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In this episode of The Morning Huddle Well Built Series, Chad and Matt discuss why so many contractors “can’t find good people” and what must be done to end that cycle in your business. In the X v Y segment, there’s also a lively discussion about firing slow or fast that leads to excellent lessons for anyone struggling with how to handle underperformers. Subscribe to be notified when new episodes are released on Spotify, YouTube, Apple Podcasts, or LinkedIn. If you’re looking for more ways to engage with the wider construction community, check out our affiliate podcast, The Morning Huddle Construction Show, hosted by Chad Prinkey, Well Built Construction Consulting and Stacey Holsinger from Steel Toe Communications. Tune in every Tuesday morning at 9 A.M. EST on LinkedIn Live for discussions with A/E/C experts, advancing the construction community. 0:00 What is the "Well-Built" series? 5:35 Check-Ins! 9:10 Why do construction companies have trouble recruiting people for positions? 13:30 How do you overcome the mindset of high expectations when recruiting? 24:43 What is "poaching" and what is our stance on it? 31:35 Should you fire fast or slow when handling under performers? 43:20 What is a positive view you can have for firing someone? 50:51 What are we reading this week and what are our biggest takeaways? 56:19 Thank you to our sponsors! Thank you to our sponsors! Well Built Construction Consulting https://www.wellbuiltconsulting.com/ Steel Toe Communications (Digital Marketing for Contractors) https://www.steeltoecommunications.com/ Katz Abosch (Tax, Audits and Accounting) https://www.katzabosch.com/ Lawrence Law (Legal Challenges for Contractors) https://lawrencelawllc.com/ Sandy Spring Bank https://www.sandyspringbank.com/ Genesis AEC (Full Service Architecture, Engineering, Construction in Life Sciences) https://www.genesisaec.com/ Marsh McLennan Agency https://www.marshmma.com/?utm_source=... Construction Links Network: https://constructionlinks.ca/ For additional episodes and information visit: http://www.themorninghuddleconstructionshow.com/ Follow us on LinkedIn: https://www.linkedin.com/company/82318299/admin/dashboard/ Subscribe to our weekly e-newsletter for the latest updates: https://lp.constantcontactpages.com/sl/Ro2QrVt/Themorninghuddlepodcast?__cf_chl_tk=9S8PSaN6zCOUNBhPtHXE.qk8HWtzxNNluBDlsEYhZkg-1726511898-0.0.1.1-8361

Has this happened to you? A high-potential employee with a bright future shows up one day and tells you, “Sorry, but I got a job offer for more money. I’m leaving.” If you’re like most contractors, the answer is a resounding YES! In this episode, Chad and Matt discuss if and when employees really do leave for money, and what other hidden factors are at play. Here’s a hint: it often comes down to leadership and culture! You will walk away from this episode with some tools to better retain great people, and be a company where people want to work. After that, the guys debate whether it’s feasible to hire executives from outside, or if you need to promote from within. Let us know who you think won the debate in the comments!

Join The Morning Huddle for an insightful conversation with Jennifer Todd, President of LMS General Contractors, as she explores the nuances of unconscious bias and its impact on the construction industry. Drawing from her experiences, Jennifer reveals how these underlying attitudes shape the industry, potentially impeding efforts toward inclusivity and diversity. Discover strategies for cultivating a more equitable future in construction as Jennifer uncovers the effects of unconscious bias and shares her insights.

In this episode, Pat McGettigan, Vice President of Excellerate Manufacturing, joins us to share his unique insights into modular construction. From UPS data centers to driving innovation in off-site manufacturing, Pat's expertise sheds light on the pivotal role of modular solutions amid labor shortages. Throughout the discussion our guest host, Tom Hughes, Vice President of Genesis AEC, also shares his valuable knowledge, enriching the conversation on the convergence of manufacturing and construction.

Traditional leadership programs often overlook the hurdles obstructing women's path to leadership in the construction industry. During this interview, we'll confront these barriers head-on. By identifying the real issues holding women back, we can lay the foundation for genuine transformation.

One of the challenges is the double bind - Women are told to be more assertive and confident if they want to advance to leadership roles. Then they’re reprimanded for being too bossy or called aggressive.

We often hear from well-intentioned men who want to contribute but are unsure how. During this interview, we'll talk about how to shift the burden of change off of women’s shoulders and create a shared responsibility for change across your entire organization. We'll also share evidence-based strategies that you can use to accelerate the path to leadership for the women in your company.

In this episode, we dive into the captivating world of Employee Stock Ownership Plans (ESOPs) with our guest, Ben Nichols, President of Harkins Builders, Inc. With over two decades of experience, Ben sheds light on the inner workings of Harkins' ESOP, dispelling myths and highlighting its role as a robust accountability and culture-shaping tool in the construction industry. We explore the tax benefits, recruitment strategies, and value-maximization tactics employed by Harkins, showcasing how being an ESOP isn't just a retirement plan but a key to empowering employees and building lasting wealth. Tune in for an engaging conversation as Ben passionately advocates for broader adoption of the ESOP model and shares Harkins Builders' success story beyond traditional retirement planning.

In celebration of National Apprenticeship Week, we have designed a special episode that focuses on the recruitment of seniors and recent graduates into the electrical industry.

We'll explore the benefits of choosing a career in the electrical industry, debunk common misconceptions, and uncover the vast opportunities that exist within this exciting field. Our guests will share their personal journeys, providing firsthand accounts of the hands-on training, career growth, and job satisfaction that can be found within the electrical industry. From apprentice success stories to the mentorship and support offered by contractors, you will hear inspiring narratives that showcase the rewards of pursuing a career in this dynamic trade.

As governments and school districts recognize the massive need for employees in the construction industry and the phenomenal opportunity that need presents to their students and constituents, many are finally investing time, money, and energy in developing successful CTE programs. Our guest, Catherine Schoenenberger, joins us to share a time-tested and proven methodology she has been overseeing for years.

It has been proven that exposure to the construction industry for school-aged kids inspires many to join the industry upon graduation. By the time kids are in high school, many have preconceived notions about the industry that make them hard to reach. In this episode, Mr. Jarrett joins us to share his story about the first CTE Program in Middle School in Philadelphia and the impact it's making on young lives.

