Tips for Rebuilding Your Firm's Team

Over the past several years most of us have gone through a great deal of belt tightening: trimming staff, reducing space, stretching the life of equipment and, occasionally, reducing pay rates. Now that the housing market and, hopefully, our business prospects, are improving, it is time to get prepared for the changes that lie ahead.

There is a tendency after having held off on dealing with all of these pressing needs to get carried away with rebuilding all of them at the first sign of a recovery. Let’s look at a reasonable strategy for dealing with the situations that will present themselves during a period of recovery and beyond.

Is it Real?

Most economic recoveries tend to have somewhat fitful beginnings and often fizzle out during the first attempt or two at gaining any lasting momentum. That certainly has been true of the current situation. The stock market has recently returned to levels not seen in the last four or five years, and now home prices seem to have begun moving higher, although that is not true in all areas of the country. At the same time, unemployment has remained stubbornly high by historical standards.

Economists seem to be divided on whether or not we have entered a period of sustained economic growth. Current sentiment seems to settle on a period of slow growth, with some fits and starts, subject to disruptions from outside influences such as Congressional or international crises. Most agree that the housing and construction industries are the key to solving the unemployment problem.

So, what does all of this mean to the kitchen and bath design industry? For most of us, our kitchen and bath firms are primarily locally based, and therefore what we see and experience in our own showrooms and observe happening to significant local employers will be the best indication of what to expect in any particular market.

Is there a large manufacturer or service provider in your area that is expanding and hiring? Is the employment picture in your area improving, regardless of what you hear on the national news? If you see positive signs in these areas, you should probably start the rebuilding process with your business. Again, a key indicator will be new and existing home sales and prices.

Where to Start

The most critical area of any business is personnel. If you have been “hunkered down” and holding down (or reducing) wages over the past few years, you will need to address compensation of your current employees. Once things are clearly improving and other businesses start hiring, your employees, particularly the best ones, will be attractive targets, especially for your competitors.

This doesn’t mean that you necessarily need to shower big raises on everyone, merely that you need to let your employees know you are aware of what is happening and plan to address it in a reasonable manner. Be sure you have addressed compensation of current employees before you move on to adding new ones.

At the point that your business has picked up to a level where additional employees are necessary, spend some time evaluating what the current ones are doing. As your business has contracted, it’s likely that remaining employees took on additional responsibilities and duties. Adding an employee, or employees, provides an opportunity to reorganize these responsibilities and rationalize how processes are handled – and also add some new skills.

This has been a long recession and a lot of things have changed, particularly technology. Things will likely be done differently than they were four or five years ago. Once you have completed this evaluation, you will have a better handle on the employee qualifications you are seeking.

What’s Next?

As the construction business improves, the demand for competent sub-contractors, fabricators and suppliers will increase, as will your need for additional ones. If construction activity improves rapidly, it will be quite disruptive to the whole supply chain that we all deal with. Sub-contractors may leave their specialty to become home builders or attempt to grow their businesses to meet demand, leaving you forced to hire inexperienced help. Your cabinet supplier or countertop fabricator may not be able to keep up with demand, causing delays or production quality problems.

If your doors are still open, it is likely that you have had a strong relationship with not only your own employees, but with your sub-contractors and suppliers. Just as with your valued employees, good sub-contractors will be a prime target for your competitors. Now is the time to reinforce these relationships by meeting face to face with each of them and discussing how you can work together to meet the challenges that lie ahead. Use this opportunity to evaluate whether your existing line up of subs and suppliers will be able to keep up as business improves for you.

Increasing demand for your products and services is a double-edged sword: While your business improves and you are able to sign up more projects at improved margins, the situation will encourage others to enter the remodeling business, creating additional competitors.

You should also expect to see costs begin to rise. Since many of the projects we deal with can last many months from the time we first start quoting prices until the job is complete, how you deal with potential inflation or your costs is a critical issue.

The problem of a rapidly inflating cost structure is not one most of us have had to deal with in recent years, but it can take very little to tip the balance and set off a round of price increases that can take a serious bite out of our profit margin. Take steps to protect your margins, either through cost plus contracts or by locking in costs by having subs and suppliers bid the work on each project.

Be prepared for new challenges

The problems and challenges described above may seem welcome compared to those of a contracting economy and those of surviving in a long and painful recession, Yet they are still challenging and require being prepared and dealing with the issues on a timely basis.

While the current recovery is still pretty tentative, we can hope that this spring will see that recovery bloom and let us all tackle these new challenges.