A New Strategy for the Labor Shortage
Finding laborers for our company has been an increasingly difficult situation. With Georgia’s unemployment rate the lowest it’s been in nearly a decade, it’s not hard to see why.
In June, Georgia’s seasonally adjusted unemployment rate fell to 4.8%. The last time unemployment was 4.8 percent in Georgia was September 2007.
I’ve previously mentioned in this column that when we need five laborers for our jobsites, we will have to hire 17 people. Then, over the course of a few weeks, that group of 17 will be whittled down to five.
Many of these new hires will simply stop showing up for work. I will fire some for tardiness, unexcused absences and for being unproductive on the jobsites. We will end up with about five people that manage to stick it out.
The cost of the 12 people that only last for a few weeks is staggering. Some of these costs are the hiring, orientation, training, and administrative costs. Since the new laborer doesn’t know how to do the work effectively for the first few weeks, there is almost no return on the money we pay them for their time on the jobsites. These are massive costs that we have to cover.
Over the past six months the hiring situation has gotten even worse. It has become very difficult just to get people to apply at our company. Where we once would hire 12 laborers at one time, it has been tough to assemble a group of five to show up for their first day of (paid) orientation.
We have been wrestling with this problem. We’ve increased the number of ways that people see our help wanted ads. We’ve tried many things. Finally, after much discussion, we recently increased our starting pay for unskilled laborers by 40%.
This is a huge jump in our starting pay. And, the increase has had a ripple effect on some of our employees that have been with us for a year or two. Some of their pay had to be increased to stay in proportion with the starting wage.
Our strategy is that—while it will have a significant short-term negative effect on our profitability—the increased wage will attract more (and better) employees to our company. We also believe it will allow us to retain the best of the new laborers.
We hope that this improvement in our laborers will allow us to be more productive on each jobsite, add new clients, and complete more projects in any given week with our current amount of trucks, forms and equipment.
If all of this happens, then it will eventually have a positive impact on our profitability.
Of course, this strategy is currently just our hypothesis. If the increased pay does not produce the results we expect, then we’ll have a bigger set of problems.
However, the definition of insanity is doing the same thing over and over, and expecting different results.
We needed to do something significantly different in order to change our situation. Let’s hope this will do it.
To Your Success,
 |
In July, we attended the Concrete Foundations Association Convention in Nashville, where we learned tactics to improve our business. I was also one of the speakers at the event. I gave a presentation about how to hire a salesperson and the importance of follow up. At the event, both of the projects we submitted to the Project of the Year competition won an Honorable Mention. See more about that in this post.
|
|