During a question and answer session at a recent industry conference, a home builder asked Moody’s Analytics chief economist Mark Zandi for his thoughts about the labor
Standard recruiting procedures are great for finding standard-issue employees. But finding great talent requires something better — and the key is to not wait until you have a particular staffing need. Recruitment is an ongoing process of scouting talent, networking and creating a reputation as a great workplace with current employees, trades and subs.
Standard recruiting procedures are great for finding standard-issue employees. But finding great talent requires something better — and the key is to not wait until you have a particular staffing need. Recruitment is an ongoing process of scouting talent, networking and creating a reputation as a great workplace with current employees, trades and subs. The goal is to have the right person to tap when your next opening becomes available.
When you have an immediate opening, it's easy to get anxious and hire the first person who comes your way, seems right for the job and is eager to accept it.
"The mistake I think most small builders make is to hire in a knee-jerk fashion," says Rodney Hall, senior partner with The Talon Group, an executive search firm specializing in the real-estate development and home building industries. "They wait until they have a need, and then they go address the need."
People are a company's most important asset, and builders need to approach recruiting from that perspective. Management must commit to making good hiring decisions.
"In a lot of ways, I think it's easier with custom builders," says Leo Taylor, president and CEO of TopBuildingJobs.com, an online job search engine devoted to the building industry, "because they tend to be smaller. You can get your leadership around the table and say, 'We're going to grow this organization. We need great talent. So before we bring the next person in here, we all have to say yes, and we all have to take responsibility for making sure that this person is successful.'"
The cost of a bad hire is high. This person will eventually leave the company either out of boredom for lack of a challenge or frustration with his or her below-par performance – if not fired for the latter. You end up starting the whole hiring process over again: searching, interviewing, training and bearing with your new recruit's learning curve while crossing your fingers that you made the right choice.
Worse yet, the resulting poor service or product produced by incompetent employees may cause irreparable damage to your company's reputation.
"You want people to be really responsible and a good image maker for you," says Jeffrey B. Robins, president of Jeffco Custom Homes and Renovations in Rockville, Md. "When you have someone who's less than capable on the job and who's not handling business properly, that's just bad marketing. That might work for that one job, but you'll never get referral business."
Because of company size, the effect of a bad hire is even greater for custom builders. Having one person on a two-person team perform poorly drastically affects your bottom line. Just as detrimental is the effect on morale when a poor hire clashes with your existing team.
"Somebody that doesn't fit well in that small culture is going to stick out like a sore thumb," says Hall, "more so than a person placed in a 100-employee division of Pulte."
The saying "If you don't know where you're going, you will probably end up somewhere else," could be revamped to say, "If you don't know what type of person you're looking to hire, you'll probably end up with someone else."
Custom builders should determine early on what unique competencies and attributes are needed for every position within their organization. What you'd seek in an accountant might not be what you'd want in a marketing person or site supervisor, though some characteristics such as dependability, honesty and a proven track record are important in almost any position.
"The best predictor of future behavior is past behavior," says Hall. "If you see someone who has made several job moves, they may have some valid reasons for it, but they may end up having a valid reason for leaving you, too."
"The principle that I've always used in finding and hiring talent is attitude first, then aptitude," says Taylor. "Does this person have the right attitude that fits into our culture and the ability to influence people to lead? If they don't have the right attitude and can't lead and coach people, they become a one-person player. Their value to the organization, while good and positive, is limited."
Craig Smyth, owner and president of Clemleddy Construction in northeast Pennsylvania, is careful to not rely on resumes alone. "Just because someone is qualified doesn't make him or her a good hire," says Smyth. "They have to be a team member. All the Yale and Harvard graduates — you can have a hundred of them, but if they can't work together, it doesn't matter."
"I'll read the resume," says Robins, "but the important thing is not really exactly how many years they have in construction. Most people who are going to work here know how to build a home or do a renovation project. The key is how you deal with the subcontractor and how are you going to interface with the client, which is a huge part of our business."
You know what type of person you're looking to bring into your organization. How do you find him or her? You could wait for the perfect candidate to respond to an ad or send in a resume — or you could be proactive.
