July, 2007

Hiring for Keeps

How LBM dealers find, train, and keep key employees to fuel their success.

By Matt Bolch

A lumberyard cannot thrive without quality employees. Knowledgeable salespeople, friendly cashiers, helpful delivery drivers, and competent support staff all work in concert to build the brand and culture of a business.

Unfortunately, a bad hire or frequent turnover can affect every aspect of an operation, and the cost of replacing an employee can equal three to six months (or more) of that person’s salary.

So how does a dealer hire right the first time and make sure good employees stick around?

Mendo Mill and Lumber Co. has been working to reduce employee turnover for the past five years, says Mike Mayfield, president and CEO of the four-store Ace dealer in northern California. Mendo Mill has 160 full-time equivalent (FTE) employees at locations in Ukiah, Fort Bragg, Willits, and Clearlake, Calif.

"Turnover always is a challenge, but it’s probably the lowest it’s been ever,” says Mayfield. "We’ve been very focused on that because we’re aware of the cost to solicit, hire, and train [new workers] and of the lead time before an employee becomes productive.”

At Mendo, store managers do most of the interviewing and hiring, but central office administrators place ads and contact local employment agencies, as well as schedule background checks and pre-employment physicals to lessen the administrative burden on managers.

Part of each manager’s bonus calculation is also based on the turnover in his department, Mayfield adds.

Dipping into Local Labor Pools

Gary W. Spicer, owner of the Ace Four Seasons Supply Center in Alturas, Calif., agrees that turnover is always an issue for dealers. "We’ll go one to three years with pretty stable personnel, and then we’ll turn over three or four positions in a year,” says Spicer. "I have two people who have been here 18 years and another who’s been here 10, but the others ebb and flow,” he says of his 12 to 18 full-time employees, depending on season.

Alturas is located 21 miles from Oregon, 23 miles from Nevada, and is almost completely surrounded by the Modoc National Forest. Spicer says his store’s location means it competes for talent with deep-pocketed local, state, and federal government jobs. To address that, Four Seasons has medical, dental, and retirement benefits that mirror those of government competitors. "We’re looking for older employees, to be honest,” Spicer says. "Five of our current employees are 50-plus, reliable and personable. Their weakness is they’re not as adept with technology as younger workers.”

Finding quality yard help has been the biggest challenge at the two stores that Teddy Bryant owns in Mississippi. "We have some employees who’ve been here 10 to 12 years, and the others we run through like a washing machine,” says Bryant, owner of Teddy’s Discount Building Supply in Holly Springs, and Grisham Lumber and Supply in Blue Mountain. Keeping good employees has also been key to Bill VanSant’s success.

Over the past 14 years, VanSant has transformed his six-employee Oklahoma Home Centers into a 46-employee (full-time equivalent) company, deliberately building a stewardship culture where employees help each other help the customer.

Based in Guthrie, Okla., just north of Oklahoma City, VanSant’s store gets 90% of its business from contractors, with the remainder coming from do-it-yourselfers. VanSant says he has occasional difficulty keeping workers in the installed sales side of his business but notes that his office manager has been with the company since before he bought the business in 1993.

"We place people first,” VanSant says of his philosophy. "I work alongside everybody, and we try hard to help people better themselves, giving them the tools and empowering them to be better. The demographic of today’s [workers] is that if they have a problem at home, they bring it to work, and we help them solve it.”

Where to Find Key Employees

As the economy slows, it becomes easier to find counter help, but Bryant says that a pervasive drug problem in his Mississippi region hurts the 32-employee company when laborers are needed. Bryant, like most lumber dealers, says he turns to newspaper advertising and referrals when looking for new employees. "I’d rather go with referrals because it’s a little safer,” Bryant says. "Well, you want to think it is, but you never know.”

In addition to newspaper advertising, VanSant says he networks with employees and customers to find potential workers.

Like VanSant, Tom Wiswell, owner of Barry County Lumber in Hastings, Mich., agrees that Internet advertising has not generated meaningful job leads for his company, except for executive positions. Wiswell has 46 FTE employees, and says most of his needs are for part-time workers, an area where employment agencies are not much help.

Both VanSant and Wiswell believe in a deliberate hiring process to make sure the best fit for the company is hired. Wiswell does the hiring for his company, while VanSant relies heavily on his personnel manager to identify and screen likely candidates. "Too many dealers are so busy and wear so many hats, they’ll interview someone for 15 or 20 minutes, do all the talking, shake hands and then pick the person most like them,” VanSant says.

The process at Oklahoma Home Centers begins with a pre-prepared list of 40 to 50 interview questions. The questions asked depend on the position being filled, but VanSant said about one-third of the questions will be asked during every interview. The personnel manager briefly meets every applicant, even calling in those who drop off an application. Initial interviews might include up to 12 applicants before the list is narrowed to four or six. Those people are brought back in for second interviews and assessment tests.

