Читать книгу Construction and Contracting Business - Entrepreneur magazine - Страница 17
ОглавлениеAs a contracting business grows, it is necessary to hire employees to assist in the many tasks of operating the business. Managing employees is one of the most difficult tasks any business owner faces. Contracting companies often face additional challenges because some sectors of the industry are seasonal and some specialties have a higher turnover rate than average.
“It’s not what you pay a man, but what he costs you that counts.”
—HUMORIST WILL ROGERS
Hiring and managing employees is a time-consuming task that is part psychology, part economics, and part organization. Attention to detail is required, not only for government and insurance reporting but also because employees will descend on the payroll department if they think there is even a small error in their paycheck or if it’s delayed.
In spite of the headaches, hiring employees can be an extremely positive experience. Not only do they help the business grow and prosper, each employee also makes contributions to the personality of the company. When interviewing prospective employees, keep in mind the effect he or she will have on the mood and temperament of you, your business, and other employees.
An employee handbook is a great tool for both employer and employee. As a company grows, it needs to create an employee handbook to document the employer’s expectations of employees. The handbook will describe expected performance, how an employee can earn a raise or promotion, what fringe benefits are available, and other information such as work hours, dress code, and acceptable/unacceptable behavior. Owners can become better managers by participating in the process of creating the handbook because it will help them decide which policies are most important and most practical for their company. By setting guidelines and laying out some ground rules, a handbook can be a positive tool for improving morale and communications.
Both books and internet websites provide information about creating a handbook. In addition, it is usually wise to have your lawyer take a look at the document to ensure that you are not violating state or federal law.
Most contractor handbooks include at least the following items:
Overview of your company
Equal opportunity statement indicating that your hiring policies are nondiscriminatory
Hours of work, lunch, and other breaks
Wages and benefits, vacation and holiday pay
Retirement plan rules and eligibility
Safety policies and requirements
Dress code
Employment-at-will statement that says that employment can be terminated by the employer at any time for any reason
Standards of conduct, policy on sexual harassment, smoking, alcohol use, disciplinary procedures
Drug-testing policies
Statement that the handbook is not a contract and that policies can be changed at any time
Signature line for employees to acknowledge that they have read and understand the handbook
The handbook can be emailed to each employee with a date by which time employees should sign off on having read it. Hard copies should also be available. Hint: Try not to make it read as legalese or people are likely to forget what they’ve read or simply gloss over it. Make your points in an easy to follow manner… make your handbook concise and readable.
Job applications should be straightforward and easy for the prospective employee to complete. In addition to basic contact information, the application should ask for driver’s license number, level of education, and special skills and have space to list several business references.
It is illegal to ask questions about race, gender, and age because these might lead to discrimination questions. Some states require that applicants fill out a special form that allows the employer to obtain detailed information about the applicant’s motor vehicle record. A simple telephone call to verify references is essential. Some states provide public court records on the internet where employers can learn if an applicant has a criminal record.
Once hired, new employees must fill out Form I-9, “Employment Eligibility Verification,” which proves that he or she is legally permitted to work in the United States, and Form W-4, which provides the employee’s Social Security number and indicates the allowances (deductions) she or he is claiming for income tax purposes.
Employers are also encouraged to develop written job descriptions for each job category in the company. These descriptions are useful not only to inform applicants about the job they are applying for but can also be used during the periodic employee review. Small businesses should conduct a review with each employee at least once per year to discuss overall performance and strategies for improvement. Employers should also seek suggestions about how to improve the way the company operates.
Written job descriptions must be more than a simple list of tasks to be performed; they should be results oriented by including desired outcomes of the job. The description should start with a job purpose, which is a general summary of the job, and then include the essential functions of the job. These summarize what the employee does to complete his or her specific tasks and includes sections related to the results of these tasks. Following are several examples of items that may be included in the results-oriented portion of the job description:
Keeps equipment operating by following operating instructions; troubleshoots breakdowns; maintains supplies; performs preventative maintenance; schedules repairs
Maintains a safe and secure workplace by adhering to company standards and policies and to legal regulations
Contributes to company success by being respectful of clients and by helping other employees accomplish their tasks
A major concern of many contracting companies is the hiring of minor employees, those under 18 years of age. Most states require that minor employees obtain a work permit prior to beginning a job. Depending upon their age, minors may be prevented from operating most power tools, driving company-owned vehicles, and assisting in “dangerous” work. The federal government has issued regulations covering the maximum hours a minor may work, both by the day and by the week. The United States Department of Labor has links to more detailed information on its website, which can be found at www.dol.gov.
