How Successful Contractors Motivate Employees

In soft construction markets, it may be difficult to conduct business as usual. The stresses of not knowing when work will resume, uncertainty about finances and headcount, plus the everyday challenges of operations can have a depressing effect on morale if some key metrics are not in place. Key employees may wonder if it’s time to look elsewhere. At a time when fringe benefits may be scaled back, contractors need to consider prudent ways to retain and motivate their employees.Consider three tips to retain great employees:

1. Commit-and adhere-to timely pay schedules.
2. Involve managers/superintendents in business planning.
3. As it makes sense, offer incentive-based compensation to all employees.

It’s all about the paycheck.

When an employee is hired, a covenant is formed that binds the employer to provide fair, timely compensation for appropriate labor. Employees need to have the security and peace of mind that this commitment will be upheld-no matter the circumstances. Should the contractor find it difficult to prioritize, in any given pay period, the checks that need to be written due to lack of funds, employees should always be given priority. Top-notch employees are more easily kept than found. If times are especially challenging, it is best to withhold pay from those who will feel the bite the least-usually those making the most money. If funds are still short, at least partial wages should be paid. Regardless of the situation, employers must also be careful not to neglect their responsibility to keep up their federal 941 payroll taxes, since penalties and interest are very stiff.

What about “moonlighting?” It’s important to first determine if a conflict of interest exists. If the employee is performing similar work off the clock, it is entirely appropriate to give the employee the opportunity to either bring the work in under the company banner or to cease and desist. If an employee refuses to curtail competing work, it may be appropriate to take disciplinary action, including dismissal.

How involved are your employees?

Managers and superintendents can be a great asset in “rallying the troops” if they are confident in your business strategy. Take every opportunity to discuss policy changes and new ideas being considered to help revitalize the business. They, in turn, will be your advocate to the laborers who make it happen for your clients.

Three ways to involve your key leaders:

• Invite them to a planning/strategy meeting
• Delegate problem-solving
• Start/improve a performance review system

Since you probably already have meetings where business decisions are made, take time to invite a key manager/superintendent in the company to join the discussion. They will feel affirmed and connected. When a customer indicates that a problem exists in the field, ask your up-and-coming leader to come up with a plan to resolve the issue. Give mentoring advice, and trust that the situation will be handled appropriately. Evaluate all employees on a common system. A five-point scale for performance with metrics would be a good start. The scale could include:

• Craftsmanship
• Mistake-free work
• Adherence to timeframe and budget
• Number of days missed
• Initiative and cooperation with others

Evaluate performance after each job so that learning and coaching can occur frequently. Keep copies in the personnel file of what’s discussed so that progress towards promotion or a raise can be documented.

Encourage a sense of ownership

All employees can be a part of caring for the profitability and growth of your company. Work performance is better stimulated by rewards than threats of consequences. It makes sense to give more money to someone who cares about the bottom line rather than just an annual pay increase. In general, bonuses for hourly employees and profit sharing for managers (and above) are the way to go.

Hourly workers can be rewarded for time-saving or cost-reducing ideas they create and help implement. The profit-sharing pool is a way to get more key people focused on business outcomes. Materials on jobs will be treated with more care. Extra driving will be limited by better planning (fuel expenses will be minimized). Finishing a job ahead of schedule will be a goal owned by more people and may allow the company to negotiate a performance incentive with a client for exceeding timetables. The goal is to challenge employees to gain their sense of identity with business goals.

Pick up the pace of motivating your employees, and you will be able to retain and attract the very best. You’ll derive the added benefits of having a better managed company that hits its financial and business goals. In addition, you will have the staying power to not only survive any economy, but gain market share in comparison to competitors who don’t manage employee practices.

Construction Business Owner, June 2009