The Design Builder's Blog

Have The Right Compensation Strategy For New Carpenters Before You Hire Them!

One of the benefits of the great recession was that as business slowed down businesses got rid of underperforming and or overpaid employees.  This article is intended to help those remodelers who had or may still have such employees.   I hope by reading this information they can avoid repeating the same mistakes again as the economy eventually improves.

During the boom times many contractors, trying to get enough field labor to keep up with volume demands, resorted to overpaying carpenters and other field workers just to get them on board.  Also, over time, many remodelers gave wage increases to these people just to keep them, either in fear of losing them and or because another business offered the employee more money.  Additionally, many employees received wage increases based on longevity, perhaps with little or no consideration for any actual advancement in performance, responsibility or productivity.  One could fault the business and or the economy for why this was happening, but certainly not the employees.  After all, if market demand stimulated increased wages, employees would be foolish not to pursue and take the increases.

Then the bottom fell out

The great recession changed this scenario somewhat due to layoffs and downsizing.  The surplus of unemployed field workers got as high as 27% for the construction industry during the recession.  Unfortunately many skilled workers left the industry for other jobs, less physical jobs and or better job security.   This has set up what is expected to be a major labor shortage problem for our industry as the economy and construction pick up again.  Many contractors around the country are already reporting challenges finding skilled carpenters to keep up with construction demand.  As the demand goes up, so will the wages that carpenters can demand to either stay at their current jobs or that other contractors will use to lure workers away to work for them.

Finding, attracting and keeping the best carpenters will require strategic thinking

If you plan to hire additional carpenters as your business volume picks up now is the time to put a plan together for not only finding, but also attracting good carpenters to work for your business and then to get them to stay with your business.  The compensation package you put together should not only capture their interest, but also help them see opportunities for future growth and increased compensation if they are loyal and motivated.

This provides a great opportunity for remodeling business owners to get compensation and any future wage increases in line with actual performance, rather than continue using the subjective reasons so prevalent the past.  It should only make sense for a business to put a plan in place that properly compensates employees based on the value they bring to the business.  It also makes sense to put such a plan in place so employees will know how they can and when they have earned the right to expect increased compensation.

Buying a boat or getting married is not a good reason to give a carpenter a raise!

The automobile industry uses a flat rate manual to determine the labor costs for auto repair services.  The strategy they use is not to estimate the number of hours to do a certain task, but rather the typical actual cost of the labor to perform the task.  A repair shop that uses flat rates pays their employees for what they accomplish, not how long it took them to do it.  A construction or remodeling business could do something similar.  Such a strategy could also help the business and the employees learn where to invest training to improve performance and stimulate wage increases for those who buy into performance based opportunities.

If remodelers and other contractors continue to use purely subjective methods to determine compensation for field employees, they will be setting the example for and encouraging employees to also continue using subjective methods to assess their own performance.  If this plagued your business in the past it’s up to you to make sure it doesn’t happen again. 

Summary

Before you hire new employees or bring previous employees back into your business take the time to think out and document compensation plans based on merit.    If you introduce such a plan to job candidates it could even act as a filter.  Top performing candidates will be attracted to such a plan, but those who can’t or won’t perform will likely find somewhere else to work.  After all, as a business owner your compensation is based on actual performance.  Why not offer the same opportunity to employees.  If they make more money participating in such a plan, so will you!

Related articles:

Successfully Grow Your Business By Creating A Ladder Of Opportunity For Employees

How To Make The Ladder Of Opportunity Happen At Your Construction Business

Simple Profit Sharing Plan For Contractors

Is He Or She Really A Lead Carpenter?  Probably Not!

I was involved in the creation of the NARI Certified Lead Carpenter Program.  NARI did a great job putting that program together.   When the certification was created it included a definition for what a lead carpenter really is.  Unfortunately even though experts on the system helped define for our industry what a lead carpenter is, many remodelers and construction companies have ignored that definition and have decided to create their own definitions.   Without endorsing and enforcing a common definition across our industry every carpenter can have the title of lead carpenter.  This waters down the title and leads to confusion for employees, employers and, more importantly, consumers.  Also, I don't think it’s fair to true lead carpenters, those who have achieved the skills and experience to be a true lead carpenter, if we allow impostors to receive and use the title.

NARI Definition of Certified Lead Carpenter

“A lead carpenter is involved in tasks and has responsibilities beyond the technical production aspects of a project. He/she is responsible for customer contact and communication, supervision of subcontractors and employees, managing the job site, scheduling, and safety issues. The success of a remodeling project during the production stage is the primary responsibility of the lead carpenter.”