"We don’t use testing as a sole criteria for hiring, but we want to put people in positions where they will be comfortable and excel at what they’re good at,” VanSant says. Greeters, truck drivers, and customer service people take less comprehensive assessments than those being considered for sales, supervisory, or management positions. At that point, a department head conducts the second interview, which may be VanSant since some departments report directly to him. He’ll also sit in on second and third interviews if asked.

Training Helps Retention

Even the most effective hiring process won’t help turnover if employees aren’t properly introduced to the company culture and trained. Dealers admit that sometimes training isn’t a core competency.

To address that, if affiliated with a buying co-op, a dealer will sometimes use the national organization’s training materials, supplementing that with peer-to-peer training and visits from key vendors. For example, Spicer from Four Seasons Supply pays $50 for each of six Ace training manuals the store uses.

"We always could do [training] better,” Wiswell says. "We try to send people to the Michigan Retail Lumber Dealers Association training sessions. Vendors come in once a month or so, and we use the Do it Best CD program.”

VanSant also is dissatisfied with his company’s training efforts as it has grown, and he’s working with consultants to study the business and help formulate training programs.

Mendo Mill and Lumber Co. has a 90-day introductory period with a formal review at the end to determine whether the employee is happy with the company and vice-versa, says Mayfield, noting that this time is no longer called a probationary period because of possible legal concerns. The company uses Ace training tools, as well as materials from the National Lumber and Building Materials Dealers Association and the National Retail Hardware Association, the latter of which "holds great promise,” Mayfield says.

Benefits and Incentives

Dealers say most employee turnover occurs in the first couple of years, depending on the position, but that those people who stay with a company for two years likely will stay much longer. Incentives certainly can help, although most financial rewards are based on store sales rather than someone’s tenure.

Teddy Bryant says that while he doesn’t offer health insurance to his employees, workers at his two stores in Mississippi do get a monthly bonus for not having unexcused absences and a yearly bonus based on store profits that can be as high as $2,500, depending on the year and an employee’s longevity.

Kavin Swenson, owner of Rockford Lumber Co. in Rockford, Iowa, says he also doesn’t offer health insurance per se, paying individual premiums where the worker chooses, but his company does have a 401(k) retirement program with a company match and a three-year vesting period

Mendo Mill entices floor managers, store managers, and yard foremen with a monthly bonus based on a number of factors that include employee retention. Mayfield says that goals are set 11 months out while variables that might have affected the month’s sales (weather, natural disaster, big sale) still are fresh in everyone’s minds. All employees participate in profit sharing at Oklahoma Home Centers, VanSant says. Each employee is assigned to one of seven profit centers, each with a separate balance sheet. When that center is profitable, employees in that area receive extra pay based on a number of factors, including tenure. During the last disbursement, a 10-year part-time worker received a larger bonus than a full-time employee who’d been with the company for two years. "Last year, we distributed more than 30% of our net profit back to employees,” VanSant says.

Another way to increase pay is through promotions, and dealers say they prefer to promote from within whenever possible.

Especially in smaller stores, though, more responsible positions might not be available. Wiswell often hires college students as part-timers and has had to encourage several competent employees to leave after graduation because he couldn’t offer the full-time job with benefits they needed. "I wanted them to stay, but my fatherly instincts kicked in and I encouraged them to go elsewhere,” Wiswell says. "I called somebody a newbie the other day, and he’d been with me for 10 years.”

Sidebar 1

What Makes a Star? LBM Dealers Describe their Ideal Employee

Successful lumber dealers don’t just want warm bodies to fill jobs—they want qualified, engaged employees who know what they’re talking about and who truly enjoy their jobs.

Here are key traits that employers are looking for. > Trustworthiness. "That’s my benchmark,” says Mike Mayfield, president and CEO of the four-store northern California-based Mendo Mill & Lumber Co. "Everything else is trainable.” > Superior customer service. "I want employees to give customers all the help they need,” says Teddy Bryant, owner of Teddy’s Discount Building Supply and Grisham Lumber and Supply in Mississippi. "If someone’s buying plywood, do they have the glue and nails they need, too?” > Internal drive. The ability to learn and the desire to learn separate so-so employees from superior ones, says Gary Spicer, owner of Four Seasons Supply Center of Alturas, Calif. Other desirable traits dealers mention include: > Punctuality > High sense of urgency > Desire for a good quality of life > Hard-working > Well-mannered "If you walk into a small-town hardware store, you expect to be waited on,” says Mayfield. "I walk a fine line every day to find individuals with the necessary skill sets to work in these stores.”

Sidebar 2

Passing the Test: Some Dealers Turn to Experts to Gauge Potential Fit

Tests to assess a potential employee’s personality, value system, and how he or she goes about tasks can run $200 or more, says Lynn Schwarz of Lee Resources International Inc. "But $200 is a bargain when you think what a bad hire can do to your organization,” says Schwarz, vice president of the Greenville, S.C.-based training and consulting company dedicated to the lumber industry. Assessments should not be used solely to make hiring or promotion decisions, but they can help determine whether a person is a proper fit for the job and if he or she will mesh well with the culture of the organization.

