Does having a smaller staff actually save you money?
With people now returning to work, many companies that have survived the industry downturn caused by the novel coronavirus (COVID-19) pandemic appear to be repeating a common mistake in how they manage staff. I have some friends and business associates whom I’ve been talking to, and their frustration level is through the roof! They’re just banging their heads against the wall, saying, “What is management thinking? We need more people!”
Engineers, project managers and installation technicians, in particular, are beyond frustrated by this so-called “frugal” method of returning to business. I’m not trying to badmouth anyone, but it makes me wonder if there’s a secret business-owner handbook, which is titled How Not To Think Logically, which advises owners not to staff their companies properly, not to assign current staff members reasonable workloads and not to offer staff members support, as necessary.
I bring up logical thinking because the same pattern repeats over and over (and over) again. Here’s the bottom line: Pay me now or pay me later! Either you can put in the money at the front end and, thus, do it right the first time, or you can accept the inevitable delays and problems and just pay me at the back end— with significant overages! I often find myself wondering whether this method of doing business will ever end.
I’ve lived through and witnessed all of this. Nevertheless, it still never ceases to amaze me how many companies turn a blind eye to the fact that the operations manager is burying excessive overages into projects, thus skewing actual project profitability!
Back when I was a contractor in New York, if I had a project to do, I would staff it accordingly—no matter what. If I made less profit because I had more staff but I couldn’t sell the job for more, I was OK with that. After all, there are other benefits, apart from just profit, to completing a project on time and with quality workmanship!
I’ve said it before and I’ll say it again: The biggest return on investment (ROI) your company can get is from a happy customer who will recommend you to others and hire you again. Although it’s certainly not characteristic of our industry as a whole, the trail of poor workmanship and incomplete jobs floating around at any given time never ceases to amaze me. What does amaze me is that some of the repeat offenders have been able to grow nonetheless!
I have a close friend and associate, and we always joke with each other about how our business model—summed up as, “Do it right the first time”—compares to the other option: “Just do it and worry about it later!” Sometimes, it feels as though that shortsighted approach has outgrown our business model by a hundred fold. What’s up with that?! Hence, many industry professionals are banging their heads against the wall.
As I said, I don’t want to paint our industry with a broad brush. I have absolutely worked with companies that staff their projects properly. For them, “Do it right the first time” is the order of business. It’s just that, more and more, I’m hearing about staffing issues. So, consider this a helpful reminder: Try to find a happy balance between controlling your project costs, selling jobs at a profitable rate, and considering how much extra time and effort your staff will have to put in.
Throughout this year, I’m going to dig deeper into means and methods that will help smaller businesses manage their projects from start to finish, become more profitable, and, most importantly, keep staff members and clients happy. Those are the keys to staying in business, retaining your employees and, at the end of the day, buying your kids new shoes with the profit you earned!
As people vent their frustrations, sometimes they come up with funny quotes. Take, for example, this one: “A $10-per-hour employee must be twice as good as a $20-per-hour employee—they cost half as much!” I’ll include more witticisms throughout the year. Of course, if you want any of your favorite comical quotes published, send them to me, along with your name and company name…even a brief story.
To all, stay safe out there! Let me know if you have any questions, comments or stories you would like to share. Please email me at email@example.com.
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