The term “jobless recovery” that pundits use to describe the economy applies to building material supply as well, as dealers nationwide have maintained—and even cut—staffing levels as sales rose. But with continued growth fore-cast for years to come and workers already dog-tired from overtime, it’s inevitable you and other dealers will ask whether it’s time to get more help. First, though, answer this question: What kind of help do you need?
LBM consultants urge dealers to go beyond hiring full-time employees by considering temporary, contractor, and part-time workers as well as outsourcing tasks. Those options can help keep a lid on personnel costs, a category that ate up 61.4% of the total expenses at a typical dealer last year, according to the Building Material Operations Comparison survey. You don’t need to pay benefits on temps and contract workers, and they’re much easier to bring in and lay off as needs require.
Jon Davis, president of Davis Consulting and a member of ProSales’ editorial advisory board, says the alternative hiring options can help dealers hedge their bets about how and when conditions will improve. “Most people are not choosing to add full-time employees until their market is strong enough for them to justify the cost,” he says.
Mike Butts, a former consultant and now general manager at Jackson, Mich.-based General Materials, says rapid increases in Internet speed and connectivity make it far easier today to have outsiders do certain tasks. “The entire back office can easily be outsourced with very little disruption in your normal business,” Butts says.
Outsourcing—in essence, the handover of a set task to an outside company that will perform that job for an agreed-upon fee—is common already for functions like payroll and accounting. Experts consulted for this story also see it as a useful option for inside work like collections and human resources as well as outside tasks like delivery and installed sales.
Davis says outsourcing logistics can be particularly advantageous if dealers can get the delivery company to back-haul orders for them. Butts, however, has come across a few larger suppliers who outsourced their deliveries and lost control of customer service. “The person who controls the labor controls the quality,” he says.
One of the biggest challenges to outsourcing is that it requires you have faith that the firm you hire will operate the way you’d like. To help ensure there aren’t surprises, “I tell companies outsourcing a department to check references on whoever you’re going to outsource to,” Davis says. This includes talking with former customers and people the company has done business with.
“Regardless of the type of service, check with other dealers who have outsourced similar services for pricing guidelines, copies of their contracts with the subcontractor, potential problems, service standards, etc.,” Davis adds. He says joining roundtables with non-competing dealers or tapping resources such as buying co-ops and regional associations can provide a wealth of knowledge about how to go about outsourcing.
Whether you’re outsourcing or setting up a contract with self-employed persons (popularly known as “1099 workers,” because of their tax status), Davis says you should review your service standards and decide which ones it expects the contracted party to abide by.
“Identify those standards in your contract and include language that allows you to break the contract if these standards are not met,” he says.
And once you do hire a temp or begin working with a key contact at the outsourcer, keep an eye on that person. Using temporary employees is a great way to check a potential full-timer's work ethic and see how that person fits in around the other employees. That temp could end up as your next full-time hire.
All Special Report Articles
As housing revives, follow these ideas to revive your business so it can handle and profit from increased business.
Fine-tune your operation's performance by adding these innovative metrics.
Housing data expert Jonathan Smoke predicts growth virtually everywhere nationwide.
Hanley Wood Market Intelligence’s Jonathan Smoke gives advice on which economic indicators deserve the most attention, how economists work, and what to expect through 2014.
Get on better footing with lenders by building relationships with myriad money sources.
Old-school management techniques are some of the best things you can do to advance when housing revives.
Tighter credit, scaled-back production, and a trucker shortage have put the entire supply chain in limbo.
Consultant Jim Enter offers this formula to help you decide whether your reps are generating sufficient sales.
Temps, '1099' contract workers, part-timers and outsourcing firms all might be better.
Veteran LBMer Dena Cordova makes the case for rebuilding your staff in part by hiring '1099' workers.
Layoffs during the downturn thinned the ranks, soured young people to an LBM career.
Dealers say there's an active market in seeking out other dealers' sales reps. But there's etiquette to be followed in pursuing those people.
How do you provide personal TLC when you're getting busier? By investing in technology.
Young remodelers are more tech-savvy than their older counterparts. For good or ill, that's going to change how dealers work with this group.