Bill VanSant began testing employees and potential employees in 1995 in a deliberate effort to change the culture at his Oklahoma Home Centers, which he bought in 1993.

"The turning point for me was when I woke up one day, and there were eight trucks lined up for deliveries but no one showed up to drive the trucks,” VanSant recalls. "After working 20 hours a day for three days, I decided that I needed a better way.”

At that time, there were six employees at the Guthrie, Okla., lumberyard and retail center, including VanSant. Today, he has 46 full-time equivalent employees, and VanSant credits a deliberate hiring process and testing from Lee Resources with building a company culture that encourages longevity.

Assessments begin at about $30 for a brief report and range up to $200 and higher for a more comprehensive report on a person’s strengths, weaknesses, interpersonal skills, work habits, and how he deals with conflict, Schwarz says.

"No matter how large or small an operation is, the company’s success or failure depends on the quality of the people you have on board,” says Schwarz. "Testing has nothing to do with intelligence; it’s a determination of whether this person would be a good fit in your organization.” She notes that managers tend to hire people who are like themselves, but a successful organization needs a variety of personality types so those with strengths in one area can pick up the slack for those with weaknesses in the same area. Testing can help determine those strengths and weaknesses while also matching personality type to a worker’s likely success in a particular position.

"It’s not a crystal ball,” Schwarz says of testing, "but it will increase a lumber dealer’s odds of getting a good hire.”

Sidebar 3

Inside the Hiring Process: Step-by-step Program Works for Barry County Lumber

Tom Wiswell says he always apologizes to job applicants during the initial interview about how long the hiring process takes at his company, Barry County Lumber of Hastings, Mich. But as company president, Wiswell makes no apologies about following a deliberate, collaborative process with the applicant and other employees to find the best person to fill open positions.

"It’s significantly cheaper than laying people off,” says Wiswell of the multi-week hiring process, which includes paying an outside vendor for assessments and an impartial interview of full-time job applicants who pass initial screenings. "[One] person I had to lay off was embezzling from us, and I lay awake for three nights before I did it.”

At Barry County Lumber, the review starts when a prospective employee fills out an application, which must be completed on-site. Cashiers are encouraged to write notes on the application with their impressions of the applicant, which Wiswell then reviews. "If they’re gruff to my cashiers or have a funny odor or whatever, I’ll know when I’m reviewing the applicant,” Wiswell says. "If it’s a coin toss [on whether to hire someone] and they were mean to my cashier, that makes a difference.”

Those chosen for an interview participate in what Wiswell calls a "kick the tires” meeting. During the 30-minute interview, both Wiswell and the applicant get to know each other better, reviewing background, expectations, and any questions that might arise. The following day, Wiswell calls the applicant to see whether he wants to continue the process, or to tell an unsuccessful applicant that he will not be considered further.

Applicants picked to continue return for a half-day session of testing and interviews. The lumber company uses assessments from Lee Resources International Inc. Tests are administered first, followed by one-on-one conversations with three employees—who are selected for the review based on the position being filled.

"I tell the applicant the conversation may be 5 minutes, 15 minutes or 20 minutes, and they may talk about whatever comes up: the job, fishing, the weather or something else. I want the staff to get to know the applicants so they can tell me whether they believe this person will fit in and give me any red flags or bright stars that might arise.” This encounter also includes a more formal interview with Wiswell, which includes preliminary talks about benefits and compensation.

If staff input is positive, which Wiswell says occurs 90% of the time, assessments are sent to Lee Resources for scoring and Wiswell schedules a phone interview with Lynn Schwarz, vice president of the Greenville, S.C.-based consulting company.

Recorded phone interviews are a core offering at LumberSearch, a sister company to Lee Resources that does recruiting in the lumber industry. "A client can listen to a long-distance interview and determine whether to fly the client in,” says Schwarz. "The monetary savings can be tremendous.”

Working with the client, questions are compiled in advance and approved before any phone interview takes place. Following the interview, which can run 60 to 90 minutes, a digital copy of the session is e-mailed to the manager, who can listen to it at his convenience.

A couple of years ago, Wiswell asked Schwarz to conduct a phone interview for a friend Wiswell was considering hiring to provide an unbiased perspective. Wiswell thought the process so valuable that he uses it routinely now. Because Schwarz has seen the applicant’s test scores and knows what types of personalities work best at Barry County Lumber "she can push in some areas that I don’t,” Wiswell says.

If the interview and assessments don’t raise huge issues, the candidate is offered the job during the final meeting. At that time, the new employee is given his test scores and the scores of people he will be working with, along with an explanation of what the scores mean and where opportunities and conflicts likely will exist. An applicant who is not offered a job can also request his test scores.

Wiswell says he believes strongly in his process to hire the right person the first time. "There are better-paying places to hate your job,” Wiswell says, "but the effects of a bad hire affect everyone in the organization. If the person passes the interview process, he’ll likely stick around and know about the possible hurdles before he crosses my threshold.”