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In part 2 of our 6 part series on the Myths of Recruiting we tackle why believing employees are expensive is a very short-sighted way of looking at things. If you're hiring the right people, they should be more than paying for themselves. Hiring is an investment you're going to want to make, and we'll tell you why.

Show highlights include:

  • Why all your employees pay for themselves (even your office staff) (1:46) 
  • Are you worried about hiring more team members? Here's why you’re committed to working more for less money (3:02) 
  • Why the most successful, wealthiest, and free entrepreneurs always have the biggest teams (4:16)
  • The simple “investment” mindset tweak for hiring that attracts top level talent to your business (6:15) 
  • The 3 key characteristics that make a bad employee (and why each of them is your fault) (11:47) 
  • The counterintuitive reason having a 6-month (or longer) waitlist for new projects is stealing your money (12:46) 
  • How always interviewing potential candidates helps you attract top talent and makes your teammates more effective (16:57) 

If you want to learn more about Paul and Ed and the hiring services they provide, you can visit https://www.contractorstaffingsource.com. Or hit us through our Contact Page at https://buildernuggets.com and we’ll make a personal introduction.  

To get the most out of this podcast, head over to https://buildernuggets.com and join our active community of like-minded builders and remodelers.

Read Full Transcript

And you can always get more money, but you can't get more time.

Welcome to builder nuggets hosted by Dwayne Johns and Dave young. Hey, our mission is simple, build freedom. We are a couple of entrepreneurs turned business coaches who have dedicated ourselves to helping our builder remodeler clients create the most rewarding businesses in the industry. My co-host Dwayne has been a successful builder and remodeler for over 30 years. He's seen the highs and the lows. From the beginning though, Dwayne has been on a quest to find a better way to run a contracting business. In 2016, he found that better way. That's how I met Dave, a lifelong entrepreneur and visionary who measures his success by the success of those around him. He reached out one day with a formula on how to transform my business and the rest is history. Since then, we've teamed up to help hundreds of contractors like you build better businesses and better lives. Now we've decided to open up our network and share our secrets so we can start moving the needle with you. It's collaboration over competition. Each week, we bring together industry peers and experts who share their stories so that we can all build freedom together.

(01:07): Hey, we're back for episode two on the six myths of recruiting with Paul and ed from contractor staffing source. These guys are your gurus for finding top talent to join your team. Last week, we took a look at myth. Number one, only invest in recruiting when you need someone. And we crushed that I couldn't help, but think of Alec Baldwin's iconic. Always be closing scene from Glengarry Glen Ross, since you can never have too many good candidates, you gotta always be recruiting. In this episode, we tackle myth two, and this one's a classic employees are expensive. So we're flipping the script on you today. You are never going to see your team as a cost. Again, ed, welcome back. Our employees expensive.

(01:49): Well, some, some contractors think that, but the reality is, is just the opposite. You know, the, the common way that often times contractors think is they just look at their books, right? Of course, employees are expensive. I'm paying them wages and you also, their health benefits and matching their social security FICA. Fuda of course. What do you mean? Of course they're expensive. And oftentimes if you're looking particularly at your office staff, you see them as a fixed expense, right? Because at least maybe your project managers, you can build them out as part of your, your construction expense, but your office staff. Absolutely. That's a fixed overhead. And you know, it's a burden on your bottom line. And so I've had many, many contractors tell me, you know, gosh, if I, you know, increase my office staff, I've got to work harder to pay for all those people. And that's a, that's a very short-sighted way of looking at things, because if you're hiring the right people, then they should be more than paying for themselves. Right? And they should be revenue, generators, and profit centers. They shouldn't be, you know, fixed overhead and, and, and costs that burden.

(03:02): One of the nuggets that I remember, I I'm one of the builders, I truly respect. He does pick a number, 101 very successful guy. He went to one of these seminars and he paid like 15, $20,000. And I came back and I said, okay, John, what did you get out of spending those $20,000 in a week at that seminar? If you can boil it down to one thing, he says, you know what I found out, I found out that the more employees you have, the more money you make and your life gets easier. And that's what he learned. And I think that is key that most people just don't understand.

