By Dan Paulson, Invision Development International, LLC
Earlier this year, I launched a podcast called Books & The Biz. In each episode I am joined by my colleague, Rich Veltre, a Fractional CFO. We discuss and debate issues from two different perspectives: His being the financial side of business and I take on the operations.
Over the past six months we have addressed newsworthy topics like Quiet Quitting, and outrageous employee perks, to issues such as tax planning and hiring. Recently, we asked our network and clients what questions they had that were keeping them up at night. The result was several questions I thought resonated with what many business owners were thinking. While these questions were not specific to construction, I believe they relate to our members here. Below is the transcript of questions from that episode.
“Dave D. wants to know, if we’re in a recession, is it going to get easier to hire?”
“That’s a great question that we’ve actually addressed a couple of times, I think. The answer might be best saying ‘it depends’. I could be saying ‘it depends’ to a lot of these things, because certain situations are going to have different outcomes. But overall, I would say no. We are in a weird situation right now. With everything that’s going on, the one thing that hasn’t lessened up is unemployment. We still are seeing very low unemployment numbers, and everyone I’m talking with is still struggling to try and find help to fill key positions. What’s more interesting is skilled positions. So, let’s say you’re a doctor, or you are a construction worker. Any trade labor is going to be very difficult to fill. There’s just not enough people out there and not enough people trained in those skilled positions. So, we’re seeing that across the board. Everyone I’m talking with is trying to find creative ways to hire people. And of course, here in Midwest, I think we’ve talked about that Midwest nice. We don’t want to upset our friendly competitors by taking their employees away, but I’m seeing less and less of that now.”
“It’s like, how do I get people in the door? And the second part is, how do I keep them? Because it is getting so difficult to find the people, and it seems to be a revolving door of people going in and out. Now when it comes to frontline staff, I think that has eased up a little bit. So, what we would typically call unskilled labor for restaurants, entry level positions in retail, things like that. I think you are seeing some ease, if you will, where it’s a little bit easier to find help, but everywhere I know it’s still struggling. And it’s mainly again, going back to that revolving door situation, we’re seeing a lot of people come in and go out. Employees have the upper hand right now. They have the freedom to move around as they see fit. And that definitely means that as an employer, you have to be on top of your game to make sure you keep people around. So, did that answer the question, Rich? It was ‘it depends’, but I think for the most part, we’re in a situation where we are not going to see major improvements. And from what I’ve researched for decades for finding help, we’re going to be shorthanded for a while.”
“I think you’ve definitely answered it. I think you’re 100% right. The question is basically a short-term question. If I’m in a recession, recessions don’t necessarily last forever, so it’s a short-term action or a short-term question. The long term, I think you’re 100% right. This is something we’ve been talking about for a while.”
“Well, typically, though, in a recession, you tend to see the labor market free up a little bit more. Now there might be less jobs available. A lot of times there’s more people available through layoffs. Even with the layoffs we’re seeing, we’re just not seeing large group of people freeing up to the marketplace. And that’s where I think a lot of companies are getting frustrated. They’re seeing all the signs saying that we should be seeing more help materialize, but they just aren’t there. And different than other situations like this, they’re more willing to move. Take us back to 2008, and people were just happy to have a job. They plucked their butt in their seat because they didn’t want the outcome of either getting fired or laid off. We just are not seeing that this time. We’re seeing employees as a new generation that they’re more than willing to take the risk to leave and go somewhere else, and in most cases, they’ve got the opportunity to do so.?”
“Brenda S. says, ‘what can we do to find talent?’”
