It’s the start of a new year, always a hopeful time. I’m hopeful our industry will continue to improve as homeowners and building owners do the remodeling, repairing or building they delayed when money was tight. When they call you to do that work, I’m hopeful you have the business tools to sell those jobs at the right price, the price that covers your job costs and overhead expenses, and returns a fair profit.
When you sell those jobs, will you use employees or subcontractors to get them built?
In my experience, the most efficient small construction-related business structure is a three-person company. One person sells the jobs, the second person gets the jobs built, and the third runs the office. The owner is generally either the salesperson or the superintendent, depending on their skill set. The third person might only be part-time if the business is small.
When it’s time to hire, follow the old adage to be slow to hire, quick to fire. That means when you need a new employee, you advertise the fact and then go through the hiring process. Eliminate those who don’t meet your minimum standards. Reduce the list of potential employees to three or maybe four people. Conduct your interviews and make sure they tell you the same thing they said in their resume.
If one or more check out and you are ready to make an offer, do a thorough background check. This is getting more important; did you know that if you provide services to the elderly, you are required to do employment background checks on the people that will be working with the elderly? If you’re involved in residential construction, the odds are good you’ll be providing services to the elderly. (American Painting Contractor magazine, page 26)
As a condition of employment, make them sign your employee manual. If they don’t or won’t sign it, don’t hire them.
Your employee manual should cover most everything you can think of that relates to the employee working for your company. For example, how should they dress, speak and act around customers? What time does the workday start and end? Can they use cellphones and radios on the jobsite and while driving?
The manual should also include how to deal with changes on your jobs when they come up. You should be very thorough in describing how changes are to be made on the job, who authorizes them and what you will do or not do to the employee if they violate those rules.
You should have a complete separate section on moonlighting or taking side jobs. If you allow side jobs, do you allow the employee to drive your vehicles to those jobs, use your tools, and maybe “borrow” some of your materials to do those jobs? If you don’t allow side jobs, you need to clearly define what you consider to be a side job and what the penalties will be if they are caught doing them.
Your employee manual should be reviewed each year. Anything that has caused an issue since the last update should be added to the manual. Anything that’s no longer necessary or appropriate should be removed.
Make sure all employees know that you’ll hold them accountable for their actions and their work. This is where the effort you expend putting the manual together will pay off, because you have a written guideline to follow. That’s why the more thought you put into the process and the more research you do, the better protected you will be. (We offer a starting place for your employee manual here – https://www.markupandprofit.com/more/employees/employee-manual/.)
This is especially true when an employee decides to leave your company. When I talk to contractors, I often hear about problems that surfaced after the employee left and collected their final paycheck. Let them know that they’ll be expected to conduct themselves the same through their last day of employment. If they decide to leave with some of your tools or materials in the back of their pickup, or if they take your client list and attempt to contact those clients to start their own business, remind them that you’ll take legal action, as necessary, to recover your loss.
There are downsides to using subs to get your jobs built. There are also downsides to hiring employees to get the jobs built. Do what works best for you and your business, just make sure you’re protected.