By the Numbers: Salaries are Only Part of the Equation
OK, so you don’t need the sharpest pencil for bids during America’s greatest boom. It’s a different story though when it comes to salary. Record growth means record employment, which makes human resources the biggest challenge in the foreseeable future.
Economic PressureThe Market Research Department at Business News Publishing Co., Troy, Mich., publisher of Roofing Contractor, sent out 1,000 surveys to randomly selected readers last spring. We also interviewed roofing contractors — not necessarily those who were surveyed — for anecdotes and tips. Some of the more interesting findings were:
- 11 percent of companies pay $25 to $29 per hour for mechanics
- 26 percent do not provide paid vacations
- 29 percent said that retaining employees was the best reason for salary increases
- 36 percent said that they paid employees more than what they were worth to keep them from leaving
That latter figure can only exist in a rare economy like ours, and only for so long. The pressure on profits compels changes in employee severance where salary is not the only incentive. Thiel Brothers Roofing Inc. in Sidney, Mont., implemented a bonus program about five years ago that factors in safety and attendance, along with some profit sharing. That is great for retainage, but Casey Thiel says that new blood isn’t that interested. “A bunch of 25-year-old roofers don’t really care about incentive bonuses,” says Thiel. “They want cash on the barrel.”
He’s lost some seasoned employees to other construction trades and new recruits are heading for the “oil patches” that are being developed in the region.
High salaries talk the loudest, even if they are in highly cyclical industries. Considering that it takes 5,600 hours to reach the prevailing journeyman wage of $16 per hour, many are taking the short route. “Some of these guys just get the itch,” says Thiel. “They want to be doing something else.”
The apprenticeship program is set by the state, which assists with training. The Montana Roofing Contractors Association is finalizing its detail drawings for future continuing education, supplemented by materials from the National Roofing Contractors Association. The industry is promoting itself beyond the $8 per hour starting salary and emphasizing a good trade that can’t be exported and will always be in demand, particularly to those who have kept up their skills.
Roofing organizations are also sprucing up the image of the industry and stressing roofing as a career choice, one that may be someone’s most direct path to college. Contractors are getting help from higher education: over 100 colleges and universities offer four-year degrees in construction management or science, 30 offer a master’s degree. Promoting the continuing education of an employee is more expensive than vacation pay, but at least they bring back more than a tan.
Training is going to be a key issue for years to come when the roofing industry is running on all pistons. According to the Bureau of Labor Statistics, an amazing 99.6 percent of the nation’s 107,000 roofers are employed (1998), the highest rate in construction craft occupations. Contractors may look to other trades with lower employment rates like carpenters (78.4 percent) or painters and paperhangers (64.6 percent), but some prefer the raw recruits.
Sully-Jones Roofing Co.of San Diego likes the new laborers who are blank slates, so the company’s in-house training is more readily absorbed. While the tight labor market may pressure some companies to boost entry level wages so they rival those of skilled workers, Sully-Jones holds firm with starting wages. Instead, the company emphasizes its impressive bonus program that rewards longevity. “I don’t think that (a high wage) is the most important thing,” says Jim Thomson, vice president. “We prefer to keep the wages down in the median range and put some money towards the bonus. Once they work here awhile, they realize that they can make more with us.”
In addition to full medical coverage plus paid vacations and holidays, the company plows one-third of its profits into yearly bonuses. The bonuses have been healthy the past few years and many employees come to depend on them. Still, each employee is told the formula and it is stressed that being a stakeholder is like being a stockholder: past performance is no guarantee of future returns.
Roofer MaintenanceJust like contractors are implementing maintenance programs for roofs, they are becoming better at maintaining their employees. Intangibles are becoming the tangibles in today’s workplace, where continuing education and retirement plans are expected, even demanded. For an industry that has been historically reticent about incentives, the Salary Survey indicates that roofing contractors are taking a variety of steps to take care of employees (see chart). Performance appraisals vary widely, with 32 percent conducting reviews less than once a year, 39 percent conducting annual reviews and 5 percent conducting more than six reviews a year.
Those reviews are not only important to the bonuses, but provide a crucial aid to keeping in touch with employees. James Seagraves, president of JVS Inc. in Simpsonville, S.C., meets with every employee annually. He knows the value of good employee relations since his wife, a human resource manager, helped implement his program three years ago. “Some of the best ideas that I’ve ever gotten have been from my employees,” says Seagraves. “It’s just amazing when you’ve got a laborer sitting there and boom! He’s got a great idea.”
His company dynamics are also influenced by several large employers nearby, particularly the BMW plant in Sparta. JVS employees get complete medical coverage, plus paid vacations and holidays. After one year, they can enroll in the SIMPLE plan, where the company contributes up to three percent of the employee’s salary. And while barbecues and T-shirts have an impact, it’s the annual bonus that keeps employees happy. It helps when the company lays it all out for them. “We try to put it together as a package and then put it on a spread sheet to show what the workers actually are making,” explains Seagraves. “It’s kind of surprising when we do that. Sometimes they’ll say, ‘Gee, I’m making more than I thought.’”
Sure the circumstances drive this stuff, but the company philosophy of family first means all sorts of programs that take care of workers. In an era where finding a new employee with a driver’s license is gold, contractors are taking the long-term approach. “If you don’t take care of employees now, where will you get new ones?” says Seagraves.
What is the best business model for the model employee? High pay can kill profits and raise the expectations to unsustainable levels. Low pay contributes to dissent and makes a human resource nightmare. As contractors struggle to make that balance, it’s nice to be reminded that treating employees with dignity is a philosophy that even corporate giants adhere to. General Robert Wood Johnson of Johnson & Johnson, wrote a pamphlet in 1935 called “Try Reality” that listed the company’s responsibilities in order: customers, employees, communities and stockholders. Even in this age of high-flying stocks and colossal mergers, the world’s largest health care company makes employees second only to customers. So the next time you lose an employee and ask yourself, “How can he offer that?” the question may be, how can you not?