(03:42): Yeah. If you're not willing to hire and expand your team, then you are committing to working more for less money. It's just the re the reality to it. That's exactly why you it's, it's the investment instead of hiring, or this is a cost. This is, you're an expense. It's an investment. Any investment you make, you're gonna want or expect a good return on your investment. So I think to your point, Paul, that's exactly the way it should be is if you've got the right people and you're investing in them, you're going to reap the benefits.

(04:13): I can say, I've been doing this like 45 years, the most successful people. I know which the people that have the best lifestyle have the most integrity, make the most money, blah, blah, blah, all that kind of stuff. They have some of the largest teams. I know the guy that has pick a number, 40 people working for him. He nets way over a million dollars a year. He takes months of vacation at a time and he has this very awesome lifestyle. And it's because he has all those people looking for. Why do those people like working for him? Do you think in this particular,

(04:51): Because it's a great place to work. They pay their people. Well, they don't pay him too much, but they pay them well, they're respected. The company has an awesome reputation in the bay area and it's just a great place to be. And so people feel good about the fact that even work there. And that, to me, he's done a very good job of building a great team and paying that team well, but it's not a little team. You know, he's got 40, 50 people and it's a great place to be. So I see that is, is a better model versus where I see, you know, three guys working, he's working 60 hours a week. He never gets any time off. He never, he may be making money, but as any time, any time to spend it, and that's not a lifestyle I protect

(05:39): Well. And it's interesting because when you're out recruiting, which you should be doing all the time, we learned in episode one, what you're really trying to do and show is what a great place you are and who you are and your mission and your values and everything like that, that we touched on before. But what you're asking them to do is to invest in you invest themselves. Like they're making the ultimate investment, their, their time and their energy and their commitment. You're asking them to invest in you. What are you willing to do for that? You, you need to be willing. And we see this in the best companies that we work with. We've, we've had meetings before where we've, we've recognized a project manager who has, who has really put a lot into there into the mission and into the company and, and into growing it.

(06:29): And we asked them like, what compelled you to take this kind of initiative and initiative? What, what compelled you to give so much of yourself? And I can think of one case very clearly where we're, where he said, well, it was really easy because for the first time, I really felt like you invested in me. So it's a two way street. If you start thinking of it in as, as an investment, you will attract people who want to invest back into, into you. And so often these employees are treated like commodities and ground up businesses are looking at them like, all right, I need to get this body in here. They need to do this. I need to make so much profit on them. And you do, you, you need to be, you need to be generating profit. But if you develop that investment mindset, mindset is a word we use a lot around here. That's going to be key to getting the buy in and the emotional commitment that you really need and want in your business and, and focused in the right way. If they know where you're, where you're going. So,

(07:30): What I would say is the most valuable asset any of us have is one time. That's it. When you think about it, you can always get more money, but you can't get more time. So that time is your most valuable asset. You're asking people to invest their life, their most valuable asset in your company, which is huge. That's tough. If you could look at where you put in your money, I can't think of any better investment than you can make in your own company period. Right?

(07:56): W we S we see this often, it's, it's interesting. Cause sometimes the moment of enlightenment comes when somebody switches their business model or has a directly tie is able to closer. You're able to tie employee contribution to profit, the more valuable or the easier it is to see the value of the of the employee and a fixed price model, where you may not necessarily see that, or you're not tracking time. It's not as prevalent in the businesses we coach they're working exclusively on a billable time format. And you're able to see the individual contribution of exactly how much revenue and employee has generated and showing it to them. If you have that degree of transparency in your business and the ones we work with do that project manager is empowered by seeing the impact that they're having on the bottom line. Some businesses aren't comfortable showing that, and you may have everybody, you may be, you may be at different stages of that, but being able to show an employee where they add value and where their commitment is going to and rewarding them appropriately for that, what a great way to, to get buy in and help help to under, under somebody to understand the value of what they're doing within the, in the company.

(09:16): If you just take number, let's say your employee costs, you picking a number a hundred thousand, right? It is not uncommon for that employee to make another hundred thousand for you, right? So where are you going to invest and get a hundred percent return per year? And anything I can think of it just doesn't exist besides that and makes your life easy. And so, so important that the contractor understands that the most important investment he's ever going to make is as people

(09:50): Totally true. And it comes down to the right people. Dwayne's got, Dwayne's got a great thought on this because we're talking about the right employees are not expensive. They're a real investment. And before Dwayne, before we talk about the right employee phenomenon, take a moment for a second. And, and what you just talked about there, you know, where that employee you're paying them a hundred thousand dollars and they're generating an extra a hundred thousand dollars when it comes time to value that business, that extra a hundred thousand dollars of profit that they're producing, maybe worth three times that. So when it comes time, if you're constantly focused on growing the value of your business and your team, you should be that return is often overlooked as well. The, the, the value of that, that business, as you know, with your employees as your most valuable asset within your business as well, but the opposite is true too.