Many owners of contracting businesses will, when asked, tell you that, “I probably work for about fifty cents an hour.” While untrue, it sometime feels like it. On the other hand, most employees choose a job because they think that they will like the work and they are satisfied with the salary. A positive workplace with caring bosses does a lot to create a successful work environment, but competitive wages and benefits are what maintain the success.
Most segments of the contracting industry are unique in that the workplace changes from day to day or week to week. Workers who choose to work for contractors enjoy the variety of jobs they perform as well as the prospect of working outdoors and/or working at different locations. While some factory jobs may offer higher wages, the typical successful contracting employee would go crazy with the daily routine often found in a factory.
Many industry associations conduct periodic wage and benefit surveys and share the results with the participating companies. Contractors that take advantage of this opportunity can become more competitive because they know what their competitors are paying on average for wages and benefits; knowledge of typical wages and benefits is also useful because employers can prove to their own employees that they are keeping pace with the industry.
While benefits may be seen as the icing on the cake, most employees expect them. Employers who fail to offer these benefits will likely suffer higher turnover and have a less skilled and dedicated work force. Typically, however, most employers institute a probationary period of several months before an employee is eligible for benefits. It makes little sense to give a new employee a paid day off after working for only a few weeks.
Paid holidays are expected by all employees. Typically six holidays are covered as legal holidays, but some employers include the day after Thanksgiving as a working day.
Paid vacations, based on years of service, are another expected benefit. Seasonal contractors may wish to take into account the fact that many of their employees may be on layoff for several months.
Retirement plans, while not yet universal, are becoming more popular each year, but most are predicated on the employee contributions. The problems faced by our Social Security system, coupled with the demise of corporate pension plans, make it more imperative than ever that all workers take steps to prepare for their own retirement. Larger companies can offer a 401(k) plan, giving their employees the opportunity to invest pre-tax wages that will grow tax free; the employer may make contributions to employees’ accounts as well. The Roth 401(k) has contributors paying taxes up-front to make tax-free withdrawals during retirement. It has certain advantages over the traditional IRA, but all tax considerations need to be taken into considerations. These plans may be expensive and somewhat complicated to administer. Small contractors have another option called the “SIMPLE IRA.” As the name implies, this plan is much easier to administer and is inexpensive for the employer. Unlike the 401(k), however, employers must make either matching or non-elective contributions to each employee’s account.
Use of a company vehicle, if offered, requires tedious record-keeping, especially if the employee uses the vehicle for personal use. The value of the personal use must be included in the employee’s taxable income. The rules and regulations established by the federal government are very complicated. The decision to offer this benefit should be made only after consultation with your lawyer and accountant.
Raises are not actually a benefit, but employers should have a policy in place regarding wage and salary raises. Most contractors give raises once per year, after the annual employee review and when merited during the year on a case-by-case basis. Any employee promoted to a more responsible position should receive a raise, as should newer employees whose progress is above and beyond expectations. While most employers do not share wage rates among employees, employees certainly know what others make. Employers should provide at the minimum, an annual cost of living raise. No raises, or those that do not keep up with inflation, will typically lead to low morale and high turnover, which means training new people. In the end, turnover and additional training will typically cost more than giving employees at least a cost-of-living increase.
Incentive plans offer an employer a creative way to reward productive and successful employees. While bonuses paid annually based on increases in sales or profits are a fine way to reward employees, it can be more valuable to give the bonus closer to the time when it was earned. Some companies reward employees immediately after a successful project is completed or pay out bonuses on a monthly basis. The most successful incentive plans reward individual effort on a continuing basis as well as companywide success on an annual basis. For new companies that are not yet able to provide bonuses, non-financial rewards, such as an additional vacation day or even an award/public acknowledgment, can be considered. Be creative—know what your people would appreciate.
Helping employees pay for continuing education can reap rewards for employers. Technical colleges offer courses that improve employees’ abilities and do not conflict with the workday. Some associations offer certification classes where employees can learn more about their jobs and their industry. In both of these cases, the employer can assist with tuition and fees. By advertising and sharing the accomplishments of their employees, contracting businesses can both honor their employees and attract a more affluent clientele.
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Employees who violate company rules or policies should receive a written warning explaining the error and what will happen to the employee if the error is repeated. By maintaining a written paper trail of policy violations, an employer both protects himself from future legal action initiated by a disgruntled employee and gives the employer ammunition when a troublesome employee demands a pay raise.
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Workers’ compensation rates for contracting companies are typically very high due to the risks associated with the tasks performed. While the rates are established by a government-controlled bureau, the insurance companies that provide coverage offer a variety of incentive plans in which companies with good safety records receive part of their premiums back. As these rebates can be upwards of 50 percent of the total premium for large companies, an excellent incentive to promote safety is to share a portion of the rebate with safe employees. By implementing a safety contest that rewards safe employees, an employer can reduce the number of claims, which will ultimately result in high rebates. However, it should be noted that employees cannot be penalized for injuries and are required by law to report them to the employer.
