seasonal. Fortunately, in Nashville, we can work 12 months out of the year.”

The biggest disadvantage to having employees relates to human nature. “You have to make sure employees are producing what they need to produce in a given amount of time because they are working by the hour,” Huseby states. “It is important to find a way to hold them accountable.”

William Atkinson writes from Carterville, Ill., about remodeling and design.

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