The remodeling industry has a growing problem on its hands that must be addressed immediately.
Coming of Age
With a lean staff and regular use of temporary labor supplied by a staffing agency, Louis Krokover of NewDay Development runs his remodeling and new-home business more like a big corporation than many contractors. Based in Encino, Calif., NewDay specializes in remodeling single-family homes for the upper-middle to "upper-upper" class.
With a lean staff and regular use of temporary labor supplied by a staffing agency, Louis Krokover of NewDay Development runs his remodeling and new-home business more like a big corporation than many contractors. Based in Encino, Calif., NewDay specializes in remodeling single-family homes for the upper-middle to "upper-upper" class. While they have significant income, the owners of these 45- to 50-year-old homes also have to spend significant dollars for their additions and whole-house remodels.
"Three years ago, the general average cost of a remodel in southern California was $110 per square foot," says Krokover. "Currently it's right around $225 per square foot. That's a huge increase for the same work."
Louis Krokover (center) of NewDay Development reviews plans for the Cooper remodel in Encino, Calif., with journeyman carpenter Matthew Tauber (right) and carpenter-in-training Ryan Schempp.
Photo: Tim Tadder Photography
Referrals are the best choice for new hires, says Lisa Gonzalez of Finished Basement Co. She is excited by the number of people with construction and business management degrees entering remodeling.
As a result, Krokover keeps overhead low — just 13.5 percent of the company's annual $3 million volume — by employing just an office manager and five lead men on a full-time basis. He also has a part-time bookkeeper and three part-time field employees who are apprentices.
"It's very difficult to get what I call key personnel. I mean even a qualified framer," Krokover says. "What we're using now in California is a lot of general labor service companies to cover our shortfalls. If you put a project out to bid for general framing services to a subcontractor and he wants $40,000 and you know it's $30,000 in your heart, you can get your lead man and people from a service company to do it for a fair price."
For the past three years, he has used both CLP Resources and Labor Ready to find skilled labor on a project basis. He has provided both companies with a list of requirements — three years minimum framing skills, the ability to take direction from a lead carpenter, and a homeowner-presentable appearance. "If they can't cut it in two hours," he explains, "we call the company and terminate and ask them to send someone else." The system works, he says, because his leads have solid people-management skills as well as field skills. "When we find people who fit our profile, we keep them busy," he adds.
Krokover's strategy is just one of many ways remodelers across the country cope with the labor shortage troubling the residential construction industry. Other methods include getting referrals from employees, subcontractors and suppliers; hiring contractors who used to run their own companies; drawing on the growing immigrant segment of the workforce; using search firms; and in-house training.
"It depends," is the most common answer. Many remodelers prefer employees with at least a few years schooling and/or experience beyond high school.
"I believe that, in general, people today do not mature to take on significant responsibility until they are in their mid-20s," says Allan P. Lutes, president of Alpha Remodeling in Ann Arbor, Mich. "With people younger than this, we have unfortunately found that too often there is a lack of focus and dependability, and that they are willing to quit over very minor issues. This has made people in this age group a poor risk for much more than raw labor, given the training and investment that are required to make them productive." He does, however, ask college trade instructors for referrals when seeking new field hires.
Melissa Banakos of Blackdog Design/Build/Remodel in Salem, N.H., notes, "People entering the industry seem to come from two distinct age groups: late teens to early 20s who have decided to go to trade school or follow the family trade, and people in their early to middle 30s who desire a change in career."
Krokover agrees. "The younger people that we hire and stay with us, for the most part it's because their families are in construction. They helped out on weekends," he says. Finding employees with both physical strength and mental agility isn't easy, he says. "Most of the younger people today, men and women, don't have both," he comments. "Eighty-five percent of the people today, within the first eight days of working construction, because it's physical labor, quit."
In addition, he says, young people who are drawn to construction often choose union jobs in commercial construction because those positions tend to pay more.
"A lot of today's kids don't want to get dirty," says Bob Losyk, president of Innovative Training Solutions, a workforce consulting firm in Fort Lauderdale, Fla. "But if you pay them enough money they will." He recommends that more construction companies take a look at how people in other industries, particularly restaurant and automotive, promote their fields and available career options beginning to students as early as junior high.
It makes sense that in a referral-based industry where a high percentage of sales come via word-of-mouth, hiring often works the same way.
"When we are in need of an employee, we contact our subcontractors, suppliers and even other remodeling companies we know very well to see if they have any referrals," says Tom Sertich of Kirk Development Co. in Phoenix, Ariz.
