Spring is upon us and the spring hiring season has begun.
The 5 problems most painting contractors have when they’re hiring or retaining new hires are:
- Inexperienced applicants for a position requiring and described by the job application for an experienced position.
- The hiring process is not only time-consuming but a cost that is lost if the “new hire” does not stay with the company.
- Onboarding, the “new hire” takes away from others who are producing work and money for the company.
- The “new hire” is all talk but no action. We assume the worker is an experienced as they state but only find after they start that they are not up to your expectations. As some in the south may say “big hat, no cattle”.
- The “new hire” seems to be doing well only to leave after a short time leaving you back at square one.
I have recently found it is not that our system is broken, is that in most cases we want to hire someone for a position for the lowest price per hour we can pay them and in their eyes, they want the most they can receive per hour.
[Related: Click here to download my 11 Interview Questions for Hiring an All-Star]
Here’s what our conversations used to look like…
employer: What kind of hourly rate are you looking for?
experienced employee: I was hoping for $17.00 per hour
employer: I was thinking $15.00. I’ll start you at $16.00 and I will review you in 30 days and we can talk then.
After you proceed with the hiring process with background checks, past employer calls, maybe a day or two of on the job trial work, onboarding with one of your teams and don’t forget a few new shirts to make him look good.
The employee starts and works for a few weeks and you are happy with their work.
Late on Thursday of the third week, he lets you know tomorrow is his last day.
He just took a job for a dollar more somewhere else.
What did that Dollar cost you?
Assuming your labor rate is $50 per hour and the rate for your time as an owner is worth $75 per hour, let’s calculate the following:
- 15 hours of work thrown out the window for the hiring process. 15 x $75 = $ 1,200
- 72 hours of “new hire” onboarding with the crew (some work produced) 72 x $50 = $ 3,500
- Additional new hire advertisement 1 x $35 = $ 35
- 3 company t-shirts and sweatshirt 1 x $55 = $ 55
- Frustration ………………………………………………………………………………………………………. Priceless
- Total: $ 3,790.00+
What could an extra dollar have done for you?
- You gave the “new hire” $ 19.00 per hour to start
- Gave a detailed job description and advancement goals and rewards
- Told them you hire for company career minded people
- Explained the extra you expected from them in terms of effort and hours when needed.
So what did that extra dollar cost you?
- A Team member who feels they are valued.
- A Team member who is not jumping ship for a dollar.
- Saved new hiring costs as employees stick around
- Frustration and headache
The actual cost of an additional $ 1.00 for labor cost per the State of Massachusetts is about $ 22% which includes:
- labor rate $1.00
- state tax and federal tax
- Mass unemployment, cobra, Medicare
Calculation:
An employee at a rate of $ 16.00 per hour working 40 hrs will cost approximately to the employer $ 780.80 per week.
An employee with a rate of $ 19.00 per hour working 40 hours will cost to the employer approximately $ 927.20 per week.
Is $ 146.40 per week worth a motivated, happy, respectably paid team player who in most cases not going to jump ship for an additional dollar?
Remember the hiring process and cost to do so?
Hiring cost = $ 3,790.00 plus frustration. This cost would not be realized as an added cost until the $ 19.00 per hour employee worked for 25 weeks at the higher rate.
Pay more to win big this season.