If the company owner is the foundation of any successful remodeling business, then it could be said that the employees are the framework around which the business is built; they are just as important to the shape the company ultimately takes. For this reason, company personnel decisions should be made with the same careful planning and precision that you would use in altering the structure of a client’s home.
“Most of us tend to hire fast and fire slow,” says Orren Pickell, of Orren Pickell Designers & Builders, in Lincolnshire, Ill. “In reality, we should be doing the exact opposite.” Especially, he notes, when it comes to office personnel. “When you’re hiring managers or office staff, you better not make mistakes. We’ll interview someone six times if we’re not completely sure about them,” he says.
Conversely, a prudent owner will know when to pull the plug on a floundering employee — difficult as it often may be.
“I think it’s easy to blame the system first,” says Bob Fleming, owner of Classic Remodeling & Construction, in Johns Island, S.C. “It’s the really nice people that underperform who are difficult to let go. I don’t think anyone would ever say that they’re quick enough to let someone go when there’s a problem.”
Further complicating matters are the employment practices laws surrounding both hiring employees and letting them go. A seemingly innocuous application question (for example, asking an applicant’s age), or a layoff resulting from justified but undocumented disciplinary actions, can land a business owner in legal hot water.
So how can remodelers make sound personnel decisions that strengthen the framework of their company while also taking pains to ensure that they’re not vulnerable to legal recourse? Read on for a list of hiring and firing best practices, compiled by a group of experienced remodeling business owners and legal professionals.
Start Looking Before You Need To
The worst time to start looking for key employees is when you desperately need them. Don’t wait until your company has a gaping hole before you start think about filling it. Look to the future: If you know that in six months you plan to hire another lead carpenter or project manager, get the word out to your employees, subcontractors, suppliers — maybe even to clients with whom you have particularly good relationships.
“The best employees always come from referrals,” says John Tabor, owner of Tabor Design Build, in Rockville, Md. “Nobody’s going to refer somebody who they think might embarrass them.”
Tabor has a referral incentive program in place for his employees. For each referral hired, the referring employee receives $500, paid when the new hire has been on board for six months.
Tabor also advertises in Craigslist.com’s online classifieds and in the newspaper, the latter of which has been a better source for qualified applicants, he says, but insists that referrals are his preferred method of finding new employees.
For his office positions, Fleming hires a recruiter to help canvass for potentially qualified applicants. Any leads that the recruiter passes to him are considered pre-qualified. “He gets them on the phone and asks them questions about what motivates them, why they’re looking for a new job,” says Fleming, noting that the recruiter also explores non-traditional routes, such as Monster.com, as well as working with other recruiters.
Whatever recruiting methods are best suited for your market, one thing is for certain: It’s better to take a proactive approach to finding quality employees than a reactive one.
Use a Standard Application
“With regard to hiring, the No. 1 [legal] issue of importance is to have an employee application used universally for all hires, and that has been vetted by knowledgeable legal counsel,” says D.S. Berenson, managing partner of law firm Johanson Berenson LLP, in Washington, D.C. “Every [application question] should be analyzed and approved as appropriate for the company.”
There are a number of questions that the law deems inappropriate to ask on an application, among them: an applicant’s marital status, age, child care needs, religion, race, or experience unrelated to the job — “I don’t want to know what clubs you belonged to in college, if you’re a Republican or a Democrat, your sexual orientation, or anything else,” Berenson says.
By using a universal application, you don’t have to worry that applicants not hired will later claim that they were treated differently because of one of the above factors.
But you should go a step further in ensuring that extraneous information doesn’t make it on to potential employees’ applications. “Make sure you have a statement on your application warning the applicant not to submit information that isn’t requested,” Berenson says. A statement to that affect should be in bold-face type on the application, making clear that if extraneous information is included on the application, it will not be considered. “The reason is that it’s not uncommon for people to ‘salt’ an application with extra information that they could later point to as a reason they weren’t hired,” Berenson says.