“Well, let’s see. What’s the context from what Brenda S was saying? So, they’re having a difficult time hiring people. This is a client. They’ve been posting ads. They’ve been using the different job sites out there, and they’re having trouble people applying, getting people in the door, getting solid applications. And that again, ties to the problem we talked about with first question that finding talent is difficult even with the new channels. Back in our day, Rich, we had something called a newspaper. And you would look through this thing called the want ads, and you would circle the ones that you wanted to apply to, and then you would mail in, get this mail in, a paper resume, and hopefully somebody would call you back. Nowadays, it’s a completely different story. I’d say 99% of it’s electronic. I don’t know of a lot of people that get a paper resume anymore. So everything’s all online. Everything looks very very bland, and people just aren’t applying the same way that they did in the past. But the same point, it’s easy for your message to get lost amongst all the other applications, because you can post on several sites.”
“There’s Indeed, there’s ZIP Recruiter. You can post on LinkedIn. I believe you can even post jobs on Facebook, maybe even Pinterest and Twitter and all the other places, at least post links to it. You have it on your website. So, keep in mind, in the past, you have one place to go to get information, and now you have multiple places. So, it’s really easy for your job placement to get lost somewhere. And you’re going to have to be more creative, because employees are looking for something other than a list of tasks to do at a salary tied to those lists of tasks. That is why we’re seeing a lot of turnover. We are, because we … We have now two generations. We have the millennials, and we have Gen Zs. These generations have been coached up by their parents in different ways, which most of them need more guidance.”
“I guess a better way to say it’s more coaching. They are looking for feedback. They’re also looking for opportunity. Right now, the perception is that you pick a job, you work at a job for a while, you do the task, then you use that experience to get you to your next position. We haven’t built a system that rewards loyalty or people sticking around. I completely understand why, because in most cases, business owners haven’t been that loyal to their employees. If the economy changes, first thing they do is lay people off. If somebody’s not performing to their level instead of coaching them or helping them along, helping them improve their skills, we’re often quick to fire. And sometimes that is okay. If it’s not a right fit, you definitely have to make those choices. However, if you are going to hire people and keep people, you have to become the employer of choice. You have to market yourself better. You have to create a culture that people actually would enjoy participating in, and if you are able to do that, you will be highly successful. You’ll have no problem finding people. The problem most of us have right now is we’re still stuck in 20th century mentality on leadership, on hiring, on firing, and we just have not progressed enough to where we’re able to keep this new level of talent that’s out there.”
“So, the first thing I would tell Brenda to do is approach your hiring like you would approach finding a new client. Who is your ideal, in this case, employee instead of customer? What skills do they have? What personality they have? What likes and dislikes do they have? Another part of this that I don’t think is tied to this question, but it’s something you need to consider is there’s people that live in big cities. Rich, where you live, you’re only a few minutes away as the crow flies from New York City, the most densely populated city in the U.S. I live in rural Wisconsin. I can throw a rock across my yard and not even get it into the neighbor’s yard. There’s a lot different as far as population density. If you’re in a more rural area, you have fewer people to choose from. That’s another issue. You have to create an environment where you’re attracting people that are going to want to fit in that area. For example, out here, hunting, fishing, outdoors, anything where you have people that don’t want to be in a densely populated area. They seek entertainment that isn’t through the theater or things that you typically find in urban settings.”
“They will be more attractive to some place out here. There are people that are like that. Just as there are people that want to live in the big city that enjoy the urban hustle that are going to gravitate to there, and they are going to look for amenities that are going to support them. You really have to look at what amenities does your community offer, and where can you attract those people from? If you are not considering those issues, if you’re not building your marketing plan towards hiring around those issues, it’s going to be very difficult to find people. It’s also going to take longer to find people, as we discussed in some of the earlier questions. There is just not that many people out there. So you’re going to have to work that much harder and have a marketing employment plan just like you would have a marketing plan to find new customers. The process does not change.”
“No, it definitely doesn’t. I think my takeaway from what you just said, though, is definitely it’s the creativity. It’s the creativity of the hunt for an employee.”
“It’s a new challenge. And it’s going to be a challenge for a while. So as I tell people, get used to it. You can whine all you want. It is not going to change. So make a difference. We got another one? Okay. Yeah, we.”