NARI’s Certified Lead Carpenter Training Program lists the following seven basic responsibilities for a Lead Carpenter:

1. Customer Satisfaction
2. Material Take-offs, and Orders
3. Job Site Supervision, Protection, Cleanliness, and Safety
4. Carpentry Labor
5. Supervision and Scheduling of Subcontractors
6. Building Code Inspections
7. Project Paperwork

Job Description for a Lead Carpenter

An Overview of the Lead Carpenter System

Are you misleading your carpenters and your customers?

Just because your carpenter is the most experienced at the job site, and or is the highest paid employee at the job site, those characteristics don't make him or her a lead carpenter and does not justify giving him/her the lead carpenter title.  Plus, unless your business setup and systems have been specifically designed to support a lead carpenter system, how could a true lead carpenter actually perform their job duties?  

For example, if your business can't or won't share the job estimate and pricing with a lead carpenter, how could he or she manage a project to meet the budget?  If the project specifications are inadequate, and or the business doesn't have a sales to production handoff process, the lead carpenter will need to be micro managed and or will need to constantly interact with the sales person who sold the job to know what to do and what to do next.  

If you hire a real lead Carpenter will he stay?

I am also aware of true lead carpenters who were hired as lead carpenters only to find out that they couldn't act as lead carpenters at the business that hired them because of the reasons shared above.  When they find these conditions at their new job they quickly realize their opportunities for career and compensation growth are dramatically compromised.   So many left for a different business and opportunity where they could use their skills and continue to advance their careers.

With the economy showing signs of improvement, and as the volume and pace of remodeling and construction increase, there will be high demand for the skills and responsibilities a true lead carpenter can bring to the job site.  Businesses without true lead carpenters in the field will have much higher overheads than those that do.  In a competitive marketplace businesses using a real lead carpenter system with true lead carpenters will definitely have a competitive and a profitability advantage.

When to Implement The Lead Carpenter System?

 The Benefits of Implementing a Lead Carpenter System(2 Videos)

So, is he or she really a lead carpenter? 

Does your business really have a Lead Carpenter System?

How To Make The Ladder Of Opportunity Happen At Your Construction Business

Note: This is the last article of a 3 article series on this topic (Click for article #1 or for article #2)

Let’s use the example of creating a “Turnkey Business”

If you want a turnkey operation, which is one that runs without the need of the owner’s participation, the employees need to be self-motivated rather than motivated by the owner, their manager or short term measured motivation programs. Even if turnkey is not part of your vision, a single owner can’t wear all the hats of a continuously growing company. Vacations, health, and emergencies will at some point require the owner to delegate responsibilities to key employees.

Learn the “whys”

The best way to find out what will motivate team members is to ask them. While interviewing recruits or existing employees, find out not only what motivates them to grow, but also why. Connecting the “why” to the “what” can help get you, your business and that employee to where everyone wants to be much faster for two reasons.

1. The first is the simple fact that adults choose to commit and follow through on their goals for their own, sometime selfish, reasons.
2. Second, if the business, the marketplace or life changes at some point, knowing the why can help us find alternate ways to accomplish the long term company vision while still maintaining motivation.

 

Managing employee growth requires scheduled reviews

To help facilitate success support employee career advancement planning and implementation with a structured employee review process.  Be sure your review process identifies where the employee is today, where he or she is headed, and where you both expect them to be along their career path by the next scheduled review meeting. 

Generating a vision for where they will be is not enough

Work with the employee to identify the plan required to get there.  Include what the employee needs to do, as well as the company’s commitment and the necessary steps to help make it happen. 

Implementing a ladder of opportunity may require that the employee train and mentor his or her replacement.  Be sure the company provides "training of the trainer” early in each employee’s career path.  Education then becomes part of the company culture and facilitates constant growth among workers. 

Write down and maintain records of the employee review process.

Include in your record keeping not only the reviewer’s comments, but employee’s feedback about how well the company helps him or her to get there.  If your process includes writing down what has been agreed to at this review, both the company and the employee will know what to do between now and the next review.  You will also both know what you will be discussing at the next review.  This helps minimize the typical fears experienced by both the reviewer and the employee when anticipating the next review meeting and what they should talk about during the next review. 

If the review process is well thought out, properly documented and followed throughout each employee’s career, you have created a ladder of opportunity!

Related articles:

Article #1 of this series: Successfully Grow Your Business By Creating a Ladder of Opportunity For Employees

Article #2 of this series: How To Create A Ladder Of Opportunity For Your Employees

Government to Contractors: Start Hiring Convicted Felons!

