In the blog.

Management: Hiring and Compensation Strategies

The following article was authored by David C. Phillips and originally published in AWCI's Construction Dimensions magazine.

A recent survey of the construction industry revealed that the biggest concerns among contractors for 2020 are not a lack of work, but worker quality and worker shortages, which can result in companies walking away from projects due to lack of manpower.

We asked our members to share their front-line insights, personal observations, strategies and successful approaches for hiring, and compensation of, their office and field personnel.

Is There a Real Personnel Shortage?

The picture is not the same in all parts of the country; it also differs for office staff compared to field personnel, and for union versus non-union shops. But the overall scenario is fairly clear and consistent.

“The pinch is mainly on the field/craft side of our business,” says Stan Kasper, president of the Rockwell Group (subsidiary of the Morse Group) in Freeport, Ill. “It has been caused by retirement, workers having left the industry during the last economic downturn, and younger people looking elsewhere for employment. It is different in each of the markets we are in. Madison, Wis., is the toughest market to find the additional craftsmen that we need to execute our projects, while our Chicagoland market seems to have a good source of quality craftsmen. Our other two markets fall in between.” 

Mike Taylor, executive vice president of Liddle Brothers Contractors, Inc. of Nashville, Tenn., (known to many of you as an AWCI past president) explains the situation in Nashville: “Our labor market is extremely tight and has been for the last two years. It is impacting our revenues, and we are walking away from work because we cannot support it.”

John Hinson, division president at the Marek Dallas/Fort Worth branch in Texas, notes that they have “fewer qualified people walking in the door looking for work.”

“Yes,” agrees Veronica DeBonise, president of G&G Plaster, EIFS & Drywall, Inc., Wareham, Mass. “There are very few qualified apprentices, and the workforce is older.”

The situation seems to be present in Oregon but less severe: “We are feeling the pinch,” says Victor Roach, president of Western Partitions, Inc. (WPI) in Wilsonville, Ore. “Office and field staff remain challenging to find. But we seem to be able to find good people, so it hasn’t been impossible.”

AWCI President Nancy Brinkenhoff, CEO/ president of Ironwood Commercial Builders, Inc. in Concord, Calif., is more sanguine: “Currently we are not really feeling the pinch, even though it has been difficult to find good manpower for the past year. We believe that as the economy slows down, a lot of this issue will correct itself. We have chosen to keep our circle tight and not take on more than we have qualified people to run. We have found that taking on more without qualified people just leads to breaking even.”

Robert Aird, president of Robert Aird Incorporated in Frederick, Md., sums the problem up neatly, based on his experience in his area: “Because a limited number of people are seeking work in our field, one of my greatest challenges is continually having to be sure there is enough work for the men and enough men for the work. I’m sure all contractors struggle with this dilemma, but it is real.”

According to Scott Bleich, president/ CEO of The Heartland Companies, based in Des Moines, Iowa, “Heartland is absolutely feeling the pinch when it comes to quality recruits. We are actively recruiting through social media, career fairs, trade schools and staying engaged with our local unions.” Dave DeHorn, chief estimator, Brady Company/ Los Angeles Inc., admits, “Yes, the market is crazy busy now, and new hires are hard to find due to the high salary requirements they are asking for. People straight out of college or with little experience are seeking $65,000 to $100,000.”

Brenda Reicks, vice president of construction services at Tri-State Drywall LLC in Sioux City, Iowa, stresses the difference between filling office as compared to field positions: “We have seen many qualified applicants for office positions but very few qualified craftsmen for work in the field.”

The reverse seems to be the case for Lee Zaretsky, president of Ronsco Inc.: “In New York, being a union contractor, field personnel is not a problem and we haven’t felt a major drain or strain. But office and clerical continue to be a very big struggle to recruit and retain.

“I put that down to the economy being busy—supply and demand—but I also attribute a lot to what we have done with our children and our generations regarding work ethic and what it used to mean to go to work for one company and make it a career, and aspire to retire at the company you work for. It’s a very different world.”

Gilly Turgeon, president of Green Mountain Drywall in Wallingford, Vt., explains how they are addressing the problem: “We have decided to adopt a different approach to this very real problem by paying our existing employees more and taking on less work. In other words, we are doing only what we can handle and not trying to take on the world as far as workload goes. Obviously with that approach, our prices are higher.”

“We can’t find qualified people to be foremen and run a job,” says Gene Cox of Custom Drywall Inc. in the Bay Area.

It seems the situation may not be affecting some of the smaller shops. John Kirk, president of Kirk Builders in San Francisco, explains, “I have a very small shop, and we are very fortunate to have a few quality apprentices. I don’t need any additional staff.”

It’s clear that there definitely is a broad situation with regard to contractors’ hiring talent. It’s not universal, and it’s not the same everywhere, but it is a serious issue and a trend for most.

What’s to Be Done?

