As the home building industry begins to crawl out of its abyss, dealers across the country are looking at ways to rebuild their infrastructure. Although many understand the necessity of adding staff for the recovery, some are left wondering how exactly to rebuild. One major lesson from the recent journey is that going back to the old business model may not help as the industry evolves. From small independents to large corporations, the conundrum of how to balance rebuilding staff while holding the salary line stable causes concern.
Looking at how the workforce has changed in recent years, one of the most interesting aspects is the sheer number of American workers who earn their living through contract employment. Often they’re called “1099s” because of their tax status. These associates are not technically employees of a company, but subcontract out their services for a set wage, for a specific type of duty, and for a specified period of time. The Census Bureau estimates there were at least 21 million of these people working in 2008.
The obvious benefit for a company that hires 1099s is exemption from payroll taxes and employee benefits. The company also gets the opportunity to evaluate the subcontractor’s skill set and see how he or she will do should it decide to hire that person full-time. Meanwhile, 1099 staffers enjoy latitude on the type and quantity of work to be done, giving them an opportunity to maximize their income potential.
Many companies have eliminated or reduced positions that, in theory, most would agree are necessary for a healthy organization. For example, associate training and development are often one of the first programs cut during hard times. The expectation is that employees will soldier on with minimal support. Or consider the case of having an estimator on staff. Without one, your sales team will expend energy doing takeoffs. Marketing is another area that falls by the wayside during downturns. All these positions would be well suited to subcontracting.
At the same time, a growing company sometimes needs to bulk up parts of its staff. Truck drivers are one example, and here again the 1099 route may prove best.
As we begin the road to recovery, going back to the status quo is not an option for future success. Look at your business model. While rebuilding your organizations, consider the benefits of subcontracting. It could lead to a productive partnership.
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