Hire With Your Team in Mind
“Any time you hire a new employee, it changes the chemistry of your entire team,” Fleming says. That’s why, after an applicant has passed an initial interview and taken a personality assessment test, Fleming brings them in to be interviewed by his entire 12-person staff.
“Six people will interview for a half an hour, then the other six will interview for half an hour,” he says. Then they sit down and discuss: Will the candidate be a good fit? Can he or she learn the necessary skills for the job?
Finally, the team takes a vote on the candidate. According to Fleming, the vote is usually unanimous. “A lot of times, new hires can threaten others in the organization. Doing it this way ensures that the whole team has bought into it, and there’s no dissension among the ranks,” he says. “If the new hire is successful, then great. If they’re not, then there’s no finger-pointing later.”
Pickell brings a similar attitude to his interview process. All prospective hires in his company (at least, those who would work in the office) are interviewed by the hiring manager and a colleague. He likes at least three people to interview applicants, and prefers at least one of them to be a woman.
“Culture is assembling a group of people who share the same or similar values,” he says. “The biggest values in our company are honesty and integrity. The most important thing for potential hires is that they match the company values.”
Pickell says that in evaluating applicants, he’s also looking to assess their core competencies and experience, though he doesn’t believe in hiring on experience alone. “It’s all about attitude, aptitude, values,” he says. “We can train them once we have them.”
Fleming agrees, pointing out that he’d much rather hire someone with more “soft skills” — how motivated and enthusiastic someone is, and how they interact with people — even if they are thin on “hard skills” such as estimating or running a saw.
“They are self-motivated and have the desire to learn and grow. They make the people around them look good,” he says. “Usually, if a person has the right soft skills, you can have them up and running with the hard skills in no time.”
Hiring field employees is a much different process than hiring for the office (both Fleming and Pickell tend to be more stringent when hiring for the office, since it’s easier to hire field workers on a trial basis). But Mark Scott, owner of Mark IV Builders, in Bethesda, Md., still likes his key employees to participate in the interview process.
“If a guy doesn’t get past his co-workers, he’s not getting in,” Scott says. “[The staff interviewers] are even harder on potential hires than management is. The staff are very concerned with personal interactions, problem-solving skills, organization, and so on, whereas management tends to focus on the [applicant’s] goals and salary requirements.”
Scott also points out that social skills should be taken into account when hiring for the field. “It’s not so important in new construction,” he says, “but as soon as you start putting carpenters in homes that are occupied by clients, you have to set a standard for your field crew as well.”
Do Your Homework
“When hiring an employee who’s going to be in or around a client’s home alone with them, or inside the office handling the finances, or in a position of authority, you should do a background check,” says Berenson, noting that an applicant’s litigation history should also be reviewed.
In order to conduct a background check, you must first obtain permission from the applicant. According to Berenson, permission should be obtained through a separate document that coincides with state and federal law — more than just a checkbox on the application.
Before running the background check, Scott asks applicants whether anything will turn up that will be cause for concern. “If they tell us the truth, then we won’t discriminate against them, [depending on the nature of the charge]. If they lie though, they’re gone,” he says.
Scott says he runs background checks because the employees that he puts in clients’ homes are ultimately his responsibility. “We need to be able to put something forth that shows we’ve done our due diligence when it comes to putting our trust in these people.”
Perhaps just as important as running a background check on potential applicants is thoroughly exploring their references. Often, this requires more effort than simply calling the names and numbers provided by the applicant. “A lot of times they’ll give me the name of a supervisor who’s their friend, and we’ll call them and get a glowing report,” Tabor says. “Then I’ll make another call to the company owner and get a completely different view. It usually takes a bit of digging on our part.”
Pickell agrees that it often takes some work to get to the truth of an applicant’s employment history. “If you call anyone who doesn’t know you, you’re going to get the standard company line,” he says. “But sometimes, if you can talk company owner to company owner, you’ll get the straight scoop.”
Pickell stresses the importance of learning as much as you can about an applicant’s past employment. “Their future is very well-predicted by past performance,” he says.