Mentor Me, Please - Gen Y Business Owner Offers Peers Advise

Contractors: How To Work With Generation Y From One Of Them

Gen Y Member's Advice To Peers: How To Develop A Good Work Ethic

How To Create A Ladder Of Opportunity For Your Employees

Note: This is the second article of a 3 article series on this topic (Click for article #1)

Look ahead to where you want to be

Creating a ladder of opportunity requires that you create a vision for where you want your business to go and how you will make it happen.  It also requires that you sell the vision to existing and recruited employees. Help them see the vision and growth plans of the company so they can see where they have opportunities to fit in and contribute to the growth as well as, at the same time, accomplish their own personal goals.

The Ladder of Opportunity strategy requires that you develop a career planning strategy based on a deliberate balance between how the company needs to grow and how employees envision their roles. For example, a designer who possesses previous field and production management experience will likely generate designs that are easier, more efficient and cost effective to build. Projects designed using such experience are also more likely to be consistently profitable.

Grow or get out of the way

If qualified employees do not see themselves as part of the evolution, you must either decide to keep them in their current roles, if possible, and/or realize that you will eventually need to hire someone else to fill future positions as the business grows. Be sure to seek out and retain the right people on your bus and take the wrong people off of the bus. Tolerating poor performance from some employees may give the wrong message to the more motivated workers.  

For smart employees, climbing the ladder of opportunity in a growing business means that someone else may be on that ladder rising right behind them.  Aspiring and high performance employees may become frustrated and lose motivation if they are held back in their career paths due any inability to climb the ladder of opportunity.  This being the case be watchful for the employee who tries to sabotage or hold other employees back as a way to maintain their status.

Managing career paths

Establishing employee career paths that benefit the business requires that you create a plan to Design/Build both the business and its employees. Decide where you want to take your business, what employee skills are needed to get there and how you will incorporate those abilities into your team’s existing pool of strengths.

To help manage the process of building employee skills, avoid mutual mystification. Clearly detail your vision and sell the goals involved to your team members.  Ask for a commitment for this required growth, both personal and professional, from each team member. Ask them how they see themselves fitting into this vision. Employees can choose to grow with the company, or, to be fair, perhaps they should be told that the company will out-grow them.

Be proactive with job descriptions

As an added caution, be careful not to develop job descriptions based on who you already have on the team. This would be like Design/Building a project for a client by only using the left over and miss-ordered materials that are collecting dust in your warehouse. How could you fulfill the purpose of the client’s project if you limit the design in such a way? Instead, Design/Build your business by creating job descriptions specific to your company’s vision and the path required to achieve it. 

If you are the business owner, create job descriptions for employees who will complement the skills you bring to the business.  This helps you to concentrate on what you are best at and/or prefer to do yourself.  If you plan to eventually give up certain responsibilities, keep an eye out for your replacement and include mentoring as part of that person’s career path.  Mentoring helps socialize the employee into the nuances of the already established norms and values of both the job position and the company.

Watch for the follow up to this blog (article 3 of 3) which will be titled "How To Make The Ladder Of Opportunity Happen"

Related articles:

Article #1 of this series: Successfully Grow Your Business By Creating a Ladder of Opportunity For Employees

Article #3 of this series: How To Make The Ladder Of Opportunity Happen At Your Construction Business

Government to Contractors: Start Hiring Convicted Felons!

Mentor Me, Please - Gen Y Business Owner Offers Peers Advise

Contractors: How To Work With Generation Y From One Of Them

Gen Y Member's Advice To Peers: How To Develop A Good Work Ethic

Successfully Grow Your Business By Creating a Ladder of Opportunity For Employees

Note: This is the first of a 3 article series on this topic

It has been my observation that the most successful construction businesses are the ones that plan for and achieve consistent growth. This growth is measured in two ways that go hand in hand.  The first, and probably the most obvious, is growth in revenue.  The second, and most important, is the growth of the employees who comprise the team.  These two forms of growth go hand in hand because without employees to manage and complete the work, you cannot increase your revenues. Another important consideration is that growth will be pointless unless you maintain profitability.  Adding quality employees helps you to maintain and boost your financial success.

You can jeopardize consistent growth by constantly replacing employees or forcing new hires into management positions. The fact is that as a business expands, you will need additional employees and skills to maintain the growth. Employee retention and improving upon their skills are easier and quicker ways to grow. Creating a ladder of professional and career opportunities for your employees helps facilitate a long-term design strategy for your business.  The ladder of opportunity is created by moving employees forward into new positions and bringing on new team members to fill the positions they leave vacant.  You maintain the ladder of opportunity by helping new hires to grow in this same way.

Reasons for using a "Ladder of Opportunity"

Evolution Vs. Revolution?

It’s not easy to replace employees as they leave your team or to bring on new hires that possess the necessary skills to ensure your business grows. Doing so also delays the rate at which you your construction business can grow.  You need to also consider whether you feel it is really fair to existing employees if you don’t give them the opportunity to move up within the company. If you are not developing employees as the company grows, you will eventually face a revolution, rather than an evolution.  If this happens, you may be forced to replace these employees with others who already have the skills the growing business needs.  This approach can be very risky and expensive.