Bill Brinkman, of Brinkman/Russell in Oakdale, Minn., agrees. "We have found all of our field staff through personal relationship connections," he says. "In some cases, people will come to us because they know someone on our team. When we are looking for new people, we will communicate to our team members that we are looking."
Professional associations often provide useful networking opportunities. Alpha Remodeling hired one carpenter, then in a carpenter apprenticeship program at a nearby college, through a job fair held by the local HBA, says Joanie Paris, the company's controller. Lutes adds that Alpha also tries out recommended people as subcontractors for a while. "If we like their work and they fit into the company culture, we'll then bring them on as a full-time employee," he says.
Even clients can be a source of referrals. In fact, says Lisa Gonzalez of Denver's Finished Basement Company, two of her coworkers are former clients who decided to join the team themselves.
Westhill Inc., a full-service firm in Woodinville, Wash., gives a finder's fee to employees who make referrals that turn into hires who last at least six months. "We try to keep a pool of prospective employees on hand to refer to if a quick hire is needed," says Sue Tughan, director of administration and marketing.
"Your best people bring in those other best people," agrees Losyk. "They work harder and stay longer." He suggests offering a referral bonus of at least $100.
Two other ideas from Losyk: ask great employees who left of their own volition if they'd like to return. "They may have found out the grass wasn't greener," he says. "I wouldn't try after they leave a second time, but the first time is worth a shot."
He also suggests going back to prospects that didn't accept a job offer but were qualified, and may be at a point in their careers or lives where your company is a better fit.
Placing an ad in the local newspaper remains a common tactic, but remodelers are also adding online postings to the mix, especially in high-tech markets. McCutcheon Construction Inc., located in Berkeley, Calif., posts ads on the company Web site and on Craig's List (www.craigslist.org), says operations manager Nancy Schmeltzer.
To find field hires, Prestige Custom Builders in Seattle uses both the print and online editions of the local newspaper, as well as the site of WorkSource Washington (www.wa.gov/esd/employment.html), a state program that offers job matching, training and search help for workers and employers. When it comes to the office, says administrative manager Andrea Williams, the company has had luck having a consulting firm and fellow member of the HBA advertise the positions and do the first round of interviewing. She and two other staffers joined Prestige that way.
In communities with a large Hispanic immigrant population, Losyk recommends advertising not only in Spanish-language newspapers but also posting flyers at Catholic churches with Spanish-speaking congregations, English-as-a-Second-Language (ESL) classes and local professional organizations such as the Latin Builders Association in Miami.
Bowers Construction Group in McLean, Va., uses another low-tech approach: the open house. John Coburn, vice president of business operations, says the company holds about three Saturday-morning open houses each year, drawing anywhere from three to 25 attendees. Bowers Construction has made two hires that way. In the booming Washington, D.C., market where skilled remodeling carpenters have their pick of jobs, the return on investment satisfies Coburn.
Former construction- or design-firm owners who gave up entrepreneurship because of paperwork and stress overload provide a rich source of skilled employees who appreciate how hard the owner's job is. This group can be especially valuable in terms of the mentoring and teaching they can offer to younger employees. "We see quite a few male applicants in their 50s who have sold their own businesses and are looking for a stable and secure 'home' in their remaining years," says Williams of Prestige Custom Builders.
By its nature, the search and hiring process typically taps into a pool of people with backgrounds similar to that of the existing staff. The experiences of several remodelers around the country, however, shows that it pays to be open to employees who are switching careers, even if making the switch from office to field.
"We are finding that many of our hires have college degrees in architecture, music and English or teaching," says Williams. "They are coming to us in their early 30s, having left their original career, and are returning to a hobby that sustained them prior to completing college."
Brinkman has seen a trend of men in their 30s and 40s looking to switch from a different hands-on technical field: auto mechanics, airline mechanics, electronics technicians and printers, for example.
Alpha Remodeling's Lute says career changers seem to be the primary source of "new blood" in the industry. "They may have lost a job in another industry, or found that they cannot make a good living in the profession that they may have originally targeted," he says.
Power Windows and Siding, a specialty firm that subs out all labor, has been quick to take advantage of layoffs, mergers and acquisitions at the large employers, such as MBNA Corporation, located near its Newark, Del., headquarters.
"You have certain people who look for the big name because there is comfort there. They always mention the benefits," says co-owner Jeff Kaliner. "When a big company closes its doors, they find themselves working at Power Siding, and they get the same benefits, and it's a lot friendlier." In Kaliner's opinion, it's an employer's market.