When in Doubt, Document
So if, after doing due diligence and following the above steps, the employee fails to perform up to standard and you determine that they have to be let go, “in the firing process, the key is documentation,” Berenson says. “If you can document the rationale for the firing, you’re usually going to be fine [legally] post-termination.” For this reason, you should have some sort of system in place to document employee performance.
The easiest way to ensure consistency in documentation is to institute a regular employee review system. Fleming reviews employees after their first 90 days, then again at 180 days, and once annually thereafter. His company conducts peer- and self-evaluations as well, to gather different points of view. “Everyone gets feedback on their strengths and weaknesses. Most will have four or five people review them, and we share [that feedback] anonymously,” he says. The main goal of these reviews is to improve performance, but they also serve as a performance record that can be referred back to later, if necessary.
Because of this, Pickell, who also conducts annual reviews, says that it’s important to tell employees what they are doing wrong, specifically, and to then document that. “A lot of managers have a tough time saying negative things about people,” he says. “But you can’t be rating an employee all sevens and eights and then expect to be able to fire them for underperforming.”
According to Berenson, repeated infractions should be formally written up and offered to the employee to sign. A meeting such as this also gives the employee a chance to offer an explanation on their own behalf, as well as to offer recommendations (which should also be documented) for solving the problem. “If they’re always late, use too many sick days, don’t follow directions or meet goals — that needs to be written up. If [the employee] refuses to sign, then check off that they refused to sign and file it away.”
The U.S. Equal Employment Opportunity Commission (EEOC), he points out, is one of few government agencies (like the Internal Revenue Service) where you’re guilty until proven innocent. “If someone complains that they were fired for an illegal reason, the EEOC presumes that’s valid and they will now ask you to provide your reasons for firing,” Berenson says. “It can be very burdensome and expensive, so the key is good documentation.”
Many companies have a “three strikes and you’re out” policy when it comes to employee infractions. If you have a similar policy in place, it is important that each “strike” be documented in the manner Berenson describes.
Don’t Go It Alone
In the unfortunate circumstance that an employee must be let go, it’s a good idea to have someone else — usually a co-owner, or a trusted key employee, in the case that there are no other owners — in the room as a witness when the termination takes place. “Don’t fire anyone behind closed doors,” Berenson says. “Often they become very angry, and afterward might file a claim against you, so it’s important to have a witness there.”
Do Unto Others …
Though it is by no means required by law, many remodelers pay severance to employees who are laid off for economic- or performance-related reasons — though not in instances when employees are fired for “cause,” such as theft, unethical behavior, or insubordination.
The rationale behind paying severance to terminated employees is simply a variant of the golden rule. “If someone quits, then I require them to give me two weeks notice. So I give them the same if I let them go,” says Fleming, who offers two weeks’ severance to all terminated employees. “It also sends a message to the rest of the employees that I’m going to take care of them. I’m not going to leave them hanging.”
This can be a particularly important message to deliver in a time when many remodelers are responding to the economic slowdown with layoffs.
Pickell offers one week of severance for every year of employment. Scott, though he doesn’t pay severance outright, will give employees at least two weeks’ notice if layoffs are unavoidable.
“Even if it might not happen, we’ll go to our teams and let them know it’s a possibility,” he says. “We’ll go to individuals at the bottom of the list and let them know individually, too. It’s the same as the two weeks notice that we would require of [them].”
Legal Advice
Employment practices laws vary from state to state and can be very nuanced and complex. It’s a good idea to establish a relationship with a legal professional who is well-versed in your state’s employment practices laws.
“I wouldn’t make a move on releasing people without talking to an HR lawyer,” says Pickell, who subscribes to an HR consulting service to help with employee-related questions. The service he uses, MRA (www.mranet.org), allows him — for a small monthly fee — to simply place a phone call to get answers to human resources questions that possibly have legal consequences.
Fleming maintains a relationship with a local attorney who specializes in employment practices law. “Any time we have a problem or think we may need to terminate an employee,” he says, “we’ll call [the attorney] first and ask his advice.”
And that’s sound counsel for any remodeler interested in protecting his business.