Guest: Catherine Schoenenberger

There’s a demand for qualified leaders in the construction industry, and our guest for this episode has dedicated herself to meeting that demand by unleashing the potential of women in leadership positions. Mentors guide up-and-coming professionals, using their experience to help develop a (usually younger) mentee. Sponsors, on the other hand, advocate on behalf of their mentees and help them advance in their careers by being proactive with those in positions of power. In this episode, we learn how to be an effective sponsor for up-and-coming leaders in the construction industry to help eliminate the leadership shortage.

Transcript:

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00:08
Speaker 1
All right, it's morning huddle time. Good morning. I'm not saying it works. I wish you, Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today, because the world, my friend, has changed. Right? Latin American construction workers, they have different needs.

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00:28
Speaker 2
They have completely different.

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00:30
Speaker 3
These awards have a huge, like, criteria that you have to fill out. And they usually have a community service or community relations portion, you know, the.

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00:40
Speaker 2
Most productive with a high performance value. And, you know, sometimes it's 11 o' clock at night.

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00:48
Speaker 1
Funny, isn't? Yeah, not for me.

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00:51
Speaker 2
Not for me.

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00:52
Speaker 1
At 11 o', clock, I am guaranteed to be snoring. So foreign. Good morning. It's morning huddle time. We're here for season four. I am psyched. We've got three months of amazing guests that Stacy helped us to hook up with I. Her, I guess just her charm. She's. She's incredible at getting people to agree to come hang out with us. It's so wonderful that we have today Andrea Jansen, who's joining us from Ambition Theory. And Andrea, how are you today?

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01:30
Speaker 2
Oh, I am fantastic. Thank you so much for inviting me onto the morning huddle.

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01:35
Speaker 1
Yeah, we are so glad to have you. You're very welcome. And Stacy, how are you?

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01:40
Speaker 3
I'm doing great. I'm really excited about today's topic. I'm super passionate about mentorship and sponsorship, and I can't wait to hear what you have to say, especially, you know, people first joining the industry and navigating that in their careers and all that stuff and how they can get help and guidance throughout their careers.

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01:59
Speaker 2
So it's going to be great.

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02:01
Speaker 1
Agreed. I'm fired up. I'm also, I'm sitting here thinking, like, I can't believe that it's been already nine or ten weeks or something like that since were last on. Usually we take 8 off, but this time I think we took 9 or 10 off. And I was really getting used to having nothing going on Tuesday mornings. So. But no, I'm, so I'm. I'm really excited to be back in action. This feels more normal to me to have this going on every week. So Stacy is, as always, going to lead the conversation on the live chat. For those of you who are joining us live, if you are not joining us live. Thank you. Think about joining us live next time if you're in a position to do so. It's 9:00am Eastern here on LinkedIn Live. And then, of course, we're getting Stacy.

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02:55
Speaker 1
We have so many people downloading on Apple and Spotify now. I keep watching those statistics. They're going through the roof. It's really exciting to watch people joining us that way. But I do miss having so many people joining us in person. I want, I want more people in person.

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03:11
Speaker 2
Yeah, definitely.

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03:12
Speaker 1
You know, it's, it brings a lot to the Q and A. But look forward to the Q and A here in, you know, 20 minutes or so. And I'm going to jump right in with Andrea if that's good with you. Stacy, we'll see you in a bit.

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03:24
Speaker 2
Sounds good.

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03:25
Speaker 1
See you. Thanks. All right, Andrea, let's get to the business of talking about sponsorship and mentorship and what it's all about. And I think I'm, you know, embarrassed to admit that, you know, it wasn't until we had you, Stacy said, you know, hey, we've got Andrea joining us for this that I started looking into this and thought, oh, man, I wasn't really sure of the difference myself. So tell us a little bit about what mentorship is, what sponsorship is, how they really differ.

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03:52
Speaker 2
So don't feel bad about not knowing the difference. Most people don't know the difference. And actually, most people use the word mentorship to describe both mentorship and sponsorship. So we don't really say the word sponsorship out loud, and we don't necessarily need to. And I'll explain the difference. And I want to say thank you for inviting me to talk about this topic because this is my absolute favorite topic to teach about. And it's the topic if people, if women in the construction industry or companies that want to get more women into leadership positions, if they implement one thing, this is the thing that's going to get them the results the fastest. So I'm so excited to talk about this today.

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04:32
Speaker 2
So I don't know about you, but for my whole career, ever since I was probably a teenager, people said you need to find a mentor if you want to be successful. And so I did, like most people, and I spent hours just talking to people about what it takes to be successful, how they became successful. And to be honest, after a while, I was kind of like hitting my head against the wall because it wasn't working. And really, there's this interesting unconscious bias that shows up on how men and women are mentored. And it's different. And I'll explain the difference. So mentorship is really about getting advice. So say you're that, you know, that junior person. You're up and coming. You're like, I want to get to that next level. You go find that mentor.

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05:15
Speaker 2
So that's either a senior person in your company or in the industry. They don't need to be in your company. You meet them, they, you know, will share stories, they'll maybe tell, give you some advice, drop some names of who you should talk to about the thing that you want to learn. And then you go back to your desk or your office or your job site and you're like, okay, I'm all inspired. I'm going to do this. I'm going to invest in myself. And you're like, okay, I read the book, I heard the story. You know what? If I call that person that you mentioned, they're not going to recognize the number. They're going to think it's spam. So they're not going to pick up. You know, same thing with the email.

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05:51
Speaker 2
They're not going to reply because they have no idea who I am. So at the end of the day, it's up to you, the mentee, to implement, you know, what you've learned. The onus to take action is on you, the junior person.

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06:04
Speaker 1
So that's a slow go. I mean, it's, and it's very daunting. And to your point, you are met with a lot of resistance. And, you know, even if you do have the courage to do that outreach, which is by itself a mountain, the amount of obstacles that are thrown in your way, precisely because to your point, it's very difficult to get somebody to pay attention to you when you don't come in with some sort of, you know, some sort of support.

