One of the many things, being in our business, that has become even more challenging given the current state of the labor market is estimating. In more “normal” times, giving an estimate was a fairly straightforward procedure; you listed the materials, applied a labor figure based upon either your personal experiences or used a rate book, added overhead and profit (you remember profit, don’t you?) and came up with an estimate that, more or less, both you and your customer could live with and that would keep you in business.
Of course, that was when you knew your people and knew how they worked and the amount of work that they could produce in a given amount of time. That is not, necessarily the case today. This actual ad was recently run in a local Texas newspaper and it pretty much sums up what we’ve got to contend with today;
CONSTRUCTION WORKERS NEEDED; Lake Fork Area – Please do not apply if you oversleep, have court often, do not have a babysitter every day, have to get rides to work later than your work day begins, experience flat tires every week, have to hold on to a cell phone all day, or will become an expert at your job with no need to learn or take advice after the first day. Must be able to talk and work at the same time. Must remember to come back to work after lunch. Should not expect to receive gold stars for being on time. If you qualify, leave name and number at (---) 000-0000.
Now, if you’ve been in business for any length of time, you’ve experienced employees with some, or all of the above symptoms at one time or another, and simply replaced them at your first opportunity. It’s just that now, these people are the majority or your labor pool!
How, then, can you possibly estimate a job with this type of employee? The fact is you can’t. So what do you do? Go to a time and material structure? Good luck with that! The short answer is, you simply have to be creative in how you price your jobs and estimate your labor. You need to be more keenly aware of your costs, both in labor and material, than before. Keep in mind that a mercurial labor force is one side of a two-sided coin. The other side is employees that evidence symptoms like those delineated above are not only costly to production, but are more likely to ruin material or cause an unacceptable level of waste.
I know what some of you are thinking… “Is it really worth the effort for an entry level employee?” Yes. It is.
Let us assume that you are in business and have a good core crew. Estimating a known quantity is pretty simple. The issue becomes more critical when trying to hire in new people. Given the current labor force, especially for entry level people, it would be wise to take into account their motivation (or lack thereof), as well as skills (or lack thereof). In other words, you need to vet your new hires very carefully.
As I have said many times, nature abhors a vacuum. There is now a large and growing industry that you can call on to help you vet your prospective new hires. In times past, this would almost be considered an invasion of privacy, but no more. The advent of the information age and the widespread hijacking of personal data has given people in the cyber security business a mandate to get information on people that once bordered on libel. It is a simple matter to contract with one of these companies to set up an account whereby they do background checks on all new employees. How in depth the checks are is negotiable and the costs are commensurate with the service provided.
I know what some of you are thinking… “Is it really worth the effort for an entry level employee?” Yes. It is. Without a deep labor pool to draw from, we are getting applicants who, in many cases, are exactly the type of person that the above ad seeks to disqualify from applying. Without a proper background check, any new hire today can become a costly disaster waiting to happen. We no longer have the luxury of hiring and firing to get the right fit for a new employee. The scarcity of entry level people has put paid to that method.
Many years ago, there was a very successful service shop whose policy it was to check out each employee, randomly, every day to see what kind of work they were doing, how much they knew or were learning and, in general, just what kind of employee they were. This would go on for a few days, a week, or a bit longer. The person that did this vetting was the shop owner himself, who was very concerned about his new hires and with his, hard earned, good company reputation. With the first-hand information he got from his on-site inspections he was not only able to assure himself that he had a good employee but was better able to more accurately estimate his labor costs on any given type of work.
While I understand that such an effort is costly and time consuming, it is your business, is it not? Would it not be better to personally, or by proxy, check on your new hires whether entry level or more experienced, daily, during their first few days (if they last that long) than to rely on their being what they said they were? The faster you can identify that new hire as desirable or not, the faster you can quantify how to assess their value to your company and be able to estimate their production capabilities.
It is sad that we have come to this pass in our trade, but using rose colored glasses instead of hard-nosed business principles can cost you so much more.
The Brooklyn, N.Y.-born author is a third-generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].