(10:46): Duane, isn't it actually, th th the myth, you know, employees are expensive. And probably the first thing that a lot of contractors are going to think, you know, hiring somebody who has it. And it's because they've likely had bad hires in the past. The problem is it's, it's really, it's when it's the wrong employees. It's when those employees haven't been trained, you know, you, as the, it was the business owner, the leader have not taken time to either mentor properly train. And frankly not even motivate those employees, you know, those employees are going to become extremely expensive as opposed to the ones that you have taken the time, you know, invested in, in, in more ways than just, you know, a a high salary. It's all those other things we talked about, the culture, those people are there, the, you know, the dividends, the returns are just phenomenal. They're because they become a magnet for your company. They're going to become people that recruit. Like we talked about in the last topic, they're doing it all the time, because they're superstars, they're going to be easier to manage. They're not going to consume your time. And it's going to make what you're doing. Just a lot more.

(11:47): There's three problems that employees have, right? This is sort of a cost thing. One is they're not trained and that's too is they're not motivated. And that's three is, or the wrong person and the owner. Right. So when it comes back to any employees issue, they all come back to the guy that haven't been really. That makes sense. Yeah. And I mean, ultimately, that's why they're expensive. Want to level up, connect with us to share your stories, ideas, challenges, and successes. The builder nuggets community is built on your experiences. It takes less than a minute to connect with us@buildernuggets.com, Facebook or Instagram, want access to the resources that can take you and your team to the next level. One call could change everything. If you've taken the time, you've got a good employee, you've done good groundwork on finding the right employee. You've trained them. You've put them in. You've got good systems. They're not expensive at all. They're a profit center.

(12:45): And, you know, not only are they a profit center, but you know, something I wanted to talk about here is capacity issues, right? This is something that, that we're seeing right now with the, the, the, the strong demand that we've got in our industry. So most contractors capacity is limited by two things by the subcontractors and their number of employees. I was talking to one of our clients last week. And, you know, he said, you know, we're booked up until middle of summer of 2022. You know, we're booked out if people are calling us right now, we're saying, well, we can't really even start your job until, you know, June, July of next year. And he kind of saw that as like a badge of honor, you know, like that's really a great thing. And we were talking to him going, you know, that's not necessarily a good thing. Why can't you increase your capacity and be able to tackle those projects sooner? And it's because you know, he's why I don't have enough project managers. I don't have enough, you know, to be able to put those projects together. So again, I think if you look at employees as an investment and in a way to increase the capacity of your, your construction company, that's a really powerful concept.

(13:54): It's a scarcity issue, right? So those are the things that are in scarcity and, and a scarcity mindset succumbs to that. If you're worried about the cost of that are solving that problem, and you're not willing to invest in solving it. And you've got an, you've got a scarcity mindset yourself, and you're going to accept a scarcity problem. It's just the way it works. They're directly related. Hey, Paul, just real quick, I have to go back to what you said on the, on on the earlier episode, around when he used something like us thinking about the roles that you have. And I think a lot of these reasons why employees tend to become expensive or looked at as expensive is because the role wasn't clearly defined, you know, somebody was put into a place, they thought they needed it. They thought they needed that other person, which is maybe an overhead burden to the company. It wasn't really planned out. You know, you've got to take the time, we'll get those roles, generator, what are, what is needed in the company? What are those really crucial roles who's going to fill those roles and then hire accordingly. Versus as you said, if you've got people in, you're moving them around and it's just a thought, gee, I need somebody to do this because I just feel like I've got to solve that problem. Those are all the wrong ways to hire and result in expensive.

