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Should I Stay or Should I Go?

Should I stay or should I leave
English punk rock band The Clash got that exactly right back in 1981 – hitting on the dilemma facing an estimated 39% to 52% of U.S. workers who are keen to make a job or industry change in 2022.

According to one study from Fidelity Investments, that’s four in 10 looking to make a job switch this year. The 2022 Financial Resolutions Study found that 39% of employed respondents across all age categories are planning to get a new gig in 2022. Reasons for seeking a change were values-based, with stress levels, flexibility, and “finding a job that better aligns with my personal values” cited as top reasons. 

Staying versus going remains a big theme in 2022 with The Great Shift – the movement of U.S. workers going after more purpose, meaning, flexibility, and greater rewards in their jobs. “It’s quittin’ time in America,” declared Business Insider this month. For real, over 38 million workers quit, leaving big paying jobs for greater life-work balance or low-wage industries for greener pastures. 

2021 labor market data fully back that up. For seven months straight – April to December 2021 – record levels of employees quit each month with a peak of 4.5 million jumping ship in December 2021. Aspire Institute for General Contractors hiring versus retention in The great Shift 2022

Are your key people quitting? Are you doing everything possible to retain your best and brightest talent?  Is your staffing plan focused more on employee retention than new hiring? It should.

Construction Must Change, Too 

Skilled construction tradespeople are not leaving in the droves we see in retail, entertainment, travel, leisure, hospitality, and food services. However, much can be learned about changing employee expectations overall.

For example, construction employment also declined in late 2021, with 410,000 open positions in the U.S. in October 2021. That’s compared to 253,000 in the same month of 2020.  

Quitting is not new to home construction. But it has taken on a new flavor in our post-vaccine economy. Construction industry turnover rates are twice as high as the average business – a whopping 25% yearly. Healthy turnover is considered to be more like 10%. Some companies had very low 1-2% exit rates before the 2020 pandemic recession.

Data from the Bureau of Labor Statistics show how the post-vaccine economy is still being reshaped by workers. Simply put, the old way of working must change for people to stay in their roles. Good news? Pay is not the primary driver of resignations. Purpose, lifestyle, and healthy work environments are – and they are also motivators within your control.

Rather than hiring, shift your focus to growing the team you have. Aim for “best place to work” status by acting on at least one of these six ideas.

6 Simple Ways to Keep Your People 

1.    Stay Interviews

·        Proactively set up one-on-one time with each employee

·        Ask them what works well and what doesn’t in your environment

·        What makes your workplace positive and motivating? What makes it the best place to work? What gets in the way?

·        If there were ever a reason to leave, what’s a top reason?

·        Listen without feeling defensive. Reward honesty.

·        Act on at least some feedback to build trust.

2.    Flexible and Part-Time Work Schedules

·        Not all roles can work from anywhere, but some can

·        Look at options like flextime, hybrid work (a mix of remote and in office), and adaptable shift patterns.

·        Listen to what your people need to balance home, community, and work life.

·        Focus more on results and impact than office presence alone.

·        Monitor what your competitors offer especially hourly roles.

3.    Career Growth

·        Invest in skills, knowledge and expertise with new interesting assignments and training.

·        Encourage affordable online training such as LinkedIn Learning with over 9,000 English courses across technical, business, creative and Professional Certifications

·        Enable lead carpenters to pursue valuable of their choosing whether it’s a new safety certification or project management or general construction.

·        Hold proactive discussions around career paths and upward mobility at least twice per year. More if you suspect a flight risk.

4.    Tech Automation & Innovation Budget

·        Today’s workforce, especially tech-savvy Millennials and Generation Z (age 18-21), prize technology.

·        Frustration often arises if they can’t explore or act to find a more efficient way for both homeowners and operations.

·        Enable bookkeepers to innovate HR by automating payroll, benefits, and tax systems – freeing up time for better long-term demand forecasting.

·        Evaluate Construction Project Management Software such as BuilderTrend, Fieldwire or Houzz Pro.

·        Set aside a budget for each employee or project, i.e. $300 monthly or $10000 annually to try or buy new technology systems

·        Create better customer and employee experiences.

5.    Care and Appreciation

·        Find out how each person likes to feel valued – not just for strong results, but for demonstrating behavior important to your work environment such as customer orientation, integrity, or teamwork.

·        Obsess less on fairness and sameness – focus more on personalization.

