The construction labor market is notoriously transient. When builders are busy, it is a simple matter for a carpenter to move down the road to another company: Different house, same hammer. When business is good, as it has been in construction for quite some time now, those with an urge to be their own boss find it all too easy to take their shot at it. Office employees have skills that are marketable not only to other builders, but also outside the industry, and can be even more difficult to replace when they move on. Yet custom building, due to the complexity of the process and the sophistication of the product, demands consistency and continuity in those who practice it. How do successful companies keep their teams intact in a tight labor market? We asked builders known for doing just that, and we found that paying well is just the beginning.
“There’s definitely some competition,” says Barry Frey of the labor scene in his active southwest Florida market. Frey subs out all his construction labor, but he still employs 22 people in jobs that are ever more interrelated and require ever more training. “It seems like what we’re doing now is more and more specialized than it used to be,” he says. “It’s more important than ever to have a team of people together.” Frey uses a generous profit-sharing plan to foster a sense of ownership among his employees. “People know a certain percentage of the profit is allocated to bonuses,” he says. When another business venture began to consume much of his time, he offered a beefed-up version of the plan to three key employees: his general manager, production manager, and vice president of sales. “I actually made them partners in the company,” he says. “I gave them an absolute, direct percentage of the profits.” As a motivator, he keeps their base salaries “fairly lean,” close to what a project superintendent makes. In order for the managers to earn more, he says, “we have to make a profit.” This arrangement fosters the kind of commitment Frey wants to see in his top people, and it has paid off on both ends. “In recent years,” he says, “profit has been triple the salary portion.”
Everyone knows cash is king, but as custom builder Wayne Foley notes, trying to please employees whose primary interest is money can be a wasted effort. “They’ll go down the street for a dollar,” he says. In hiring, Foley seeks folks willing to put down roots, and he has made his company a place that feels like home. His benefits package includes profit sharing and a comprehensive health insurance plan, the same policy Foley carries for his own family. “We pay it all,” he says. “It covers everything but pregnancy, dental, and glasses.” For long-term employees, the company reimburses uncovered costs above $2,000, up to a cap of $4,000. But even such generous benefits, on top of competitive pay, may not ring everyone’s bell. Different employees respond to different perks. “There is no silver bullet,” Foley says. “It may be a new truck. It may be health coverage. It may be no health coverage but the most money he can make. It may be the most hours he can work.” Foley’s secretary is a single father with four daughters younger than 9 years old. “We offer him maximum flexibility with his hours. He can work late, come in early, anything to get his hours in.” Freeing that person for doctor appointments and school plays requires flexibility from others in the company, but the effort pays off in job performance and loyalty. “He’s valuable to us,” Foley says, “and we give him a value he probably wouldn’t find in a lot of other companies.” And his other employees know that they will receive the same consideration, should a need arise.
Las Vegas custom builders Bart and Steve Jones also pay the full tab for their company medical plan, and they pride themselves on standing behind their employees in other ways as well. When one worker needed to make an unscheduled trip back East to bring his grandmother home, they insisted that he go. “And he had his job when he came back,” Steve says. “We have great people who are there when we need them, and we’re there when they need us.” Bart adds, “We carry people along for a few months between jobs if we have to. We want to keep consistency in their lives. We work real hard to do that.” Their company, Merlin Contracting, enjoys a position in the hot Las Vegas custom market that makes it a magnet for motivated people. For workers looking to move up, Merlin represents the top of the heap, building houses for as much as $15 million. “A lot of people can build a big house,” Bart says, but for prospective employees as well as clients, “there are only a handful of real competitors.” Growth equals opportunity, and for the past dozen years, he says, “We’ve been blessed with the ability to maintain our growth.”
“You have to let the company grow so the people can grow,” agrees Keith Waters. “If you get good people, they’re going to want more and more responsibility.” The Eden Prairie, Minn., design/ build contractor has organized his company around that principle, offering an unusual degree of autonomy to both design and construction employees. “We’re a pretty entrepreneurial company,” Waters says. “There are not a whole lot of rules and checklists. We also give as many people as possible direct contact with the clients.” The latter is especially important in retaining designers, who may be tempted by the prestige of working for an architecture firm. Waters presses his natural advantage as a builder by giving his designers more control of their projects than even most independent architects enjoy. “They project-manage it right to the end,” he says. And far from feeling inferior to outside architects, “They look at it as a point of pride that they know more than the people who are just drawing.” On the construction side, Waters likes to promote from within, encourages employees to recruit from their private circles, and sees their ties of family and community transferred to his company. “We’ll do anything not to run an ad in the paper,” he says.
Paying your key people less than they are worth is a sure way to run them off. But keeping them on board, it seems, takes more than just good money. Respect, a reasonable degree of autonomy, room to grow, and a sense of community within the company all serve to bind employee and employer. As Wayne Foley says, there is no single formula for holding on to every person you would rather not lose. And there is the point: Everyone who works for you has his or her own talents, aspirations, and bottom-line needs. Finding out what they are and doing your best to address them makes you the kind of boss worth staying with.
