The Sixth of the Seven Deadly Sins of the Construction Industry: Ignoring Your Employees

The Sixth of the Seven Deadly Sins of the Construction Industry:  Ignoring Your Employees

Seven Avoidable Mistakes Construction Businesses Commonly Make

In the last installment of this discussion, we addressed whether you are working for a profit.  In this next to last installment of the Seven Deadly Sins, we will address one of your most important assets:  your employees, and what can happen to your business when you ignore them.

Use recruiting and retention methods that work regardless of the kind of person you can afford.  You can invoke just as many problems by hiring an expensive person who doesn’t perform, as you can by hiring someone without the experience or qualifications because recruiting the right person is too expensive.  In the long run, it is usually more efficient and cost effective to develop internal management and key personnel than it is to look for those people outside of your company. But to do that successfully, you must develop an effective process that is defined, tested, routine, and communicated to the targeted employees.  Beyond defining your training processes to the candidates, you must also define your expectations of them, what they should expect of themselves and what is in it for them. Communicating these objectives will help you retain personnel who might otherwise look for opportunities elsewhere. 

On the other hand, never follow your “promotion plan” blindly:  do not promote someone who is great at his or her current job to a position for which he/she is not fully prepared.  You will set that employee up for failure, and in the end, you will lose money and likely your valued employee.  An employee who is performing at the top of his/her game, should not have to be promoted to receive more pay.  As discussed further below, an employee who is producing for you could make more money than the manager who manages that employee.  A manager is there to support those they manage, and to ensure company policies and the business plan are being followed.  Develop a rational business culture of communications that confront and coach (not embarrass and punish), coupled with a working pay for performance plan, and you will become a leader in recruitment and retention of valued employees.

Use Pay for Performance plans that work and sell others on your company.  A “pay for performance” plan is not Christmas bonuses, or subjective bonuses that become entitlements. Employees should never be left to question what they got, why they received it, why it is more or less than last time, if it was enough, or if it is what they deserve.  A true PFP plan establishes measurable standards attributable to the job the person performs with at least one of the measurements dealing with the link between what the employee does and company profit.  If what the employee does is not measurable directly to profit (for example, the accounting department), the timeliness and accuracy of what they do weekly and monthly is, as are evaluations monthly or quarterly by their internal customers in other departments.  Ultimately the combination of values that set the bonus score is taken as a percentage of the pool created by the percentage of the company profit (which must also be defined), the pool available to the department or profit center, and the pool available to the individual by job classification.  The PFP plan is a scorecard that shows the employee how he/she is doing periodically in measurable terms and money.  Each company plan should be unique.  Each company plan should incorporate standards that support the company goals of revenue, profit, customer branding, and internal culture. 

Include middle managers in senior management meetings.  It is always useful to include non-management staff in appropriate business meetings to introduce them to the real process of managing the company.  It gives them a sense of inclusion, an opportunity to learn, contribute and feel valued.  Of course, it is critical to hold a meeting that begins on time, has an agenda, involves participation by attendees, ends on time, and is followed up.

Listen to and respond to suggestions from the field and staff. Employees will often express concern or offer an idea, but there is often no structured response back.  The opportunity to coach the employee as to how the business needs to make decisions is lost.  Even a simple response such as, “Great idea, but we can’t afford it right now,” provides a teaching moment.  If someone has an idea that can be measured against ROI to an amount and timeline, and if the business is willing to take the risk, and the person managing the process or key to it (typically the one making the suggestion) is willing to “take the hit” within their PFP plan if it doesn’t work, then the company should seriously consider taking action on the idea.  Conversely, if an employee suggests something that is beneficial to the company and has a measurable effect on the profit of the company or sales of the company, then the employee should be rewarded within the PFP plan or in addition to it based on the measurable gain to the company.  In the end, it is always appropriate to say “no” when “no” is explained.  It is important to let your employees know you heard them:  it is the essence of good management, and keeps the employee from losing his/her emotional investment, which can be measured in lost productivity and profit/revenue loss.

Next week will be the last post in this series, and we will look at whether your business has an effective sales process.  Ideas?  Thoughts?  Questions?  Post a comment and let’s discuss!