It’s amazing what a remodeling company can do with half the staff, Tori Stein has learned. Her experience in the past few years — declining numbers, gut-wrenching layoffs, and, finally, a tentative return to profitability — could attest to an emerging (some might say liberating) perspective on remodeling HR.
Eighteen months ago, Stein’s company, Atlantic Builders, of Charleston, N.C., had 10 employees. She has five now, but even with the phone ringing and backlog building, “I’m scared to hire,” she says. “I want to stay at the same size, staff-wise, and sub out as much as possible.”
She’s in good company. The latest government jobs report, released June 4, showed that private-sector employers remain reluctant to hire. Having to let people go “was the worst thing,” says Stein, echoing fellow bosses everywhere. “You lose sleep trying to keep your people busy, but when push comes to shove you just have no choice.”
The surprise, Stein found, was that her skeleton crew made do just fine. “We all put our toolbelts back on and ended up with a very tight company,” she says. “The key people I have now know exactly how I want things done,” and that includes the trade contractors who have coalesced as a reliable production team.
More With Less
Smaller-but-stronger teams could be a lasting silver lining of the post-recession clouds. Layoffs were “rampant and awful,” says Victoria Downing, CEO of Remodelers Advantage, a peer-consulting company, and a REMODELING columnist. “It got to the point where the big issue was, ‘If I lay anybody else off, I can’t produce,’” she says of her remodeler clients.
To preserve group cohesion and avoid pink slips going forward, remodelers are adopting new management and productivity conventions as they position their companies for recovery.
On the production end, for instance, Stein isn’t alone when it comes to owners and desk-workers dusting off their toolbelts and using more subcontractors. “I don’t know anyone doing in-house installing any more,” says remodeling “coach” Tim Nagle of RemodelBuddy. (See “The Producers.”). Many companies also recast their production managers as lead carpenters or project managers, to manage smaller jobs and/or trade contractors.
Additional “better-safe-than-sorry” remodeling HR practices include:
Sales training for all. “A lot of remodelers are talking about adding salespeople and sales assistants,” Downing says. “Jobs are smaller and [the owners/principal sales staff] just can’t go on enough appointments.” To help, she encourages clients to train all staff to ask for referrals.
Slow to hire, quick to fire.D&J Kitchens & Baths, in Sacramento, Calif., has instituted a systematic and multistep process aimed at avoiding hasty and regrettable hires. (See “A Filter for Hires” and GoodForm.) WrightWorks, of Indianapolis, has held steady in the seven-employee range for a few years, “and as I look to growth in the coming year, I’ll be very slow to add new employees,” says owner Chris Wright. “I let somebody go last week for a policy violation and won’t be replacing him.”
Team hiring. Firms that do hire might follow Mark Scott in getting team buy-in. When all staff interview candidates, “they have a stake in them being successful, particularly our field people,” says the owner of Mark IV Builders (once 26 employees, now five), in Bethesda, Md. Scott also requires serious managerial prospects to take a DISC personality profile test. The results don’t “necessarily tell me who’s going to be successful, but who will fail” within the Mark IV dynamic, he says.
Alternative staffing. “We’re all talking about our needs and being more creative,” says Stein, of her construction peers locally. When she learned that a nearby builder could no longer afford to keep his bookkeeper on full-time, “I picked her up for the rest of the week. We’re sharing.” (And yes, the bookkeeper enjoys the vastly different financial models.)
Design outside, build inside. Wright speculates that his position as a “designer’s contractor,” which has long buffered him from the overhead expenses clobbering many design/build companies, could become more attractive elsewhere.
Creative bookkeeping.WicksteadWorks, of Atlanta, still has in-house design staff but watches overhead “like never before,” says owner Frank Wickstead. For example, charging clients a $75 weekly admin fee, and itemizing this as project support, “allows us to bill nearly half of our project manager’s salary to job cost rather than overhead,” he explains. (The company contracts four projects at a time.)
Open-book management. Devotees of this practice say there’s no better way to get staff truly vested in business improvement. Wright, who is implementing OBM, likes, in particular, that it shifts compensation such as 100% health coverage, seemingly random bonuses, and annual raises “away from being such an entitlement.”
More communication. “Meetings are longer,” Stein notes with a chuckle. “There’s just more to go over.” OBM facilitates greater discussion, too, but even non-open–book companies benefit from the wisdom of the crowd when so much is at stake. “Everybody knew that the economy was having tough times,” Stein adds. “It’s a no-brainer … to help them understand that the mark is not where it was” and that they can shape strategies for moving forward.
Will these practices endure? Several remodelers said the current industry regrouping was analogous to painful periods in U.S. history such as the Great Depression, which changed how people viewed and handled money. Time will tell whether the same holds true for post-2008 remodeling companies.
—Leah Thayer, senior editor, REMODELING.