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06:36
Speaker 2
Yeah, exactly. And so sponsorship, on the other hand, is where you're that junior person. You want to learn that thing, you ask the senior person. And I'll give the example of business development, because that's a key skill that people need to learn in the construction industry. You need to understand how does the business of construction work. That's usually a skill that you need to get to that next level of leadership. So I'll give you an example of a sponsorship situation. So you go to that senior person, you're like, I want to learn how to. How the business works. And that senior person is like, you know what? I have a meeting with the VP of Sales and Business development tomorrow. Why don't you come along with me? So you, as that junior person, you get that exposure. You get to meet that vp.

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07:18
Speaker 2
You get to learn about that thing. You need to learn directly from that senior person. Then they get to know you. You start to build that relationship and that person knows. This person wants to, you know, learn this skill. They want to get to the next level, they're motivated. And then typically in a sponsoring relationship, it's like, okay, you know what, in two weeks, I am pitching a new client. Come along, protege. That's what we use to describe that junior person in this relationship. Come along. And you know What? I'm presenting 20 slides. You take the first five. I'll be here. I can step in if you screw it up. But. But we'll do this together. And really, it's that onus to take action is on both people.

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07:59
Speaker 2
And if you think about who's going to progress faster, is it the person that's preparing and reading all the books or the person that's kind of thrown in with that person to guide them and learning it as they go?

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08:12
Speaker 1
Yeah, yeah. Well, I think there's no substitute for experience and Trial by Fire, you know, and all those types. I mean, I think it's a good combination. I'd also recommend reading the books, but I agree that certainly getting the hands on experience is going to advance you faster. And so I want to bring this back to the thought of unconscious bias and how the experience differs between men and women. And you know, these aren't just your opinions. These are. This comes from data. I know that you're a data collector. It's a part of what ambition theory does. So tell me, what's the difference between men's experience and women's experience in this and point to that data.

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09:10
Speaker 2
Yeah, so that's a great question. So typically women are mentored. So women are given advice, prepared to the opport, prepared for that opportunity. And men are typically sponsored. And again, like I want to reiterate, this isn't my opinion. This is based on years of research. And the cool thing is we are. And this happens in every industry. It's not just construction. We're actually gathering more data right now so that we can actually quantify this experience for women specifically working in the construction industry. So we will have that in a couple of weeks. But that's typically how it plays out in the unconscious bias. And it's one thing I do want to say is people never do this on purpose. They don't even realize they're teaching. They're treating men and women differently. And it's actually out of really good intentions.

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09:56
Speaker 2
So for women it's the unconscious bias is I want her to be successful, I want her to do really well. I want to support her and I want to make sure that she's ready for when that opportunity arises so that she knocks it out of the park so that she does a really great job. So that's kind of the intention around it. Whereas for men it's typically about like, you know what, let's throw them in. They can figure it out as they go. And the key to doing that, like it's great to take those risks because you need to take risks to grow. But the benefit of having that sponsor is that they have skin in the game too. So if something goes completely wrong when you're taking that risk, they are in it with you.

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10:39
Speaker 2
So they can guide you to, they can help you pick up the pieces. If something goes wrong, they can help you navigate the politics of it. You have that person with you. Whereas in a mentoring relationship, if you're taking that big risk and it goes really wrong, the mentor is not, they don't have skin in the game. If they gave you that advice, you did. It completely did not go well. Nothing happens to the mentor. And the opposite is also true. If they give you some amazing advice and you follow it and it's a great, like you deliver really well, the mentor is not in it with you, so they don't get the credit either.

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11:16
Speaker 1
Wow, wow, wow. So something just happened in my brain as you were talking through that and that I, something kind of clicked in. Is that it actually through what you said is, you know, it's good intentions. It's this real desire to help this woman to be successful. But maybe this almost treating that woman with kid gloves instead of throwing them right into the, to the mix. Almost like being overprotective of the women that you're trying to help is actually hurting them. You know, you're by trying to protect them from failure, you're keeping them from being. And I can, this all makes sense because I can totally socially. Right. It's, it is ingrained. Speaking as, you know, a middle aged guy. Right.

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12:10
Speaker 1
I, I would say it has been ingrained as a Gen Xer growing up for sure that like, you know, I was definitely to be more deferential toward women. I was taught, I was taught to like open the door for women and be nice to women and you know, women, you have to treat women special and extra nice, you know, and things along those lines. And so psychologically I could totally see how we are. When I say we, I mean people who look like me, people we are failing to challenge or failing to throw people to throw women right in the fire. Like, and again, if I thought of a, of a male, right. Of a guy, my. A younger male, I'd be like, yeah, throw them into the fire. What the hell, See what happens.

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13:03
Speaker 1
And, and that is actually a strategic advantage for that person. That is fascinating. But then it's also sponsoring. So talk about being a good sponsor for a minute. Like, how do I. You talk about having your skin in the game. How do I, how do It in a. In the most supportive way possible where they're really set up for success.

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13:23
Speaker 2
So before I answer that question, I just want to go back to this epiphany that I just watched you have, which is pretty awesome. But when another thing, the. It's not just like men are kind of like being protected above women and preparing the women. It's really, it doesn't matter if you're a man or woman that is sponsoring or it's really. The behavior is on who that junior person is. So women will prepare other women too. And that is something like, I find myself getting stuck in these mentoring conversations and I'm like, you know what? Like, we know. And I'm going to segue this to like, how you actually shift the mindset to that opportunity. So because women do the same thing, it's not men versus women. It's just like you said, how we're socialized, right. And it's just, it's nobody's fault.

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14:10
Speaker 2
It just is. And once you know that is just the society and the culture that we're in, you can move forward. So how to be a good sponsor is. It's really about. The first thing is actually slowing down a little bit because the key about sponsors. Spot the difference between sponsorship and mentorship. You can give advice all day long, but you as that senior person that sponsor or that men, if you're a mentor, you can give advice all day long. But there's no skin in the game, right? Like, nothing's going to happen to you if you give that bad advice. And if you give. If somebody isn't really that. That great because you're aligning your reputation with theirs. So the first step is slow down, get to know the person and ask yourself the question, like, am I comfortable aligning my reputation with theirs?