Because it can help to know what others in similar positions are doing to rectify a situation that you are experiencing, we asked what measures are being taken to attract and retain top talent to fill salaried and craft positions.

Kasper’s response is quite detailed, and clearly The Rockwell Group looks at what can be done internally to address the situation: “We attract our salaried positions with the reputation we have in the industry and with fair salaries. We invest in the best technology for both office and field, which includes equipping all of our foremen with iPads and the programs that help make it possible for them to succeed in our environment. We also invest heavily in the right tools to make our craftsmen’s jobs easier and safer.

“It is difficult for us to ‘map out a career path’ as we do not know who will excel until they’ve been with us for a while. The message to all new employees is that our goal is to promote from within, and we’ve done that in every opportunity that has arisen.

“We also have an excellent safety record and two full-time safety directors who inspect our projects and review the potential hazards for the specific tasks that our crews are working on. Safety is paramount for us.”

“We recruit using various methods: word of mouth, recruiters, asking employees if they have friends or family that might be good candidates,” says Roach.

Stan Marek, CEO of Marek in Houston, points to their long-term approach to the situation, which has stood them in good stead through recent years: “We have always held firm to the belief that a company is only as good as its employees. Thus, we devote time and money recruiting, training and providing the best benefits in our industry.”

Hinson explains the result of Marek’s long-term approach: “Our training programs, benefits and culture are well recognized, so we put out the word that ‘we are looking for people’ and they line up at the door” (although he admits that the line at the door has become shorter).

This philosophy is echoed by Scott Bleich: “At Heartland, we strive to be the place where all the best talent wants to work and with which all the best companies want to work,” he explains. “The key point is that we show true appreciation for our people. We show that we care for them and their families, not just the job that they do for us.” Aird confirms this strategy. “We have many employees who have been with the company for 20, 25, even 30 years. Some of the reasons they stay are that in 45 years, we’ve never been in court (except as expert witnesses in cases involving the work we do), never missed a payroll and never had an employee die on the job. Beyond those factors, we do continually train our workers. We also offer health and life insurance and five days per year for PTO (personal time off). We are recognized as the preferred contractor in our field.”

Reicks details the specific methods and steps that Tri-State Drywall is taking to succeed in the talent recruitment/retention field: “We offer medical, dental and vision care insurance to all full-time employees after 90 days. We offer 401(k) saving plans after being with our company for one year. We provide a two-year apprenticeship program for new carpenters and finishers. We have participated in job fairs at the local community college reaching out to high school students from our city and surrounding small towns. We work closely with Boost, a government-funded program in Iowa and Nebraska that helps people who are transitioning out of jail or prison to find a job. We have implemented a safety rewards program. When interviewing potential apprentice carpenters, we share our hope of them advancing to journeyman carpenters or becoming a foreman.”

“Talk to your good people and tell them that you need their help finding and retaining the best people,” says Dion Cowles, senior superintendent–Portland, WPI, Wilsonville, Ore. “Good people attract other good people because the good ones want to be successful.”

Patrick Arrington details the specific, somewhat different approach that Commercial Enterprises is adopting in New Mexico: “We are in an apprenticeship association with a Native American tribe and working with high schools to provide apprenticeships. Also, through the American Society of Professional Estimators, we give tool gifts for nominated students in the trades who are completing school.

“ASPE has contact nationwide, and we can send out invites to prospective employees. I have worked with the federal probation administration for prisoners who have completed their prison sentence. The Feds require their prisoners to learn a trade. We had one employee from the Feds who was certified in all of the welding trades.”

Zaretsky describes his company’s efforts in New York. As mentioned, being union, the craft/ field personnel side is not a problem. His efforts are directed toward recruiting the right office staff. “We never used headhunters before and are finding that even the headhunters are not providing the screened, pinpointed candidates we seek,” he says. “We use Indeed, Craigslist, locate candidates and then go through a really long process. It just took me six months to fill a bookkeeper position, and we’ll see how that works out.

“I find that personality and culture are as important as the skill set required. We have a small, 10-person office and need to make sure we’re adding and not bringing in anyone who’s going to detract.”

How Have Wages and Benefits Changed?

“We have always paid competitive wages and benefits,” says Roach. “We just treat office and field employees fairly and pay them what they are owed. We don’t try to scam our workers out of pay or travel expenses.”

Hinson says Marek has not had to change its approach to compensation: “We have always furnished great benefits to our workers, so no need for changes.”

Taylor, on the other hand, notes, “Workforce shortage absolutely has impacted compensation and benefits. Our compensation package has increased 40 percent from five years ago and similarly with benefit packages.”

“We are very generous at bonus time,” explains Brinkenhoff. “All of our people, field and office, receive bonuses based on our net profit.”

“We offer a great healthcare plan, PTO plan, a 401(k) program, as well as yearly bonuses,” says Kasper. “If the company does well, the benefits are shared with the office and field. We believe this mitigates most of the challenges.”