“Dan B. says, ‘why is it so difficult to keep help?’ And the commentary on that was essentially that employees seem to be ready to leave at a moment’s notice.”
“Yeah, that is definitely the case. Most people are looking for their next opportunity at their current one. And that goes back to something I said a few minutes ago with one of the other questions. We have conditioned people that loyalty doesn’t exist for them, so it doesn’t exist for you. And their next opportunity is where they’re going to grow with their career and their talent. So many employees do not see you, the employer, as the one that is going to teach them everything they need to know to build their skills, provide them with everything they need to do to grow their career, and they really don’t see any upward mobility, even if you are a larger company that does provide some career track. I see a lot of companies out there that it’s still, this is what I’m going to do. I’m going to do it here for a year or two years, and then I’m going to take that experience. I’m going to go somewhere else, and they’re going to teach me the next phase of that career. I’m going to get a different title. I’m going to get more money, and on they go.”
“We need to change that thought process. And it’s a little more difficult in smaller companies. In some cases, you do have a limited upward trajectory. Then again, like I said with the marketing, you have to figure out a way to market to your people better and provide them more support, more leadership than you would typically do. Now that more leadership comes in the form of coaching and career development and actually having a career path measured out for that person so that they can see where there are opportunities in the business, and those opportunities are in line with what the company needs and also what the employee wants. Is this going to happen 100% of the time? Definitely not. And if you want to keep people, you’re going to have to find those people that again, value your business, your culture, where they live. And ultimately, they want to stick around. They want to stay where they’re at.”
“So interesting. Do you have an idea of the balance between how many people are just out for the dollar versus out for the loyalty of the company?”
“I’m sure there’s probably a survey out there that has covered that. If you look at job satisfaction, this has not changed in decades. It’s typically about 60-70% of employees are dissatisfied or disengaged. Of that, there’s a percentage that are actively dissatisfied, meaning they’re already looking for their next opportunity. People are still less so now, because we talked about people are more willing. I mean, I don’t know about you, but a lot of resumes I see. In the old days, it used to be three or four jobs on there. There’s usually 10 plus years at each job, and that was about it. Well, in the last 30 years or so, you’ve seen from being a 1-2-page resume to being a 3-4-page resume, and most of that listing different jobs, different positions they had, most of them being one to two years apart. There was a time in my life where if somebody saw that, they would say job hopper, and the resume would get tossed to the side. Not so much anymore.”
“I think the prevailing culture to answer your question is really about looking for that next opportunity somewhere else and step here. So, there’s a lot of communication that needs to go on. From the time before you hire somebody to when you actually placed them in a position to when you onboard them to how you follow up with them. And I think you talked about this actually on another podcast we did where when you were brought in for accounting, you were pretty much parked in a seat, and it was trial by fire. I think you said every year, the population dwindled, and after about year four of going through the training process, you were one of the few left that was sticking around. That is been the prevailing mindset with business cultures. I’m just going to plucky in the seat, and you’ll either survive or you won’t. And if you don’t, you’re going to quit and go somewhere else. And then I got to hire somebody to replace you. Companies are now finding that’s much harder to do.”
“Rachel L. says, ‘we’ve increased salaries three times the last year, and are still having trouble hiring and keeping people. What should we be paying people?’”
“I think the stronger question here is you need to be asking what else is missing? While wages are important, the number one reason people usually leave job has little to do with wages, has more to do with how they’re treated. So, when I hear something like this where you have people that are saying, Well, we keep raising our pay, and we still have high turnover. That to me is you’re trying to fix the problem with the wrong solution. Now, does that mean you can pay people on the cheap and expect to get by with it? Absolutely not. I do believe you have to pay fair wages, and ideally, you should be at the upper end of the pay scale out there when it comes to what you’re paying people. It’s only fair if they are doing a great job for you. That’s what you should do. But when they’re leaving, they are leaving typically because of somebody else. It could be you. It could be your leadership team. It could be how people are treated overall. It could be the workplace culture. Is it a sweatshop?”