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14:59
Speaker 2
And so understanding, like, ask a lot of questions like, what are their goals? Almost like, take A step back, do a bird's eye view. Like, what are they good at their job? Like, what are people saying about them? Like, what is their reputation? Because you want to just gather a little bit of information and ask yourself, like, am I comfortable aligning my reputation with theirs? And it doesn't have to take a long time. It can happen really quickly. Like, you just, you want to connect with us, that person and really kind of make that decision. Are we going to go for this together? And you don't explicitly usually ask it. It's like it's kind of this dance of human behavior. You're kind of. So if you're looking for that sponsor, that's what you do.

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15:39
Speaker 2
If you're that protege who's looking for that person, that can open the door for you. It's about pausing for a second and maybe thinking, it's not maybe about me. Actually get curious about them. Think about, like, what are their goals? Try to figure out what they are trying to achieve and think about, like, the kind of value that you can bring to them. And really, you need to actually prove yourself that, like, you know what, I have a good reputation. Like, if you create this opportunity for me, I'm not going to screw it up. Like, I'm going to deliver. Because if you go down in a sponsored relationship, both people go down. But if you're like extremely successful, both people get the credit for that. So slowing down is the first thing.

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16:22
Speaker 2
The second thing is really about shifting, like, not getting caught in the advice trap. Because we as humans, we love talking about ourselves too, right? So yeah, because we're all like, everybody's going to get stuck into this bias, right? So that junior person is going to come and say, please tell me all the advice, tell me all the stories. They're going to ask you for it. So you have to recognize this. Be like, you know what, Like, I could tell you a short story. But then shift your thinking to like, what opportunities do I have access to that I could bring this person along? And it could be as simple as, like, you know what, I'm going to a conference next week. Usually only the senior leaders go to the conference.

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17:05
Speaker 2
I will buy an extra ticket and bring this person along to the conference. And that them getting that exposure to the industry, the connections, you can, they can say hi, they can meet other people. That is going to teach them a lot than any, you know, advice that you're going to get them. So it could be simple. Things like that could be bringing them along to that meeting. It could be Making an introduction, it could be talking about them when they're not there. So if you think about like the decisions of like how people get promoted, like how do companies decide who gets promoted? Those conversations are happening when you, as the person who wants to get promoted are not in the room. And often it's like two levels above you that are making that decision.

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17:53
Speaker 2
So your boss may not necessarily be in that room and might be at that higher level. So having those people that can influence at that level, that's another thing that a sponsor can do. And when one place where people get really stuck is as the junior person, you're like, how do I add value to this senior executives world? Right. It's like how I don't. I'm junior in my career. I don't know a lot. The really interesting thing, especially in construction and especially if you're in a bigger company, if you think about it, executives and senior leaders, they can't know what is going on site at every project or even if you're in the office, they can't have their hands in everything.

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18:35
Speaker 2
But what you can do is you can be there, eyes and ears on the ground, so you can be looking at like what is happening here. And you can kind of tell them the things that are not in the formal reporting, the formal weekly reports, all of the things that get documented. There's all these other stuff going on. Like maybe there's a, you know, the client's a little bit mad, so you can tell, you can share that information and that's really helpful for that executive. So kind of recognizing as that junior person, you do really bring a lot of value. And as that senior person, having relationships with people that are junior to you, it gives you access to so much more information. So it really is a win when this is working properly, it's a win for everybody.

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19:18
Speaker 2
And it doesn't actually take a lot of time.

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19:22
Speaker 1
I really love this concept as a. On both ends of it. Right. I have mentors in my life who, if I think about it through a different lens, I'm sure have sponsored me.

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19:35
Speaker 2
Yeah.

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19:36
Speaker 1
And, and I have people in my life that I have that I've definite. I am like Mr. Advice. So I'm like, oh, no, you know that. But, but I see exactly what you mean. And I, I would really have to kind of, you know, think through each of those relationships. I'm sure I've been sponsoring some and I can think of some instances in particular that I've been sponsoring. But I've always done that thoughtlessly. And I'm sure my biases have been at work.

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20:11
Speaker 1
So I want to bring that back just one last time here with the idea that, you know, when we have to recognize that we have biases, one of the biases that we are likely to have, regardless of who you are, which I thought was really useful to think about as well, is that we've, we may have been socialized to not throw, you know, I don't know, to not. To not challenge women to the extent that they could or should be challenged and to maybe not sponsor and instead just get in the advice trap with these women that we're hoping to help be successful in general. I, I know this was probably a question you've answered a thousand times, and I want to be clear. I'm not, I am the choir here, right? Like, I'm not opposed to that.

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21:05
Speaker 1
But I have to ask the question regardless. Why should we have a vested interest in helping to elevate women in the construction industry? Aside from just in the spirit of equity, in the spirit of, you know, doing the right thing. What, what, why should we really want to do this?

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21:26
Speaker 3
Yeah.

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21:26
Speaker 2
So 100% agree. Because what we, what I found, what I've observed is that the, oh, it's the right thing to do. It's not a strong enough motivation. Right. Because it's going to take resources, it's going to take time and like, is there going to be a return on this?

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21:40
Speaker 1
Exactly. When the chips are down?

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21:43
Speaker 2
Right. And the thing about construction, it is a for profit industry. Right. It's not, it's not nonprofit. So we really need to think about, like, what is the business case for this? And it's a really interesting time in the industry because I think most people here are probably feeling the talent shortage. And the reality is right now, if you think like 10, 20 years down the road, there's going to, we're going to be in cases. And I've heard companies say that they're actually in this situation right now. They're like, we pitch for this job. Like, I kind of hope we don't get it because we actually, I'm not sure if we're going to be able to staff it. Like, there's that kind of tension, that kind of stress happening right now. And if you think about it, there's like, we need to recruit, right?