·        Personalize recognition. Some people want time back or a family dinner out on you. Others like cash bonuses or a stretch assignment that leads to promotion.

·        Know what motivates each person, write it down, and do that thing. It’s not yours to decide alone.

6.    Better Benefits

·        Good healthcare insurance and retirement savings accounts continue to top the list. Find out how to get a double-tax and retirement advantage through Health Savings Accounts (HSA) with a High Deductible Health Plan

·        Consider life insurance, disability insurance or daycare assistance to support families.

·        Personal choices. More small businesses are moving away from one-size-fits-all. Let people choose.

·        Team volunteer days, celebrations, and free lunches (occasionally!) are fun and affordable perks!

 

 Put Your Attention on Retention  

 

Simply put, it’s better to invest your money, time, and energy to keep the crew you have. More impact and less costly. Doubling down on employee engagement pays off big time versus new hiring in a tight labor market.

high employee turnover versus high employee retention

Plus, nailing your staffing strategy is so key to profitability that Jim Eskridge, Aspire Business Coach says: “It must be a long-term, predictable, proactive process.” 

He adds, “We coach our Aspire clients to be always cultivating, looking, and nurturing talent 6-12 months out to avoid panic hiring or scrambling if somebody leaves.” 

Of course, the faster you increase your profitability (keeping more of the money earned), the more financial flexibility to bump up wages, promotions, and benefits. That might mean staffing a slightly smaller team, but one that reaps greater rewards for your profitable business. 

Plus, it’s a big, costly mistake to hire before you fix your margins. So, while you’re fixing those margins, be sure to retain critical people. 

Small Hinges Swing Big Doors 

Take one small retention step from the list above. Remember, small hinges swing big doors!  Aspire is not an HR firm, but our Business Coaches do help contractors achieve next-level profitability so that you can afford to hire, retain and reward your team.

When it comes to staying or going, it really does hinge on that.

NARI members! Remember to cash in on your 30-minute complimentary consultation. Visit our special NARI Nail Your Profits site! 

Build Your Winning Hand by Nailing Your Ideal Job Mix

Poker

Poker

One of the lesser-known ways to increase your profits is by nailing your job mix – proactively choosing a mix of ideal custom-home and remodeling jobs based on the highest value. It’s a mindset change mostly. You can become more proactive with an annual business plan with a “best case” job mix defined. Then pursue and choose your ideal jobs – while tossing the others. It’s like being dealt a hand of cards of available jobs on the market, then deciding which ones to keep and which ones to toss. All to build your winning hand.

After all, not all jobs are created equal, right? Just like a Jack of Spades is different from a 10 of Hearts in composition and value. Some builders prefer or excel at certain jobs more than others. If you’re really tech-savvy, maybe you have a passion or special talent for media rooms and digital home offices with nice built-ins to hide wires and cables. Some of you might be more entertainment-driven and love building game rooms and covered outdoor patios with built-in BBQs. Others might want to focus more on green building and energy-efficient transformations.

Classify your job types and sort them by revenue, materials and labor spent to figure out which ones bring in this most profit to your contracting firm.

Think of Each Job Type as a Card with a Unique Value

Whatever your passion, some jobs are simply more profitable than others. A kitchen remodel may deliver 45% in profit margin versus a basement remodel at a 30% profit margin. (Remember, your profit is the money left over after backing out the materials, labor, and sub costs from your total revenue. Your profit margin is expressed as a percentage of overall revenue.

Margin is a very different beast from markup – which means marking up your price. Profit margin is NOT about charging your customers more. It’s simply an expression of the money you keep versus the money you earn. Aspire helps you put together the right job mix to maximize your profitability.  

Again, putting together the optimal job mix is a lot like putting together a strong hand of cards. Except luck doesn’t play a crucial role. Strategy and patience do. 

Top 3 Ways to Get Your Job Mix Right 

1. Classify different job types. 

Your best job mix should really feed your business model and profit goals. To do that, it’s important to start classifying different jobs into categories, then look back at how much each of them brought you in profits. One of Aspire’s $2 million-in-revenue remodeling firms did a deep dive on 120 jobs completed in 2020. What they discovered came as a shock. They found 50% of their jobs brought in less than 10% of the company’s profits.

This begs the question: Do you really need to say yes to all those lower-value jobs? And how much more money could you keep if you gracefully said No and put that time into the jobs that brought 90% of profits?