(15:01): And I'd like to bring up, there's not only the, the financial expense, there's the emotions. And so how many am I? I have a couple of things I tell people. One is, if you started your company over, who currently work for you, would you reply? There's anybody you wouldn't even hire, you should find. And a lot of the apps because of the emotional expense, how many people have employees that they avoid meeting with them? Because it's an energy drink like, oh, I really don't want to meet with Frank. [inaudible]. I feel worse After that, than before employees should be an energy boost. Right? So if you don't have employees that are not only financially rewarding, but emotionally rewarding, then they shouldn't be there either. Cause you should enjoy your team. You should look forward to, you need their project managers, not, oh God, I've got to be Frank with them. So there is an emotional expense as well as a financial expense. And if you don't have the right people, sometimes emotional expenses works.

(16:03): Yeah. There's also that emotional blackmail feeling. When you, when you have to downscale, when the market turns, like hiring somebody and then having to fire them or, or restructure your company, I mean, that's, you're when you're making an investment in these people, you want, you want to make sure they are really, really right. And that you're, and that they're doing during the right spot. Like there's a number of things that go into making those decisions. And I, I'm curious to know, like we just talked a lot about the right employee and the value of that or the wrong employee. What are some of the ways you would recommend to our business owners out there? What are some best practices for finding the right ones, identifying the right ones or identifying the wrong ones? Yeah.

(16:50): Well, it kind of goes back to a little bit to what I was talking about in the first myth, which is that, you know, you, you need a point of comparison and if you're not constantly interviewing candidates, even if you're not actively hiring them, then it's really hard to know because you, you have nothing to compare them to. So if you're actively, you know, meeting, as I said in the last episode with, you know, one or two people a month, you're just interviewing them. Even if you're not actively trying to fill a position, it gives you the perspective and the comparisons to be able to evaluate not only new candidates, but even evaluate the people in your own company.

(17:33): Yeah. That's, that's interesting keeping the pulse on the, on what's happening in the market and the talent that's out there, what their expectations are, what they're looking for, because that's what the people in your company may be doing at other companies. If you're not being aware of it and talking about it, I mean, you run the risk of losing them as well. If you're not investing in learning about what other people are talking about, your employees may be part of the pool that's competing for the next jobs or looking for the next jobs. Interesting.

(18:05): And it raises, you know, it just raises the bar at your, for your existing employees. If they know that you're actively out there talking to candidates every, every month Dwayne, you, you brought that up before, just like a professional football team, right? You know, that, that first string quarterback, as he's getting older, he knows the tears. You know, the, the, the team is already talking to that, that, that college recruit, you know, who's going to be drafted next year. And so they know that they have to continue to perform and continue to get better. Or there's someone that's a younger and brighter that's gonna take over their position.

(18:42): It may not necessarily be an immediate takeover. Like a lot of those in a lot of those instances, that's a leadership opportunity for the senior employee to bring somebody a young up and comer or a younger up and comer or less experienced person in. And if you have that championship mindset where you can have both of those people on your team, because they elevate each other, that's, that's pretty amazing too, that that brings things to a whole different level. If you, if you can get that sort of experience within your team, because eventually you will have that flow through of people, but what a great op leadership opportunity to be able to give your, your team or a, or an aspect of culture to layer in where those sort of senior project managers are entrusted with developing the newer project managers, the way of veteran quarterback takes can take a young quarterback under their wing and really show them how to do it, the best teams have that, that, that culture, but there is also an implied accountability around performance there as well.

(19:43): Well, one of the things, especially bringing down specifics are if you have a project manager who is really good, but he's using a yellow pad to be specific, as opposed to the computer, we see that happening in this industry, because you're going to get onboard with cloud-based management in a computer, your most important tool versus a yellow pad or whatever else you're using, or you're really not going to be participating in leading company in best practices. And we see that happening in the project management role, where some of these guys has been around forever and they go, look, I don't need a computer. I've got 5,000 houses don't even bother. But at the same time when you're interviewing people and they are really up on all the current software and that kind of thing, the older guy has to get on board or get out because that's just the way the company is going to work.

(20:32): That's the industry, that's business. That's well, that's life. I mean, things are progressing. Things are moving along and we run into that, that a lot as well. And it's really difficult, you know, of obviously there's value for those people that are, have been kind of tried and true and done it as you said for 20 or 30 years. But there's, if you're building a team concept and a real team, you know, a group of team players, everybody has to be adaptable. You know,

(20:55): I think too, I know one of your goals you talk about on the podcast is building freedom, right? And so again, if you, if you start to change your way of looking at your employees and see them as investments and not as expenses, then they are your best way to build that freedom, right? They are your path to building that freedom is, is by having the right employees and hiring enough of them in order to give you that freedom that every contractor wants.