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22:29
Speaker 2
We need more people to come into this industry to deliver all of this work because it's a great business. The work is there, but there's not Enough people to do the work. And that's the place where some companies are at today. And probably in a couple of years more people are going to feel this pain. So I think if you can think about it that way, as this is a way to actually get more labor into the industry, more people leaning. So that's one piece. The second piece is this unique skill set that women bring to the table.

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23:00
Speaker 2
And this I'll try to, I'll do this really quickly, but there's been research that shows like when men are more transactional leaders, so that transactional is more that top down approach, like I'm the boss and I tell you what to do, I delegate the projects and that men veer more towards that side of the spectrum. Women are more transformational, so they are more collaborative. It's about setting that vision, helping people see their strengths, helping them rise to the challenge. So the research says men are more generally transactional, women more transformational. And we've no and I saw you nod. So in the construction industry, more of the leadership, even training, more of the skills that are rewarded are on that side of the spectrum. Spectrum. But with the younger generation, doesn't matter what gender they are.

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23:45
Speaker 2
Whenever you ask the younger generation, it's like, what do you care about? They're like, I want a sense of purpose, I want to grow, I want to contribute. And if you think about what kind of leader are they going to respond to, as the research says, like they respond better to that transformational leader. So having women in the industry, having women in leadership roles, it's just a great way to inspire that younger generation, help them see that sense of purpose. And women can do that naturally. So having more women, that's another reason why, where women can bring that value because it really helps with retention and getting the most out of your employees. Sold.

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24:20
Speaker 1
I agree, totally agree. So I mean, you don't have to convince. I am 100% there with you. I see it in my work as a consultant. One of my primary goals when there are all male leadership teams is to proactively explore opportunities for creating diversity on that team. Because they get better, they get smarter, and you know, if it's a good leadership team, they learn from each other and they adopt some of those characteristics that they see working. So when that woman who it becomes, you know, an executive in that business demonstrates this totally different, just natural take on leadership, it's contagious and that's a really powerful thing. So all right, I'm Going to pull Stacy into the conversation, get some Q and a going here before we wrap. Fantastic discussion, Andrea.

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25:22
Speaker 1
I'm sure the audience has some questions that you can add value to.

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25:28
Speaker 3
Yeah. First off, did you want to share any specific stories of, you know, advocating for people or. I think there was one. A client that you worked with 10 years ago.

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25:43
Speaker 1
Oh, you're talking to me.

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25:45
Speaker 3
Was, was that your story?

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25:47
Speaker 1
Yeah, yeah, yeah.

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25:49
Speaker 2
For Chad to share this sponsorship story you told me.

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25:53
Speaker 1
I, I, I admitted to Andrew yesterday. I'll do it briefly. I admitted to Andrea yesterday as we did a little prep conversation for this. I was like, you know, I, I, I want to be a sponsor. I enjoy helping people to reach the next rung in their career. I also have to balance that with a bit of a, and I think I'm not alone, but a bit of like a, what I call a hero complex, which is not something that I love about my personality. But, but is there, where there's this sort of desire to, to not just make the impact, but to, you know, just make sure that everybody knows I kind of made the impact, you know, like, that kind of thing. And, and I want to feel really good about myself.

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26:34
Speaker 1
And I think it's important that when we do this stuff that we, that we aren't embarrassed by the fact that. I think Andrea said it beautifully yesterday, was that, you know, I get something from that too. You know, I'm helping to elevate somebody, so it's not just me. Like, look at me being a great helper. You know, I want to publish how much I donated, you know, like, or whatever else. All these, it's all baggage I have in my brain, by the way. It's nobody else's problem but mine. But, but, you know, I think when we help, we, it's okay to win while we help. Right. Because you said it really well today is that we both share in that credit.

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27:15
Speaker 1
So when I sponsor somebody, when I put my social capital on the line and sponsor somebody who wins and becomes wildly successful, we're both winners in that story.

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27:27
Speaker 2
And in your story, Chad, the best part about it is, like, you help this person get into an executive leadership role and just calling you out, you own a consulting business, so having part of my job really benefits you. Just, there was a lot in it for you in this situation. Totally was a true win. Because honestly, if that person did a bad job, like, the whole company is going down. Right?

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27:51
Speaker 1
That's right.

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27:52
Speaker 2
They're like, okay, we did this because.

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27:54
Speaker 1
No, I saw this person and I was like, this person will be fantastic. They happen to be a woman. This is a win, you know? Yeah. So there's risk too.

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28:04
Speaker 2
Yeah. Yeah.

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28:06
Speaker 3
So how often do you think you should be meeting with your sponsor?

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28:12
Speaker 2
Oh, that is a great question. So a lot of companies, a lot of organizations have formal mentorship programs where it's like, we have a contract, we have goals, there's a schedule of how often we meet. And it's very time consuming, especially because a lot of these programs are for women. Like, they pair a junior woman with a senior level woman. And if you think about that woman, there's not that many. Like, she's got to do her job. She's got to, like, overcome all these obstacles. And she's got a me for coffee like, every month with someone, it's a lot of time. The reality of sponsorship, it can be so fast. You actually don't have to meet a lot. And that is the key about, like, really understanding what are their goals, what are my goals, how can I build that trust?

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28:55
Speaker 2
And when you have that trust there, like, it goes really fast. You don't have to meet with them. Like, you don't need to be sitting there talking about advice. It's just kind of like keeping them in the loop a little bit. I'll give you an example, literally, of, like, people sponsor me all the time. So I'll give you an example. I did a speaking engagement a couple months ago, met someone, attended in the audience, they reached out. Later, we had a conversation on Zoom. So I'm thinking about, like, the speaking agent was an hour. We had a 30 minute Zoom call. Then I got an email last week from conference organizer that they are, you know, on the board of this organization asking if I can come and do a talk for them.

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29:38
Speaker 2
And if you think about, like that time, like, that person put their reputation on the line for me when they were making that recommendation. But the amount of time we met was very short. But because we kind of like, in that conversation got to know each other, we built that trust and we realized, like, we're in it together. Right? Like, I have to rise to the challenge and kind of connect with this organization, deliver something to them, and it's that way. So it's really. I love the sponsorship model because it is a lot less time consuming, but it's really about that trust and that mutual relationship and knowing that, like, I can call this person if things are kind of going, you know, this comfort, something's not feeling great.

