The low unemployment rate of 3% combined with the Internet's ability to easily connect employers and employees are unprecedented in history. At no other time have these two forces created such a large employment challenge for leaders. This is the new normal and how companies deal with it will separate the great leaders and great companies from the rest.
It’s interesting to watch the language and actions from different LBM leaders, as they address the challenge of hiring and retaining the right people. The common focus in the LBM industry remains on compensation and benefits. But it’s not enough. It’s the ante in Texas Hold’em, you can play the game but it has nothing to do with winning the game.
No different than pricing a lumber package, do you use a cost-plus approach or market pricing? Is it worth a hill of beans to know what another lumber dealer is selling 2x6 precuts for in a market 500 miles away? The distance is only a factor as much as your customer and outside competitors are willing and able to cover that mileage gap. Labor is no different. Similar to a cost-plus approach, you should know how much each person contributes to the profit of the business. And, like market pricing, the salary you pay your new hire is dependent on your talent’s willingness to relocate. So focus on your market, collect information on competitors’ wages and benefits, but understand that matching the top wages and benefits is not a competitive edge that will solve the problem.
To hire and retain top talent, today’s leaders must look at their company from a new hire’s perspective and focus on the following three essential questions: What is the quality level of leadership? What is the company’s growth rate? How does your culture leverage transparency?
Mentorship and empowerment are what employees want more than anything. People look to their immediate leader to measure the amount of personal development and direct coaching they will receive. Addressing this issue, honestly, could force some leaders to look in the mirror and embrace the fact that they might not be well suited for mentorship. If a leader is not able to earn the respect of younger colleagues, maybe it’s time to pass the baton. Otherwise, you could risk driving your business into the dirt.
The growth of a company provides greater stability and career path opportunities for top talent. Our industry is full of independent owners with a 3% profit and low or no growth rates. The owners believe low or no debt is the best way navigate the volatility of the lumber market and housing demand. What they don’t realize is how difficult it is to recruit and retain the best talent in a low- or no-growth company. If a company is not growing in volume faster than the market, they are losing ground. Many of these companies are also suffering from the “me too” strategy and, as a result, are not offering a competitive edge to their customers. The lack of a competitive edge and no capital for growth is a sure plan to drive away talent.
Companies great at hiring don’t stop there, financial transparency is key. Everyone in the company, including the truck drivers and load builders, need to know the financials and their impact on the bottom line—negative or positive. How honest is the career path progression conversation in your company? What are the monthly investments in time and individual development? People know how important they are by the level of investment leadership makes in them.
The role of a recruiter is to know the best and worst leaders in an industry. It might surprise you to learn that our primary goal, as a recruiter, is to know the poor LBM leaders. Poor leaders are in both great companies and weak companies and they’re a primary reason we’re able to move top talent to our client companies. The difference between good and great, when evaluating talent, is clear: 20% of the people generate 80% of the profit. What is your ability as a leader to reach the top 20% of industry performers?