2. Choose winning jobs that fit your profit goals.

Bad jobs are the ones that don’t make a fair profit. Or worse, you barely break even or lose money. It happens. It’s part of a contractor’s life. The trick is to learn from it and prevent it from happening again. As a service industry, contractors can be natural pleasers. You want to say yes and take on more jobs – especially if you’re convinced that Boom times won’t last forever. Of course, they won’t. But even in the toughest times, there’s plenty of work out there.

General contractors win by proactively choosing their ideal job mix and going after those jobs - while saying no to loser jobs

Let’s take the housing crisis of 2008. Even with surplus inventory, and homeowners underwater, there were a lot of remodeling projects and $500 million worth of available work. So don’t react or say yes to the first or noisiest customer. Choose the right jobs that fit your profit goals – the money you keep – and your cash flow goals – the timing and length of those jobs. That way, you’ll be profitable every month — not just at the end of the year – and have no problem making every payroll.  

3. Set different profit goals for each job type.

Clever contractors realize that not all jobs are created equal – they each bring in different profit margins. Before joining Aspire’s two-year Coaching Program, some of our clients barely pulled in 13-15% in profit margin overall. Hey, listen, if you’re in the single digits or teens – say 2, 6, or 15% as we see so often – you’re not bringing home what you’re worth.

For example, your ideal job mix might have kitchen, laundry, and bathroom remodels earning 34-45%; specialties like media rooms, home offices with built-in bookcases and desks at 26-34%; and a couple of whole-house remodels at 20-25% in profit margin.

Remember that profit margin is expressed as a percentage of revenue – meaning 25% gross profit margin on a $1 million job equals $250,000 in profit for that job. That’s before you take out fixed overhead like office space, computers, and bookkeeper salary. Set your targets based on what makes sense to your business. Just realize that each job type is different.

Sort Your Cards by Suit and Value, then Recombine for Strategy 

Like in a deck of cards, sort your remodeling job types into categories such as kitchens, bathrooms, offices, basement additions, whole house remodels, and so on. Just as you would sort your cards into spades, clubs, hearts, and diamonds. Then decide which jobs have the highest value – just like you decide which cards have the highest value, i.e. Ace is high or low, then 2, 3, 4….9, 10, face cards. If your cash goal is $5 million in revenue and $1.5 million in profit, you’ll quickly see which jobs not only add up to your revenue goal but which ones bring in the highest margin based on value.

You may discover that you can choose fewer jobs with higher margins, versus high job volume with small margins. Your $30,000 bathroom remodels (hearts!) might be worth 45% profit margin, $100,000 kitchen remodels (diamonds!) 38%, and your $50,000 covered patio expansions (spades!) 26%. Throw in three $1 million whole home remodels (clubs!) at a 22% profit margin. Then, see what combinations move you the fastest to $1.5 million in profits.

If you play each of those cards and still come up short, it’s okay to take a couple of lower-margin jobs to shore up the difference.

Just No Jokers!

The question to ask yourself is this: If you found 10 good high-profit jobs and 10 poor, low-profit jobs, but you only had capacity for 10 projects in a year, what 10 jobs would you take? Would you say yes to any of the loser jobs? Of course not. 

So, classify, sort, and choose different job types for the right overall mix – your overall hand of cards – to maximize your chances of profitability (pssst, keeping more of the money you earn). Don’t feel bad or fearful of tossing the least valuable cards – or jobs – away. Set your job mix strategy every year or even in two-year intervals knowing which jobs you are marketing for, going after, and landing.

Like most card games, it’s about strategy and patience – and knowing you can pass on a bad job with the confidence that the right one will be dealt. 

For contractors, an optimal job mix blends your passion and skills to put together the highest-value jobs based on what's most profitable.

Busyness is Not Business

Being far too busy to the point of burnout does not define business success. Taking on more and more work might lead to greater revenue or sales – but that doesn’t mean your profitability or pay become any better.

Understanding what each job brings into your business is a surefire way to nail down your numbers. Having a full slate of rewarding work…and being paid what you truly deserve for your time and talent…now, that defines success. 

Aspire business coaches love to talk profit goals, job mixes, and putting together the best hand possible for residential contractors. Then, they personalize an optimal mix of jobs for each builder or remodeler based on what you like to do, what you’re good at, and what maximizes your profit.

 

NARI members, take us up on your earned 30-minute consultation with Aspire. Sign up now: www.theaspireinstitute.com/nail-your-numbers.

For more on Nailing Your Job Mix, download our FREE REPORT: Why Contractors Take Bad Jobs.