“Is it something where you’re just expected to grind, grind, grind, and there’s no care for your own personal needs? Those are items that really start to surface when you start looking at high turnover. And while people say, I just can’t afford to pay people more money, or I keep giving raises, but it does not seem to help. You have to look at what you are doing fitting the needs of your internal customers, which are your employees. And if you don’t see that happening, then that’s the first place I look is, what do we need to change about your culture? What do we need to change about you as a leader, or your leadership team, to get them to be more appealing to the staff that’s walking out on a daily basis?”
“Yeah, I think that makes complete sense. And then I also think that it is a great segue, being how you answered that question. It is a great segue into the next question which is how do we know if we have a good workplace culture? So, since you were asking about culture, how do they know if they have a good culture or not?”
“Well, I think in a way, I answered that with the last one, I guess. I would say the easiest way to know if your workplace culture probably needs a little help is the degree of turnover that you have and the reasons for that turnover. Now that said, that’s not 100% guaranteed, because I’ve seen some employees, again, depending upon how much they are paid, where they’re living, and what is going on that might actually stick out a bad job to stay where they’re at because going anywhere else would either require a lot of travel or would require pretty deep pay cut. So, it’s like they bought them into servitude to keep them there. Now that is getting harder and harder to do because people are more willing to travel farther just to get away from that. Then the next thing to look at is what’s your ability to track new people in? So turnover is one, attraction is another. Are you having people coming to you looking for opportunities to work for you. In other words, they would be excited to be employed by you. And we’re seeing fewer and fewer companies that are really that way.”
“There are some companies that just based on status or title, somebody who worked there for a couple of years, get that on their resume, go somewhere else. So, here’s where the turnover and the attraction come into play. If you see both of those things being bad, that to me says there’s a lot of work to do on a workplace culture side of things. Great benefits, upward mobility, fast-growing company, lots of opportunity. So, you tend to see these things ebb and flow. But yeah, you really have to look at how many people are coming into your door and how many people are walking out your door and at what ratio. There’s more people wanting to get in than get out. That’s a good sign. That’s usually a sign of a positive workplace culture. If it’s the opposite, not so much. And if you can’t get people in and people are racing to get out the door, then you really have to ask yourself, what are you doing and what do you need to change?”
“Emily S. asks, ‘How can we grow on a limited budget?’ And basically, what she’s saying is, large companies have more resources, money, staff, etc, than they do. So they’re finding it very hard to compete. So how can they grow their business when they don’t have the same budget as their larger competitors?”
“That is a great question. It’s a question that has an easy answer, but a difficult implementation. How do you like that, Rich? Sounds good. The easy answer is you have to compete on something other than cost, other than price. If you’re just competing on salary, in most cases, you’ll never win, because there’s always going to be a bigger company that has more resources that might be willing to pay that talent even more and maybe even provide more benefits. It’s not just what you’re getting paid anymore, it is do you provide health insurance? And most of us might not think that’s a big deal, but when you’re a small company, something like health insurance can be a very big cost here on top of your salary. So now you’ve increased your payroll cost significantly just by adding that in, and people are finding creative ways to try and work around that. But to me, it goes back to you really need to work on how you differentiate yourself from those big companies, because let’s face it, those companies will attract certain groups of people, but they will also deter other groups. There are people that don’t want to be a number and just a cog in the machine.”
“They want to do something that is more meaningful, that is more purposeful. I always tell my clients, the things you got to consider is people want to feel valued, they want to feel heard, they want to feel like they belong, and they want to know their purpose, or they want to have purpose with what they do. If you can answer those questions, often the pay issue, again, you need to pay fairly, and you should try and pay well, but that becomes a back burner item because they will get so much more out of what they are doing that they are willing to give up something else to do that. I can share an example with me personally. This was back in my work-a-day career when I was at one company that was paying me pretty decent, but I was working extremely hard, and I was pretty much in a job that I didn’t see a lot of positive benefit to. Let’s just say the culture wasn’t the right fit for me. I came across another opportunity, and that opportunity meant I had to take a 50% pay cut in my salary.”