“We do offer competitive pay and benefits to attract the right people, and yes it has changed,” DeBonise confirms. “Our benefits now include retirement plans in addition to holiday pay and vacation.”

“We are a union company,” says Los Angeles– based DeHorn, “therefore, our workers in the field have an established compensation and benefits package dictated by the union. Some of our lead foremen are paid over scale and receive gas and minor maintenance for their vehicles from the company. As far as the office staff goes, our company pays approximately 92 percent of the medical insurance for a family. This is huge, and we have to remind applicants to take this into consideration when asking for a high salary. We also allow flexible working hours for those who may have long commutes or schedule conflicts with their children and school, and other similar situations.”

“We provide our project managers with a company truck, gas card and fully-paid company health-insurance premiums,” says Reicks.

Cox says, “We are paying over union scale. We give substantial year-end bonuses for profitable jobs, and we provide company trucks.”

Zaretsky doesn’t look at it as a cost. “You obviously need to offer competitive wages. We try to provide an excellent benefits package: 401(k), profit-sharing plan, vacation, sick leave. In New York, it’s mostly statutory, but we want employees to want to come to work, and giving people what they need certainly helps attract talent.

“For me it’s not a cost, it’s an investment. Somewhere I heard in my business coaching that for every dollar you invest, whether it’s a piece of equipment or a human being, there should be a return. There’s nothing more important than human resources. I don’t see robots solving my field or office problems any time soon.”

The Key Question

What is your most successful action with regard to solving the personnel shortage dilemma?

Roach answered, “I believe our single most successful measure is to maintain our excellent reputation for being a great place to work. We treat our people like we want to be treated. And we have an upbeat, friendly atmosphere. Most people love working here.”

Kasper concurs: “Our reputation in the industry for both project execution and a team-like company culture is our secret sauce.”

Cowles has much the same story to tell: “Treat people well and others will follow because that’s the reputation you’ve built.”

The above fall under the general heading of, “Create a great place to work and they will come.” But there are also specific actions companies are taking to recruit.

Taylor mentions that “job fairs at the high school level have been a good source for recruiting.”

Bleich differentiates between salaried and hourly employees: “We’ve had great success in recruiting salaried employees in places other than the perceived norm. Of the roughly 40 salary employees we have, only three of them have degrees in construction. We believe that people need to be ‘the right fit’ for our culture and our core values before we ever measure their acumen.

“Hourly employees are a bit different as many journeymen go where the work is. That’s why we’ve made a huge investment in making sure we retain our influencers, our foremen. We think it has to begin with them. We try and keep as many of our core workers as well to accompany our foreman. Our goal is to retain as many foremen, core journeymen and journeymen/apprentices as possible.”

Reicks says, “Offering health insurance—it’s important to everyone.”

“We have had some great success stories hiring a son and/or daughter to work in the office environment,” says DeHorn.

“Usually, new employees come as family or friends or colleagues of our current employees,” says Robert Aird. “That familiarity and the knowledge of the benefits of employment with Aird, Inc. are the major factors.

“We also perform a wide array of scopes: plaster (gypsum, lime, Venetian and acoustic), stucco, EIFS, flashing, caulk, water-resistive barriers, carpentry, concrete and masonry restoration, scaffolding, spray, polyurethane foam and others. We train all our employees in all our scopes, so there is not much room for boredom.”

Says Zaretsky, “Hire slow and fire fast. Take your time to vet the proper candidate, invest in the training, and give it your all to set up everyone for the best-possible success, and monitor it. Within a week or two, you should have a pretty good gut feeling where things are going and if it’s not working out. A big mistake we’ve made, and I hear a lot of people make, is holding on to staff hoping they will work out and just trying to fill a seat.”

Some Other Thoughts

Marek notes, “Throughout history, the immigrant worker has provided the labor to build the major projects in America; our current system is broken and must be fixed if we are to build a sustainable workforce for the future.”

Hinson adds, “There is a great need to legislate ID and tax so legitimate employers can put immigrant workers on the payrolls.”

Taylor volunteered some thoughts about the causes of the current personnel shortage:

1. We all encourage our children to attend college and get that degree! We find that college-educated young people are not drawn to our industry.

2. Many years ago the focus in our schools changed: Many if not most schools dropped vocational classes and programs.

3. Our industry cannot compete with technology, health care, doctors, lawyers, etc. with regard to compensation and benefits, as well as work schedule and environment.

4. I hate to admit this, but today’s generation does not seem interested in manual labor of any type.

These sentiments were expressed by numerous AWCI members interviewed for this article.

Worker quality and shortage issues will not disappear any time soon, but as the feedback from AWCI member contractors shows, a number of effective strategies do exist to overcome them.

David C. Phillips, a freelance writer and photographer and is an original founding partner at Words & Images.