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30:22
Speaker 2
I can go back and call my person and we're going to figure it out together because there's that mutual benefit. So that's what I love about the relationship.

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30:31
Speaker 3
So leading off of that, like, the comfortability. So I act as a sponsor a lot to younger generations, high school to college level. And I notice, I don't know if they're intimidated or like you were saying, it's early in their career, so they don't know how to open up and ask questions, or maybe they don't even know what to ask. How do you get the younger generation to open up? Because once you know you're building your relationship with your sponsor, obviously 10 years, 15 years into it, you will call the sponsor for help and you have that relationship. Whereas when you're first starting out with your sponsor, you don't have that relationship yet. So you might feel a little uncomfortable. But how do you kind of pull that out?

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31:19
Speaker 2
I think sometimes it's going back to simple things, like, can you connect on another level? Like, oh, do you like their shirt? Like, compliment them on their shirt? And like, just start the conversation that way. Because you'd be amazed by when you can be authentic with someone, when you could kind of, like, take the walls down, how you can connect and how that relationship evolves and where that kind of those things come out. I think it's like sometimes letting go of this, like, here's the five steps, and just being authentic and really building that human connection with them.

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31:52
Speaker 3
So just getting a little bit more personal instead of focusing on the career part of it.

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31:58
Speaker 2
Okay. Yeah.

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32:01
Speaker 3
Okay. And then lastly, question about. I wanted to talk about the survey that you had coming up. I know a lot of women in the industry, or just the industry in general, have issues with competing with other industries and being flexible and offering those type of opportunities. So you had some type of survey to come? That's coming up and feel free to share.

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32:24
Speaker 2
Yeah, we are doing a survey. We partnered with the national center for Construction Education and Research to do a survey. We're going deep on sponsorship. So this is for women only, so please fill it out. If you're here, we'd love to include your opinion. It closes on February 13th. And then the second piece that has come up through a lot of our clients and just engagement with the industry. Is this question about flexibility because of the talent shortage? If you look at the landscape, there's so many flexible work options available, and construction has been a little bit late to the game on figuring that out. And the reality is like you are building something. So a lot of them, you have to physically be there. And I don't know if anyone's cracked that nut yet.

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33:07
Speaker 2
So we have a second piece of the survey where we're getting really curious about flexibility and what could that possibly look like in the construction industry. So, please.

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33:19
Speaker 1
Yeah, I spent a lot of time. So one of the things that I've been doing just in the past year has been really surprising. I spent a lot of time doing these studies inside companies, just inside the business about sort of stress management. And, you know, there are common set of common threads that are constantly the source of high stress. Lack of flexibility in the construction industry is, you know, and some companies are losing relatively substantial people out of the industry because they're just saying, you know, we. And, and again, it's the balance of women doing that to men is much higher. Women. And so we. It is, we've. It would be unbelievable to get to some solution for that works for everybody.

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34:10
Speaker 2
Yeah. And so we will be releasing the results of this in a report. We'll have some live events that will be. That you can come to that are free during Women in Construction Week. So that's the. In March, the week of International Women's Day.

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34:22
Speaker 1
Beautiful, wonderful stuff. Thank you so much. This has been a fantastic conversation. Certainly enlightening for me, which I always love, are I feel like I learn way more from these things than any other learning activity I do. And Andrea, you've been a wealth of information. So thank you so much for coming on and being with us this morning. Anything to say before parting ways?

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34:55
Speaker 2
No, I just want to say thank you for having me. Thank you for everyone in the audience for being curious and open. And I want to just encourage you to lean into that curiosity and keep staying open to new ideas.

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35:07
Speaker 3
And how can people get in contact with you if they.

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35:10
Speaker 2
So they can find us. We have a podcast so you can listen to our podcast. It's called Ambition Theory, Women in Construction. You can go to our website, ambition theory.com you can connect with ambition theory on LinkedIn. You connect with me, Andrea Jansen on LinkedIn. So I'd love to say hi and connect with you.

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35:28
Speaker 3
Great. Thank you so much.

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35:30
Speaker 1
Yeah, Andrea, thank you. All right, Stacy, let's wrap up and talk a little bit about next week. So first things first, I just like to remind people that we stream live on LinkedIn, YouTube and Facebook on Tuesdays at 9am Eastern. But be sure to check us out on recorded shows if those times that time doesn't work for you. If you want to go back and binge on all the previous episodes, the easiest places to do that are Apple Podcast, Spotify and then YouTube. Also email us to be added to our weekly mailing list. Stacy h.steeltoe com.com Stacy will get you hooked up so that way you're not reliant on just that LinkedIn invite. But you can expect an email every week that comes across with some cool content recording from last week and a link to sign up for the next one live.

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36:22
Speaker 1
If that's something you'd like to do next week, we have a friend of mine, Trey Farmer, who is an architect down in Texas and has a fantastic conversation planned around passive house design, which is really the latest in, you know, design standards to meet net zero and even net positive buildings. That'll be a really technical discussion but also one that anybody can follow along with. He's, he really has a great way of bringing concepts down to earth. So with all of that in terms of preparation, Stacy, is there anything I've missed? Is there anything you want to hit on? Do you have a tip for us? Do you have a, do you have a steel toe communication?

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37:05
Speaker 3
I completely do not have a tip today.

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37:09
Speaker 1
Tip number one, have a tip. It's, it's all good.

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37:14
Speaker 3
Yeah, I'll be sure next week.

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37:16
Speaker 1
Is there anything that I've missed, Stacy?

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37:20
Speaker 3
No, I think that's it. It's just like you said. If you're not on the email list, please send me an email and we'll get that out to you. We do a recap too so we try to keep our shows short and sweet. We know you guys are busy so if you can't watch the show we at least do a little write up recap in the email.

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37:39
Speaker 1
So awesome. Which we so we will see you all next week 9am and we'll do so for the next 11 weeks hereafter. We look forward to seeing you soon. Thanks everybody.

