Credit: Illustration: iStockphoto.com/LoopAll
At the beginning of 2009 Lorin Miller, president of Miller Custom Exteriors, in Fredericksburg, Ohio, departed from tradition and shifted from employees installing almost all jobs to half subcontractor, half employee installation. The year turned out to be a record for installations and revenue. This year presents Miller with the challenge of matching last year's success.
Many home improvement contractors have reexamined the way they hire and pay installers. Some have increased subcontractor use, citing an inability to afford benefits and other overhead for employees. Gone, in some cases, are installer bonus systems and other perks in a construction market where, as Mike Kelly, owner of Kelly Window & Door, in Cary, N.C., says, "everybody right now is happy to have a job."
Pay Them Better, Quicker
Jeff Petrucci, owner of Bloomfield Construction, in Bloomfield Hills, Mich., notes that in his upscale market in a state with above-average unemployment, there are "a lot more people out there installing and putting in windows who weren't before."
Many knock on his door. He says that paying subcontractors on time and treating them professionally ? i.e., promptly returning phone calls ? counts more than anything in the current climate. Crews, Petrucci notes, "will finish a job in a day. Do I want to give them an incentive to do it in half a day?" Miller agrees that the key to getting the best installers is to "pay them a little better and pay them quicker."
Petrucci says that local installers are eager enough for work that they have willingly taken on functions once considered the province of the salesperson, such as sending him photos of rotted wood or inadequate insulation encountered in the course of a job, so that homeowners can be contacted for change orders or so that extra charges can be explained in billing.
Informed on Profitability
Some companies continue to pay bonuses, either for the quality of the work or for completing jobs in a timely manner. Rene Michaud, owner of Triumph Roofing & Supplies, in North Battleford, Saskatchewan, says that the key to his system of distributing weekly bonus checks to roofing crews ? sometimes as much as 2% of the job ? is achieving the margins he needs and letting everyone in the company know how close, or not close, to profitability the job is.
When it is close, Michaud himself appears on the jobsite, handing out checks for as much as $100 per project. "The crew has such a significant effect on the revenue and expense side," Michaud says. "Without a good crew out there, we might as well all go home."
Miller says that his move toward subcontractor installation was made far easier by the fact that so many construction companies have gone out of business in Northeast Ohio. "We've been able to get people we wouldn't have been able to get two or three years ago," he says.
?Jim Cory, editor, REPLACEMENT CONTRACTOR.