“Now, some people would say, You should not have to do that, give an experience, but what the job offered me, what the new job offered me was greater opportunity to learn more skills to advance my knowledge, to give me more freedom to do things I wanted to do, and give me a purpose where I could actually make an impact of what I was doing. That is why I think it is missing with a lot of companies, a lot of leaders, and even from HR standpoint, when they are looking to fill positions, they need to look at how they fulfill the purpose of that individual candidate that’s walking in the door? What is going to get them excited to show up at work every day? What’s going to get them to go out there and do the little bit extra to make a difference in their job? And what’s going to give them the opportunity to advance their career even further, whether it is with you or whether it’s with somebody else? This is just another example of if you keep throwing money at it, it eventually is going to get to a point where you can’t do that anymore. And even the bigger companies, I think they find they reach a certain point where the name is no longer attractive to work for, and people will go somewhere else for other opportunities.”
“So they might see high turnover. They are big, so they’ve got recognition. That always helps. But it’s not the end all, be all. And you need to, again, differentiate what makes you unique, what makes you more desirable for somebody to work for you versus just going in doing tasks and having a job, because that is not exciting to people anymore. Okay.”
“I think that correlates to what we’ve been saying all along, that it becomes a unique thing that you have to get around the dollars and cents. But I have one other follow up question, to add to that. Sure. Do you see any correlation between the salary struggle and the revenue of the company? And that sounds like a far-out question because it’s a far-out question in my head, that’s why I’m asking it. So, if the company is unique enough that it’s better than its competitors, and it can go out there and increase its sales, then it should have no problem coming up with some extra money to pay for the staff that it wants to be able to be that differentiator. So, is there a correlation that we should mention that from the dollars and cents, if you’re struggling to pay the people and be competitive with the big guy, are you not able to actually compete at the top level with the big guy? And is there something else that you need to… By making that correlation, is there something to change in how you’re actually marketing the company or growing the company? Does that make sense?”
“Yeah, I think I will repeat it back to make sure I understand where you’re going. So a business might… They’re looking to grow. They need to hire somebody to help with that growth and through hiring that person, that will lead to stronger sales or stronger revenue. However, maybe right now they don’t have that money yet. And then the trick is how do you hire that individual? Where do you come up with the cash to pay that person? Is that what you’re asking?”
“To a certain extent, yeah. I had a client that was hiring some of the best people, so they had to come up with the best dollars. But then their sales were coming up short and nobody was putting the two pieces together.”
“We have all these great people and we want to keep them, but we can’t afford them, because our marketing is out the window. Is there more to this that someone like Emily should be looking at? Is it not just, Why is it? I think she made the comment. No, it was somebody else in one of the questions, had made a comment, that they’ve paid people and given them raises constantly over the course of a year. So it’s like if you’re giving them raises to keep them, are you keeping up? Are they really… Is the company producing enough to be able to handle what you’re paying?”
“That’s a good question. And I do have a company where we’ve been having that discussion because their competitors are offering more money and technically at a lower rate than what this company is offering. So there can be this lopsidedness. And we could go into very lengthy discussion, because now this becomes more than just how much do I pay my people? Is what I’m doing meaningful to my customer to the point where the customer is not going to look elsewhere for something that maybe they can get for less money? I guess the situation that I’m looking at, the person is dealing with a competitor that comes out of the venture capital world. So the venture capital company, of course, has all the monetary resources, and they’re playing this game of we’re going to go in and we’re going to take over the market. The way we are going to do that is we’re going to undercut prices, and we are going to pay more for the labor to get the job done. That’s going to be difficult in some ways to compete against, because if they have got unending resources and they can come in and they can trample all over me and trample all over the market, that’s going to lead to a bigger issue of how do I keep the people I got?”
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