‍ ‍

When most small to midsized construction companies think about Human Resources, they think of employee handbooks, PTO policies, and managing employee files. When people like Kathy Humm think of HR, they think about how investing in human capital becomes a strategic advantage for a business.

In this episode, we hear about how leading construction companies leverage their HR departments to become better places to work, minimize legal exposure, and increase productivity. Kathy has valuable experience from her time as the HR Director for Harkins Builders for 9 years before starting her new business, NTP HR.

Transcript:

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00:01
Speaker 1
All right, it's morning huddle time. Good morning. I'm not saying it works. I wish you Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today because the world, my friend, has changed. Right. A lot of American construction workers, they have different needs.

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00:21
Speaker 2
They have completely different needs.

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00:23
Speaker 3
These awards have a huge, like, criteria that you have to fill out and they usually have a community service portion, you know, the most productive with a high performance value. And you know, sometimes it's 11 o' clock at night.

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00:41
Speaker 1
Funny, isn't that? Yeah, not for me.

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00:44
Speaker 2
Not for me.

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00:45
Speaker 1
At 11 o' clock, I am guaranteed to be snoring.

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00:48
Speaker 3
So.

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00:48
Speaker 1
So. Good morning. It's morning huddle time. I'm Chad Prinke alongside my co host and producer, Stacey Holzinger. Stacey, how are you this morning?

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01:06
Speaker 3
I'm doing great. How are you guys doing?

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01:10
Speaker 2
Doing great.

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01:12
Speaker 1
For me, it's all good. Yeah, we made it through a Thanksgiving. Like everybody, oh my God, I shouldn't even say this out loud. Everybody was sick and I somehow dodged it. Everybody's better and I'm not sick and I don't know, but I'm pretty sure I'm invincible. Folks, I think I made it. I believe it. Yeah. Though I don't know, Thursday to Tuesday, the incubation period is probably not totally over. There's probably, you know, there's some, you know, doctor somewhere like, oh no, he's got symptoms, I can see it. But anyway, so we have our guest and both of our friends, Stacy, Kathy Hum, here with us today. Kathy, thank you so much for joining us this morning. Kathy owns Notice to Proceed hr.

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01:59
Speaker 1
She just started that business literally months ago after spending years and years in the construction industry working for a wonderful, well respected general contractor in the D.C. baltimore area. And, and I was just noticing like recognizing as were getting started, Kathy, Stacy and myself, all three of us have started our own businesses just in the past couple of years. Go us. That's exciting. So congratulations Kathy. How so far, how's it going?

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02:36
Speaker 2
It's going fantastic. As you mentioned, I've spent over 15 years in the HR space. Nine of the last years that I spend in HR were with Harkins Builders. So built their HR department and decided to break off and start my own consulting. And my goal is to transform the construction space HR from transactional to strategic. So it's been great. I have a tremendous network through Associated Builders and Contractors and from Greater Baltimore to Washington, D.C. and. And it's been fantastic.

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03:21
Speaker 1
Well, you're doing work for me, with me right now for a client, for a shared client, where we're working together and doing a fantastic job so far. So thank you for. For the work that you're doing there. And, you know, I think as a new business owner, it is the scariest thing is, am I going to have any clients? And you've been able to solve that problem very quickly through your network, and I'm very excited for you. So that's. It's a nice place to start from, Kathy.

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03:53
Speaker 2
Yeah. Yeah, for sure.

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03:56
Speaker 3
So many small subs, you know, need your help, too. We were just talking about, you know, same thing with marketing and hr. A lot of people are multitasking in smaller organizations when there's a level of expertise that's really needed. So you'll be able to help a lot of people.

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04:17
Speaker 2
Yeah. And what I found is that as companies grow, you know, they're just getting by with the transactional HR component, which is, you know, payroll and benefits administration, and then they grow even larger and they realize, okay, I need to recruit top talent, but my retention is low, you know, so you have to come up with some sort of strategy on how are you going to recruit those people and how are you going to retain them, and what does that look like?

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04:50
Speaker 1
Yeah. So. So let's. Let's make this transition into today's topic, clearly, which is we're going to talk about what the mission of your organization, what the mission of your company exists to. To accomplish, which is making that transformation from H in HR from transactional to strategic. Stacy, I'm gonna, you know, obviously put you in the spot that you're. That you're always in each week, which is creating great conversation with all of our audience members who are joining us live. We'll bring you back here with a few minutes left to. To cover the audience questions. Good.

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05:30
Speaker 3
Yep.

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05:30
Speaker 1
See, in a bit, Kathy, you started down that path of describing what transactional HR looks like. And what I picked up from that was sort of. I don't. Maybe compliance items, payroll items, things. Things that are really keeping the ship afloat. Give us, if you wouldn't mind, just sort of the comprehensive list or the best off the top of your head of what transactional HR is. What do you mean exactly when you say transactional hr?

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06:02
Speaker 2
So you're absolutely right. It includes payroll, it includes benefits, administration, any type of, you know, new hire termination, all of those critical transactional duties that a company needs to do. And I mean really the list goes on employee relations, if somebody has an issue or if they have a question and the employees are our customers. So we have to, you know, spend a lot of time and respond promptly to what their needs are, which is important. That's absolutely important.

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06:41
Speaker 1
Well, and that's exactly what I was going to say. What I don't hear you advocating for in any way is saying let's get rid of that stuff. Right. It's now have to occur. It's just that there needs to be a level of HR thinking that's happening at a different level than the day to day critical functions that need to occur to keep the, you know, the ship afloat. Let's now put some definition around what strategic HR looks like. What are some of the things that fall into that bucket? What strategic hr.

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07:15
Speaker 2
So strategic HR is being more forward thinking, not just putting out the fires today, but focusing on what is my 1-3-5-year plan. And you have to have buy in from the executive team. The HR business goals have to align with the strategic goal. So for example, if a business wants to double in size in the next three years, we what's the recruiting strategy to do that? Where are you going to get those candidates? You know, do you have a, you know, a diversity goal that you want to achieve? So how does that tie into your recruiting strategy as well? And I, it's all about being forward thinking and having that buy in from the executive team to be able to think outside of the box and really help that organization grow.