“A good manager doesn’t try to eliminate conflict; he tries to keep it from wasting the energies of his people. If you’re the boss and your people fight you openly when they think that you are wrong—that’s healthy.”
—ROBERT TOWNSEND
Many companies in the contracting industry are victims of higher-than-average rates of employee turnover. Training new employees is a time-consuming and expensive undertaking, so it makes good business sense to try to hold onto your best employees. Providing a competitive wage and benefit package helps reduce turnover, but is not the only way to retain employees. Another factor that rates very highly with laborers is an enjoyable work environment where employees feel that they are part of a team and are respected and appreciated by their bosses as well as peers. Bosses who have an open-door policy that gives all employees the opportunity to speak personally with the owners of the company are usually more respected than authoritarian bosses who intimidate their employees. Happy employees who work under a competitive compensation package are much more productive than employees who are constantly grumbling about the poor working conditions they are forced to work under.
An often-overlooked managerial technique is simply listening to employees. New ideas often come from subordinates because they are the ones actually performing the tasks of the business. Owners and managers who encourage employees to make suggestions to improve the company help to create an atmosphere where employees feel both needed and important. Not only can a company benefit financially from new ideas, but the costs of turnover can be reduced because employees feel happy that they are contributing to success.
Payroll Decisions
As a company grows, it is more likely to employ an outside payroll service. But it’s still a call you’ll want to make—consider the pros and cons.
The benefits of outsourcing payroll include saving time; having skilled professionals with greater understanding of new payroll laws; and saving money in the long-term rather than paying people in house to do the job.
The benefits of in-house payroll include faster access to the data and saving money within a small company.
Creating an informal organizational chart will improve communication and, in turn, the efficiency of your office. Productivity increases when each department within a company understands not only its own responsibilities but also the duties and responsibilities of other departments. To use an old cliché, “the right hand must know what the left hand is doing.”
An organizational chart improves on both job descriptions and the company handbook because it explains the relationship between managers and subordinates. The primary aim of an organizational chart is not to define the pecking order within the organization but to indicate the decision-making structure of the company.
Many contracting businesses are overwhelmed by paperwork. On any one project some or all of the following items may be needed:
Contract for design work
Formal design
Design revision
Cost estimate
Contract/proposal for work to be done
Work schedule
Work order for crew
Inventory/order materials
Change orders
Subcontractor contract(s)
Bills from suppliers
Profit/loss analysis
Employee incentive payments
Invoice sent to client
Payment to suppliers and subcontractors
Receipt from client
Bank deposit
Bank account reconciliation
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Unsure about the value of incentives? Think again. Consumers are bombarded daily through the media with offers from merchants for “buy one get one free,” “no payments for 12 months!” and “save 50 percent with coupon.” It’s a fact that incentives alter behavior. The trick for employers is to find the incentives that offer the biggest reward to the company at the least cost. Get to know your employees and think about what they want. Money is an obvious choice, but employers have also found that employees want group outings, parties, vacation days, and other perks.
Since it is highly unlikely that one department or one employee is responsible for all these tasks, it is paramount that each employee who handles a task understands who is responsible for the other tasks. Knowing the sequence of events and ensuring the proper flow of paperwork is the key to an efficient and productive office.
A variety of software programs now available feature organizational charts, making it simple to plug in names, tasks, and any other pertinent information. It also makes it easy to make changes as they arise . . . and they certainly do arise.
Because it is quite common to make changes during the course of a construction project, all employees must access the chart frequently. Mistakes once made are often hard to find and, if found, may be difficult to correct. A team approach to organizing and operating your company promotes efficiency and productivity, reduces errors, and creates a more functional organization. Using the right software can put you all on the same organizational page, literally. Hint: Try keeping your organizational chart on one page. Also, you should group people with the same title into one box to save space.
Lucid Chart (at www.lucidchart.com) can provide you with easy-to-create organizational charts at reasonable prices. A team of five, for example, would cost $20 per month total. SmartDraw (at www.smartdraw.com) is another good choice with some free downloads.
Managing employees can be a difficult and time-consuming endeavor.
Writing an employee handbook is a great tool for both employer and employee.
Both state and federal governments have rules and regulations regarding employment; understanding and following the rules will make an owner’s job easier.
Written job descriptions help employees understand their responsibilities and assist employers when reviewing employee performance.
Caution when hiring minors: Stiff penalties apply if laws are violated.
Wages are important, but benefits and incentives are vitally important to employee production.
Reducing employee turnover saves money and increases productivity.
An organizational chart is an excellent tool for improving communication. Look at some of the inexpensive organizational software options.