Offering a ladder of opportunity helps keep good employees. 

I always found that great employees are far more motivated by opportunity, responsibility, accomplishment and a sense of personal fulfillment than by the use of short-term incentives, such as cost of living wage increases, one-time bonuses, or an occasional pep rally. The right strategy, as long as it is sensitive and relative to the career path of your employees, will help keep those employees on the team.  It can also steer your company in the direction of recognizing who can move up the ladder and how to train them to ensure that your business evolves. The effects of such strategies are longer lasting and often permanent for the business and its employees.  Additionally, this strategy works well because existing employees are familiar with your company’s systems. They already fit into the culture and know how and why you do business the way you do.  It will take longer for new employees to learn about your culture, adapt, adjust and become productive dedicated members of your team.  Having employees start their career paths at the bottom of the ladder affords the business owner the advantage of limiting the expense and risks if the employees do not fit in or decide to leave the business.

Read the follow up to this blog (article 2 of 3) titled “How To Create A Ladder Of Opportunity For Your Employees”

Related articles:

Government to Contractors: Start Hiring Convicted Felons!

Mentor Me, Please - Gen Y Business Owner Offers Peers Advise

Contractors: How To Work With Generation Y From One Of Them

Gen Y Member's Advice To Peers: How To Develop A Good Work Ethic

Guest Blogger: Mark Brown is a student at BYU-Idaho where he studies Construction Management. He currently lives in Spokane, WA, working as a carpenter and studying online while his wife finishes her Bachelor’s degree in nursing. In this article Mark offers advice to his Generation Y peers based on what he learned from the commenters who shared their thoughts about Mark's first guest blog where he shared advice for contractor trying to work with Generation Y employees.

Gen Y Member Offers Advice to His Peers: How To Develop A Good Work Ethic That Will Make You Stand Out

Recently Shawn published some of my ideas and suggestions for contractors working with Gen Y employees in an article titled: “Contractors: How to work with Generation Y from one of them.” It became obvious shortly after the article went live that this subject is something many people have strong opinions about. I’ve sifted through over 8,000 words of commentary (over 15 pages!) left by readers of that article to try and find some common threads that I can tie into a follow up article for Gen Y’ers that shows them firsthand what industry professionals are looking for today and how they can stand out.

One of the biggest grievances about Gen Y is that they just don’t care. They have no respect. They’re too absorbed in themselves and the here and now of social media to be interested in learning a skill or craft. If you are guilty of this sin, it is time to change. Find something you enjoy doing, be it construction related or not, and STUDY it. Find books, magazines, museums, websites, blogs, Facebook pages, Pinterest boards, even actual human beings who enjoy the same thing. If you find yourself awake in the wee morning hours, let’s say reading blacksmithing books or something, you’re probably headed in the right direction. Learn to love and have passion for something real. Bring this enthusiasm to the job and apply it to learning a new skill. You will work harder, learn faster, and grow to truly love what you are doing. I think as Gen Y’ers we should all take a page out of this guy’s book…

Put your technology away and work.

If your girlfriend can’t wait, she might cost you more than dinner and a movie. Stay focused if you work on a computer all day. Get up and walk or get a drink to take a break rather than check your Facebook. We all know long winded personal calls and texts on the jobsite are unwanted. Learn to go without your phone in your hand for 8 hours a day and you will see better work, more focus, and I swear the day goes by twice as fast when you’re not constantly thinking about what “she” is doing (or “he” for that matter).

Put technology to work at work

At the same time, be the guy who remembers what your technology can do for your work. Bring up how to articles, diagrams, photos, and references from all that studying you’ve been doing. When questions or confusions arise on the job, be the one who remembers you can access plans, scopes of work, calculators, and change orders from a phone. Just remember to avert your eyes from tempting texts.

Finally, learn to work.

And I mean, like, the bury the guy who’s been doing this for as long as you’ve been alive kind of work. Show up on time. Be “present” mentally and physically. If you’re in the field, watch and learn the old guy’s tricks. Your fresh knees and elbows are worth their weight in gold. Don’t be afraid to stay late and show up early to organize, plan, and prepare. If you’re in the office, stay on top of technologies that relate to your industry or can be used to better it. Make suggestions, study the costs, and take initiative to show off things that can make the business better and more profitable.  

In summary

These are three simple suggestions that come not really from me at all, but from people across the nation who have spent decades learning what they do. By adopting these ideas to both your professional and personal life, you will be happier, fulfilled, and far more valuable than most. I encourage you to share them with your friends and family in hopes that Gen Y can learn how to contribute more effectively to the industry and the world.