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08:11
Speaker 1
So, so if I can just solidify this recruiting can fall into either a transactional or a strategic bucket. But transactional recruiting looks like post the ad, call the headhunter. It's, it's reaction to we need a pm. We need to bring in somebody in this key position and our HR department reacts. Posts the ad calls a headhunter or any other number of just in time things designed to create a result. Not bad things, but things that are less effective perhaps than they would be if they were a part of a broader plan. So talk to me about what strategic recruiting just as an example might look like in comparison to the two, you know, to the, you know, post the ad, call the headhunter.

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09:14
Speaker 2
Sure. And those things like you mentioned Chad, are really important. But let's break this down a little bit. Is your job description from the 1920s or do you even have a job description?

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09:26
Speaker 1
Are we scrapping together a job description Last minute. I can't just, I can't tell you how I've seen people who are like, I don't know, Chad, do you have a job description? Something that we can help me with that? Yeah, totally.

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09:38
Speaker 2
But, but more specifically about the job description, are you talking about the challenges that this position will focus on? Are you speaking to the candidate? Are you talking about your culture when you write that job description and what it's like a day in the life at X Company? Then you take that a step further and do you have an employee referral plan within your organization? And have you coached your employees with an elevator pitch on how to recruit top talent? You know, you could be at a.

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10:12
Speaker 1
One thing to say, hey, we'll give you 500 bucks if you bring somebody in. It's another thing to give the tools to be successful in doing that.

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10:20
Speaker 2
You could be at a wedding, you could be in the grocery store and you get exceptional service from the, the person at the register and you think, wow, they have the skill sets, the essential skill sets that might be able to fit in our company. We can teach them the technical skills. Then you have to take it even a step further. And where are you going to find these candidates? Are you just parking your posting on LinkedIn and that's it. You have to build some sort of strategy around where we got most of our candidates. Do you typically hire from universities, community colleges, trade schools in construction? The Votech programs at high school are a great, you know, starting point to hire entry level people within the construction space.

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11:13
Speaker 2
And is your company the go to company in those programs that when they think about okay, we want to start placing our students, are they calling you? Are you the first one they're calling? Which means your recruiting strategy is you have to get in the classroom and you have to be present and you have to, you know, do the upfront work to get on that list and be the first go to caller.

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11:36
Speaker 1
Like so many things in life and business, what I'm hearing you say is it's all about making the investments in these areas that have long term benefits. That if I start laying down lines, if I start creating funnels at vocational schools, if I start laying down funnels in community college programs, I'm not going to have a bunch of candidates tomorrow. But what I will have done is help to Solidify my pipeline 3 years, 5 years, 10 years down the line. And that's strategic. And that's, that's exactly what you're talking about is, you know, hey, if you're today, if you're transactional, so be it. You might need to post that ad, you might need to call that headhunter. But today I want you to also make investments that will help you to be more strategic in the future.

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12:32
Speaker 1
It will help you in the future to have a much more effective strategy. And we're just talking about recruiting, not to mention all the other things that could fit into the hr which I look forward to potentially getting to with you today though time is so limited and there's so much to. So I want to ask what are some of the biggest mistakes that contractors are making as it relates to their HR departments? Whether it's general contractors or specialty contractors, what are the biggest mistakes they're making in relation to their HR department?

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13:10
Speaker 2
I would say the investment in hr. You have to invest in HR for it to be successful. So that's number one. And what I mean by that is you have to put the right person in the seat on the bus or develop that team that has both a transactional mindset as well as a strategic mindset. Because the duties are still the duties but you need to be forward thinking in an HR department and an HR role. So I would say the investment in hr. I would also say that HR needs to have a seat at the table. And what I mean by that is the executive team needs to include HR because let's face it, our most valuable asset in the construction space anywhere are our people.

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14:07
Speaker 2
And if we don't have good talent, satisfied employees, we're not going to be the best that we can be in whatever we do. So who has the better pulse, the best pulse on our people? It's the HR department. They, they absolutely have a pulse on the people. And so HR needs to have a seat at the table.

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14:31
Speaker 1
Yeah, that's so the first, the foundational aspect of that I'm hearing from you is really treating HR not as an afterthought, treating hr. Making the appropriate investment in HR leadership is maybe what I'm, is what I'm hearing you say. Does that sound right?

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14:57
Speaker 2
100%. But here's also something about that HR.

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15:05
Speaker 1
People.

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15:07
Speaker 2
That, that lead the department, that work in the department, they have to be able to speak the executive language. They have to be able to sit in those executive meetings. And the two biggest things that executives are focused on are the cost and the risk. And if you can't speak in business language and take the empathy and the touchy feely part of hr, which is important out of that discussion, that's where HR people tend to have trouble in those meetings. You have to be brief, you have to be concise, you have to be prepared, you have to have solutions. Don't come to them with a problem, come to them with solutions. And you have to know your data analytics and be able to present that information so that you're touching on the cost and the risk. That's what they want to hear.

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16:14
Speaker 1
Yeah, it's a two way street. You can't. First, first things first. The executive team has to welcome the HR leadership as an equal, as an equal voice at the table, as somebody that's really going to have impact, that they're going to consider their perspectives. Yeah. The other portion of that equation is HR people need to speak exact. They need to, they need to actually be prepared at that level. And playing at that level requires, you know, bridging the gap between these touchy feely topics like employee satisfaction and tying it to metrics, tying it to measurables, tying those touchy feely topics to real. Measurable business outcomes, costs, risks, returns on investment.

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17:12
Speaker 2
So even speaking about employee satisfaction, you can go into an executive meeting and say, our employees aren't satisfied. What does that mean? Right. What is tell me more? Or you can go in and after you've done, you know, year after year employee satisfaction surveys using the G12, the Gallup 12 questions, which are very simple, you can go in and say, I just want to let you know, this year our Gallup 12 survey, Employee Satisfaction Survey, dipped from 4.8 out of 5 to 4.3. And here are the categories that they dipped in. And here are those scores. And so we really need to focus and unravel this. And I've done a little research and this is what I've discovered. Two very different. You know, you go in and you say, we've got problems. