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
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.
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. 
Grow or get out of the way
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.
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.
Respect. From those first meetings with prospective employees, I've always been careful to offer the utmost respect, particularly when it came to older craftsmen. I respected them based on their many years of experience. I took the time to listen to stories about the good ole' days and how things were done differently. I'd smile and nod my head as I listened. Many of the stories were well-told and well-crafted, providing me with wonderful insights and lessons. I never questioned the knowledge of my senior tradesmen. And if questions ever did arise, I was always careful to ask in a tactful manner.
Building Rapport. Last week, I approached my team – consisting of several individuals in their late 40s and 50s. I had the opportunity to get their feedback on what they enjoyed most about working on my team. Their answers were all based around rapport. They liked the fact I support their decisions and they were grateful for my willingness to step in and help without being asked. As the leader, I've always been quick to step in and get the project back on track if issues arise. In addition, I've learned that communication with these team members must be clear, concise and written. Accommodating them in this way has led to much better productivity and the strong rapport makes for a healthier work environment.
