How to Deal With Labor Shortage

Posted by Justin Zeller, Red House Custom Builders on 16 August 2018

I started Red House as just myself leading work for a couple of GC’s in 2006. Two years later, the economy was tanking, and I had to find work for myself as a remodeler and find help fast. In 2008, posting an ad on Craigslist, I remember getting 15-25 applicants per day to work for us - a company that was young, unestablished, and untested. Amazing! So many carpenters looking for work, and so much talent to choose from. I eventually found one, then another. It was an employers’ market. I assumed the labor market would always be so good.
Fast forward 10 years -- things have changed. Now, Red House is increasing production rapidly in 2018 over 2017 and, although we are a more established business offering 401K, an excellent managerial experience, healthcare, and vehicles, I can barely get 1 applicant per day when we advertise for carpenters.
The market has changed. There are fewer carpenters looking for work, fewer carpenters in the field, and many of them are being closely guarded by the companies they work for. According to the Wall Street Journal, construction workers in the US have fallen from 11.7 million in 2005 to 10.2 million in 2016. That’s a huge drop in availability of workers for the industry just as construction and remodeling spending ramp back up to pre-recession levels.
Red House has taken a two pronged approach to the labor shortage. We are incorporating short term labor shortage strategies to fill the gap, and we are implementing a long term human capital strategy to build up talented individuals on our team.
Short Term solutions:
To fill the gaps in our production roll, Red House has been fortunate to lean on the expertise of fellow EM NARI members such as ROI. Temporary skilled labor from Resource Options has allowed RH to continue to provide skilled labor to projects, and meet construction deadlines when we haven’t had the in-house carpenters to staff every job. Keep in mind, in these situations, you can’t just send someone in blind to a new job. Good usage of temp labor still requires an onsite Lead Carpenter or highly involved Project Manager to achieve success. However, having an extra set of skilled hands onsite can be instrumental to accomplishing goals and meeting deadlines. Two other benefits to temporary labor: One, it's not your employee. You can send them back and request another if they don’t fit your needs. Two, if they are an amazing fit for your organization, you can always request a long term match, or negotiate a fee to hire the talent out-right.
Another useful strategy for filling the workforce gap is to utilize independent carpenters aligned with your company's culture and goals, and willing to work with you closely to achieve project or departmental goals. While you should not use a sub as a long term fill-in for new employees, building a strategic relationship with independent remodeling carpenters is a great way to ramp up your production capability during busy times. This does take time to develop these connections. If you don’t currently have these relationships, you may be able to ask your lumber supplier, or folks in line at the counter, for some recommendations. You’ll have to network. Also, don’t forget to ensure all of a sub’s paperwork is in order. While a company like ROI has a more structured approach to insurances and licenses, sometimes independents require a bit more due diligence from the GC.
With either of these options, temporary skilled labor or relationships with independent remodelers, a remodeling contractor is likely to pay more than the burdened cost of an in-house employee; however, these provide the ability to get “over the hump” when facing a mountain of work.
Long Term Human Capital Campaign
For healthy long term growth, a company will need to systematically work a strategy for attracting and retaining talent within the remodeling field. Part of the key to this is development and advertisement of an outstanding Employee Value Proposition. Michael Page, a recruitment company, puts it like this:
"An employee value proposition (EVP) is the unique set of benefits which an employee receives in return for the skills, capabilities and experience they bring to a company."
An EVP is about defining the essence of your company - how it is unique and what it stands for. It encompasses the central reasons that people are proud and motivated to work there, such as the inspiring vision or distinctive culture. When integrated into all aspects of a business, a strong EVP will help to retain top performers and attract the best external talent.
While Google and TripAdvisor are iconic examples of building EVP’s with onsite food courts, gyms, and more, as remodelers we are not able to compete. Instead, we have the chance to focus on the benefits we can offer. These include culture, company values, employee development, and management, all leading to higher employee engagement with the company and the company’s mission and purpose. These efforts not only build the ability to attract new talent to your organization, but they also help your company to retain that talent.
Of course, as you develop and grow the EVP, our industry also has the opportunity to engage with, and sell that EVP to entry level youth in vocational schools. Programs, such as EM NARI’s Youth Remodeling Career Day, provide the opportunity for remodeling leaders in our community to engage with young, talented individuals who will become tomorrow’s leaders. As a long term strategy, communicating with, and sharing the value proposition of remodeling as a career is the surest way to fill our ranks in the future.
Long term, the curation of a highly talented, highly engaged team is what we all hope and plan for in our businesses. Building our in-house team is the most secure and stable way to do this; however, when opportunity knocks and we find ourselves requiring immediate assistance temporary skilled labor and independent carpenters are a great way to increase production capacity and complete project goals.