"[Wal-Mart founder] Sam Walton used to call it MBWA -- management by walking around," says Hall. "He would just walk around the stores — that's how he managed. For the custom builder, it would be recruiting by walking around. The best thing custom builders can do is be observant as they drive through these custom communities. When they see a home going up and they see something of interest to them, or particularly good work in action, or people doing things right – they can pull up, introduce themselves and genuinely compliment the person. There's nothing wrong in approaching that site supervisor or project manager and striking up a conversation: 'I drive by here everyday. I notice this is a new home you're building here. I'm really interested in this finish you're using. Share with me a little bit about that?'
"What you're doing is creating a relationship that might not yield an immediate candidate," Hall says, "but if at some point this person decides they want to make a change, who is going to be top of mind?"
"Part of this business is keeping your eyes open," says Smyth. "Trade partners or employees, you always want the best. That's how you get them."
This technique doesn't have to take up a lot of time. Hall advises spending no more than 20 minutes a day — an average of three to five minutes per individual — while out and about doing what you normally do.
"If builders can do three or four of those a week," Hall says, "in three to six months they'll have a network of people they will feel comfortable approaching."
When a need arises, you can subtly feel your prospect out. It could be as simple as saying, " 'If you know somebody who's almost as good as you, let me know. I have a need on a new house we're doing,'" says Hall. "At that point he might say, 'Yeah, I'm interested.' Or he might say, 'Not a problem. I'll be glad to keep it in mind.'"
Your network is about whom you know — in terms of getting a job or getting great employees.
"One of the things I used to ask leaders in any company I've ever worked for," says Taylor, who was also an executive vice president of human resources for Pulte Homes, "is bring me five people who are like you that we can talk to and convince this is a great company in a great industry."
"I think people or companies wait way too long to leverage their sphere of influence," says Hall. "They need to be constantly talking to their trades and their suppliers about who's good out there."
Reihl Mahoney, a project manager with Kistler & Knapp Builders, a custom builder in Acton, Mass., also finds his company relies on networking to find new hires.
"We don't really go through the traditional means of posting want ads," Mahoney says. "Most [employee prospects] are referrals from subs or just find their way to us via architects we work for or other builders."
Just as you wouldn't risk hiring an employee without checking references, the best employees are going to do their homework before accepting an offer. And word of mouth may reach your prospects before they even begin to research your company.
"Whether deserved or not, most of your reputation out there is going to be delivered to an audience, like potential candidates, from either the realtor community or the trades," says Hall. "So how you interact with them will bleed over into what people out there actually hear about you."
"The quality of the workplace and the working environment is something that's been important to my employees," says Robins. "They all do their due diligence in checking out who they're going to work for. They talked to some of the subcontractors that we know in common."
Simply put, custom builders who do good work and treat their people well will have a reputation that attracts the best of the best in their markets.
"That reputation helps immensely," says Smyth of his company. "The deadbeats don't show up."
Says Hall: "If builders nurture those relationships with subs, suppliers, and the realtor community that is very active in their product line and complement that with three or four stopovers for just a few minutes while they are out driving around, it will create a greater awareness of the organization. What ends up happening is they might always have three or four people waiting to work for them. Now that's the position you want to be in."
You've done everything right, and now you have an ample supply of candidates lined up who are willing to work for you. Choosing the right person is the next step.
Many builders feel a face-to-face interview is all it takes to know whether a person is the right hire; several builders integrate some degree of testing, which can be helpful in detecting things about your candidate you might otherwise miss.
Clemleddy Construction recently began using DISC psychometric testing to classify candidates into four personality characteristics: dominance, influence, steadiness and compliance.
"The idea is to make sure you don't have combatants working together," says Smyth. "It doesn't always work. Sometimes a test can fool you, but it's a good benchmark anyway."
"I'm not a big believer in behavioral or psychological testing," Taylor says. "I believe in accountability of the manager or persons doing the interviewing."
"And there needs to be a consensus process," Taylor adds, "so if one person is a 'no,' and four out of five are a 'yes,' then it's up to the four to convince that 'no' person that the candidate is a go for the organization."
"As far as gut instinct," Hall says, "if I see somebody who has made successful hires in the past, and by and large they've all been home runs, then I would tell that person that testing is probably not that important."
But Hall says his organization is, for the most part, very "anti-gut-instinct."
"It leaves too much to subjective whims," Hall says. " 'I like a guy with a firm handshake. I like salespeople who are very ebullient.' There are too many subjective things that can come into play. But if you have a track record of several years and several hires that have been successful, then you can probably go with your gut."