(21:26): Yeah. You're really building that freedom for each other. And because you're elevating, you're elevating everyone and, and all those things get better and better, but yeah, yeah. And your great employees are going to help you hire. They're going to help you regret. They're going to be the ones that, you know, can be something that actually gets taken off of your plate to a certain degree, because the raw, again, the right employees that have been trained properly or are motivated properly fit the culture. They're going to be excited about bringing on other folks that they want to work with. Right? Look at the value you have there versus a team of, you know, maybe folks that are, have some animosity against bringing on another people or change or new employees. That's, that's just toxic.

(22:09): Well, we find that our best clients self-regulate in a sense that their team leaders make sure that everybody on the team makes a fair contribution and they don't tolerate people that aren't making a fair contribution. So it's much less work for the manager of the continent or the company, because the project manager is managing his team and he holds people accountable, shields, people accountable, and they make sure that everybody performs because it's part of being on the team, right? Self-Regulate if it's the right team.

(22:42): Yeah. It's, it's peer accountability and everybody wants to be part of the success and everybody wants to be, to be valued. And when you can show how you value your team, you're celebrating that stuff. You're layering it into your social media or what, or however you're, whatever your marketing is. Other people see it. And these employees, like it goes beyond what they're doing in the job. It's using them as, as part of that, of that magnet. Because when you see an exceptional project manager, as an example, celebrated in a client testimonial video, every other client that sees that video or potential client looks at that, and they say, that's the experience that I want to have. And when the trades are in that video, and they're saying, you know, talking about the experience at that project manager delivered other trades, see that and say, that's the experience I want to have in dealing with that company.

(23:43): Other employees or future project managers say, wow, I would like to be that woman. Or I would like to be that man. I would like to be that, that project manager and to be valued and celebrated like that and to have that kind of impact. So the return on that investment can go way beyond just the profit that you're seeing on billable hours or bottom line or number of jobs that they've done. It's who else do they attract to the team? Who else do they instill confidence in that says, I really want to be a part of the unique value that your team brings. And the best owners can do that very, very well, but they it's. It's very difficult for any owner to be able to do that stuff by themselves.

(24:30): And I think the myth that employees are expensive comes from the base and it comes from absolutely the wrong employees are expensive. No doubt in my mind right now, when they look at employees are expensive, they look at the wrong employees. They go, I remember Tom, he costs me $40,000 on the job. Jane. She embezzled, you know, Excel, and they're not looking at the glass half full. The people that made them all the money laying the myth comes up, their employees are expensive. They looked at the ones that in fact were expensive because they were the wrong people.

(25:04): Right. And it can go the other way too. I mean, it's the wrong people and it could be the wrong leadership, bring in, bring in the right person. And then don't take the time to train them properly or put in or get them properly set up. That's going to become really expensive as well. It's a pay me. Now pay me later. You know, I'm the one you bring on. You bring on good employees, you better be prepared to do the things that are necessary on the front end to set that employee up for success.

(25:32): I would agree the myth are wrong. Employees are definitely expensive. No doubt. My mom employees are the best asset and investment you've ever

(25:41): Right on. Well, let's, let's leave it there. We're, you know, that's myth two of the six myths. The next one that we're going to dig in to is the notion that we can do all of this ourselves. So stay tuned. We're going to be back with Paul and ed to dig into that and challenge you. If you've fallen, ever fallen into any of these traps or thinking about some of these things, we're dying to hear your stories feel free to reach out to us and share what's worked. Or if you've heard something in here that you would love to challenge and, and think is BS, call us out on it. We've got these guys for a few more episodes. We'll get it sorted out. If you want to learn more about Paul and ed and the services they provide, you can visit www.contractorstaffingsource.comorhitusupatourcontactpageonbuildernuggets.com. And we can make a personal introduction, be sure to join us next week for episode three, in our six part series on the myths of hiring.

Hey, thanks for listening. Dwayne and I love hearing from you. Your stories are inspiring and your challenges can be overcome. Got a cool tip? Idea for a show? Problem that you haven't been able to solve or maybe just struggling to figure out what you need next and where to get it. We can help. Hit us up at BuilderNuggets.com and start building freedom.

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