Hiring For The Future
Well, here it is, the middle of May and you still haven't made your first trip to Honey Hole Pond. You know exactly where to find Lunker Brown, who spurned your dinner invitation last season, yet your work schedule just won't let you make the trip. Maybe, with no more emergency calls, you'll be able to finish Mrs. Jones' water heater replacement in time to drop Mr. Brown a line this afternoon.
You would have more time for the important things in life if you just had some qualified help. Unfortunately, all you get from overpriced help-wanted ads are the "leftovers" from other contractors. Maybe it's time to start your own farm team.
The growing shortage of skilled labor is not news. The average age of skilled tradespeople continues to climb as we grow, shall we say, more experienced.
This fact comes as no surprise, considering the aging of the population in general. According the Administration on Aging, by the year 2030, 20 percent of the U.S. population will be 65 or older. Besides the sobering fact that I'll be among that group, construction and service trades will be facing a compound challenge.
As we trade professionals get older, meaning there will be fewer of us, the need for our services will grow. Instead of complaining about the do-it-yourself market, we may be telling our customers, "I can't get to you this month, why don't you do it yourself?"
If we old codgers can't get under the sink, what makes us think that our old codger customers can do any better? As our market grows, our labor pool evaporates. Construction trades will be competing against employers from every industry for a growing slice of a shrinking pie.
The picture gets worse if we acknowledge the poor job of recruiting we trades have done over the past several years. While other industries recruit and train, we simply fight over those who are already in the trades. Have you ever told a fellow association member that you wouldn't recruit his people? That's the most counterproductive practice we have. It breeds the very problem it is intended to prevent by thwarting the free market process.
If we would simply encourage a "no holds barred" competition for the existing labor pool, we'd drive the market price up enough to attract a larger number of new entrants. Instead, we just shuffle personnel back and forth, holding them back or losing them to other industries.
Growing Your Own PlumbersDusty Cook, owner of Dynamic Plumbing in Houston, is part of the solution. You may know him for running marathons with his plunger and water pump pliers. Over the past two decades, he has raised 19 journeyman plumbers from scratch. With only nine trucks on the road, he has gone far beyond the norm to contribute manpower to our industry.
Long ago, Dusty figured out that an apprentice program contributes to his bottom line. Rather than fret about how much it costs to train new people, he simply lets his customers pick up the tab. After all, they're the beneficiaries of his training program.
Dusty's company includes three primary revenue sources: commercial service, commercial contracting and flat rate service work. Apprentices contribute to sales in each of these areas.
Much of his commercial service work is billed on time and materials. Even on smaller jobs he charges for his apprentices. His commercial accounts have come to understand the value of a two-person service crew, so it is very rare that he is questioned about the additional person on the invoice. His customers get the benefit of an efficient crew, his company earns a profit on training new people and the industry gains new professionals.
Some of his commercial work is priced by the job. On these jobs, he simply includes his apprentices in the job cost, earning the appropriate mark-up. Mark-up and increased efficiency add up to healthy profits on these jobs. Since he is committed to the long term, his crews learn to work as a team, further enhancing his production efficiency.
He also offers flat rate service work to his residential customers. There are two ways his apprentices pay off on this type of work. First of all, they're included as part of his overhead. Typical residential service doesn't look like two-person work, so charging for a second person on the invoice wouldn't make sense to most customers.
Rather than itemize an apprentice on the invoice, he or she is considered overhead expense. Overhead, as we know, is included as a cost in flat rate pricing. Even if the apprentice does nothing more than carry an extension cord, he will be profitable. But the payoff extends beyond that.
Even on small jobs, an apprentice can increase billing efficiency. For many companies, just one more billed hour per day can offset the cost of an apprentice. Whether he's fetching tools or cleaning up, the apprentice frees his plumber to concentrate on the job at hand. Being more efficient adds consumer value to the job as well. The customer benefits by a quicker, more thorough job completion at no extra charge.
Dusty has seen that growing his own plumbers results in higher standards of ethics and workmanship. While learning the technical aspects of the trade, his apprentices also are learning how Dusty works and treats his customers. Once the apprentice passes his journeyman exam, Dusty knows he has a plumber that will make him proud.
Contractors who are part of the solution not only enjoy having qualified labor when they need it, but they reap other benefits as well. In Dusty's shop, the extra sets of hands have reduced injuries and property damage that often occur when lone mechanics attempt chores too close to their physical limits. An extra set of eyes on the job may even prevent a weekend skiing tumble from turning into a Monday morning worker's comp claim.
The Apprentice PayoffThere are other, less tangible benefits as well. Hiring apprentices can help you attract more experienced professionals. Experienced tradespeople come with experienced backs and knees. Having a sturdy prot¿ to help with that 42-pound gatemouth tool bag makes life easier on us experienced professionals. (It's not that we can't do the work, it's just that we feel someone else needs the opportunity, right?)
If your competitors are offering similar wage and benefit packages, you can trump them with apprentices in every truck. Is it too altruistic to think that you could add a decade to a professional's career, and at the same time provide an opportunity to pass the torch of our great profession to the next generation?
Forget the altruism and let's get back to being mercenary. As Hoyt Axton used to sing, "Work your fingers to the bone, what do you get? Bony fingers!" If you want to build a business that produces more wealth than you can produce alone, you have to bring others into the business.
By bringing young professionals into our trades, you'll be building a foundation for wealth while doing your part to relieve the shortage. Or, you can just settle for "bony fingers."
The question I know you're asking is: "How can we afford to bring them aboard?"
If the tank on your truck was sitting on empty and fuel was $3 per gallon, what would you do? You would either pay the $3 per gallon or just stay at home and forget about taking care of business.
Our profession is running on fumes right now. For years we have ignored the needle bouncing on "E" and before long, we're going to be hitching a ride. Unless your business plan is to do nothing but faucet repairs in your final years, you have little choice but to do what it takes to bring new people into our profession. Since our customers are the beneficiaries of our services, we should expect them to pay the costs of training just as we expect them to pay for fuel.
If your budget doesn't include an apprentice/trainee position, create it and include it in your pricing now. Larger companies can spread the added overhead out a bit. Smaller companies may see more of a spike in their costs of doing business but nobody should get off the hook.
As I mentioned, Dusty Cook has produced 19 plumbers from scratch in the past two decades and his shop is not particularly large. Even though several of his plumbers have gone on to join other companies, he still views training as an investment that his customers should fund.
If you can't afford to bring someone on right away, start growing a trainee account equal to six months or more of wages before hiring anyone. (It may take that long to find a good candidate anyway.)
With this payroll buffer in place, you can offer full-time employment as you work through the early stages of training. If you've hired the right person and are doing your part to train them, you should begin to see a productivity increase before you use up your trainee account. If your new hire doesn't offer promise within a couple of weeks, tell them they might do better selling stuff on e-bay and find another one.
Next month I'll help you find and attract these professionals of the future. In the meantime, recognize that the future is already here and it's time to do something about it.