Retaining Employees - Catskills Real Estate, Narrowsburg NY

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As seen in Builder Magazine

Retaining Employees

If anything is a more important attribute for a small business owner than the ability to identify, admit and address personal shortcomings, I haven’t found it.

Whether stemming from client feedback, or self-evaluation, the ability and willingness to improve based on best available information – personally hurtful as it may be – seems to be an important component of staying alive in jungle of small business. The self-correcting trait has counter-intuitive elements since just as true is the need to ‘stay the course’, ‘believe in your gut’ and ‘press on’ past hurdles and obstacles.

The evidence doesn’t have to be subtle to be missed. For me, the incalculable cost of employee turnover was clear long before I acted on the information readily available. My company, Catskill Farms, has had between 5 and 12 employees over the years, all cross-talented and hard to replace. Each time we lost one, I could count on between 5-9 months of hiring wrong (many times multiple times) training, confusion, and a diversion of focus for me – i.e., going backwards.

The final club over the head (we small businesspeople have a well-earned reputation for hard-headedness) was losing employees during the height of the recession – meaning, when there were no construction jobs to be had, I was still having a hard time retaining help. That was a wakeup call I heard loud and clear, finally.

What was I doing wrong that we held onto and reliably built up our subcontractor network and relationships, but failed to do the same with my employees?

As a small home builder with a steep learning curve in a very finicky Catskills Mountains 2nd home real estate market for NYC metro area clients, I was used to administrative hard work and heavy lifting. To begin to retain help, I very simply had to lower my expectations, lower my bar of what day to day success looks like (without tainting quality), and at the same time, improve my compensation packages. The answer to my problem seemed perplexing – can you really lower expectations and improve overall performance?

And, I had to improve as a manager. The latter is just as hard to swallow as the former.

There is no harder self-correction for a hard-charging small businessperson than accepting less and paying more – of being aware you are ‘over-paying’, and recognizing the real-politick of the situation is not an accurate formula for today’s value of the labor, but the value (and risk) of investing in that labor and letting its value – over time – catch up and eventually exceed its cost. I learned that the value of the retained employee diverged from the cost over time, in a positive correlation – both the value and cost went up, but the value went up much faster, caught up to the cost, and exceeded it, paying ever-increasing dividends over time.

Our programs I instituted weren’t cheap, but were laser focused on the needs of our workforce, which I understood well.  We had the steady year round work, and reliable paychecks, which wasn’t enough to stem the turnover. The solutions we found were as follows –

• More individual attention on the human resource side, even if it was just a meeting once a year to discuss whatever was top of mind.
• Institution of a 401k program, which through the Safe Harbor program, is a must have benefit for any small business since it serves a dual function of rewarding employees and sheds a lot of flexible benefits to the owner themselves. We designed this so an employee who quit couldn’t touch the accrued savings and earnings for 2 years, reducing the maddening short term employee reflex I’m always on guard against – in this case, quitting the job in order to gain access to accumulated savings. This benefit is rare in small companies.
• Holidays, Vacation and Flex time, even at the expense of productivity (getting less for more in the short run, but more in the long run)
• Golden handcuffs – I bought my 3 most productive employees personal trucks, kept the title and ownership, took the accelerated depreciation, and used the 24/7 truck usage as a benefit few companies could match – a benefit that would be lost if the employee moved on from our employ.

Benefits are nice, but it’s only one part of the retainage strategy. Another is the day to day quality of the workplace. Since our jobsites can be as much as 2 hours from home, little things like finding a way to keep the workers close to home on a Friday, paying for the Friday off before Labor Day and Memorial Day, turning those holidays into 4 day much appreciated summer bookend mini-vacations, and even keeping the jobsite very organized from an administrative material and phasing perspective so every day is felt to be productive and valued. Showing you care, which isn’t easy for a bunch of construction guys.

I also found the process of putting in writing the full value of their compensation and reviewing it annually. It’s not so easy to do the math of the hourly, the overtime, the health benefit, the 401k contributions, the personal truck savings/cost, holidays, benefits. We break it down, piece by piece, and present the whole number, which, truth be told can easily exceed $100k for the veterans and is shocking to all at the table, in a positive way.

Personally, I had to find a way to better merge my competitive drive and market-driven instincts with the personalities of my employees, who didn’t live, eat and breathe Catskill Farms like I did. A small company can be very personal for all involved – done wrong, it’s a recipe for failure; done right it can grow into a culture of family. If a feeling and connection of family is achieved, there is no greater competitive advantage and formula for survival and growth.

Even all the above is no guarantee. People move on, change priorities. Blowup and blowouts happen. Better offers materialize. But at Catskill Farms, we have stemmed the tide of turnover, and created a home where employees see themselves residing for the near and far future, a steady job that can help them navigate life’s ups and downs, a job that they can leverage against the curve balls of life. We are always out there recruiting, but now it’s as much for future growth and much less for plugging the hole in the dam.

What I learned, grudgingly, is that you don’t have to be wrong, to not be right. And it pays to be nice as often as you can.