All Business Myth Stories
From customer care and human resources to land strategiesand purchasing, misconceptions abound about how to operatea building business...
Customer care myth: Home buyer satisfaction increases in an up market.
Finance myth: Every dollar of revenue should generate the same return.
Service myth: The customer is always right.
Purchasing myth: Price and cost are the same thing.
Hiring myth: It's all about money.
Operations myth: Bigger is always better.
Land strategy myth: Builders need to pay more for land than developers.
Operations myth: Land is the answer to all problems.
Labor myth: Talent lost during the recession is easily replaced.
The housing downturn ravaged the building industry workforce from subcontractors to CEOs. Now that home building is making a comeback, many companies are feeling the loss of these former team members. BIG BUILDER talks with human resources expert Martin Freedland about the implications of a pending labor shortage.
What is the No. 1 misconception builders have about labor?
From the statistics I have seen, about 1.5 million people in the home building industry lost their jobs during the recession. Certainly, most got other jobs at places like Home Depot, FedEx, or UPS. These employees now get paid regularly, and enjoy benefits, raises, and bonuses. I don’t see these workers returning to home building and losing their security after having had such a terrible experience.
The former home building workers who were in operations such as superintendents, estimators, purchasers, construction managers, or CAD operators are not easily replaced. These are positions that require tenure and not a 60-day training program. While a training program may be beneficial, most of these jobs require at least two years of experience to achieve proficiency.
Are most builders offering training programs for new employees?
It’s my understanding that most, if not all, of the public builders shut down their training departments and significantly reduced their HR functions during the recession, leaving them with a void in these functions. Of course, I don’t know every builder in the country, but I only know of two builders (both private) who continued to have training during the recession. With the downsizing of most HR departments, management training programs have fallen by the wayside. The question is: Where does this leave the industry?
What about subcontractors?
It’s important to address the trades, which have a large Hispanic population. It is safe to assume that with the decline in home building plus the hostility of many state and local governments toward immigrants, many have fled back to their home countries. Ironically, most of the hostility is in the Southeast and Southwest, which are also the areas of the country where much of the recent home building activity is taking place.
What are the ramifications of a labor shortage now that sales are booming for many builders?
It is true that the one job which can be filled rather quickly is that of new home sales. In 60 to 90 days, a new salesperson can be up and running. So, builders are selling many more homes, but can they build them without experienced employees or trades? How will homes get built on time? I hear of expanded/delayed delivery times that are causing service issues, because any buyer whose closing is a month or two late will not be a satisfied customer.
So, I do believe that the labor shortage is one of the factors driving up home prices as the supply cannot meet the demand in hot markets.
What else should builders consider when it comes to hiring talented employees?
It’s important to remember that not all jobs are transferable. By that I mean that the culture, processes, and job descriptions are not the same from builder to builder. For example, a superintendent with one builder may be responsible for buyer relations while another builder may limit the superintendent to the task of building the home and have a salesperson or concierge work with the buyer. The difference in culture and the personality requirements of the superintendent are markedly different. A successful superintendent at Builder A may by very unsuccessful at Builder B. Knowing the differences in the job descriptions and the personality requirements will require hiring managers who are proficient at hiring, assessing and interviewing.
What do you think will happen in the next few years?
In my prediction, the demand for skilled workers will exceed the supply, and the gap will grow larger as home building ramps up. Will this lead to higher sales and slower/fewer closings? We cannot manufacture skilled workers so this may be the limiting factor as business improves. It might also lead to more incidents of “poaching” taking place with job offers, raises, and signing bonuses to recruit people from one builder to another. We may be at the cusp of a talent war in the industry.
Learn more about markets featured in this article: Atlanta, GA.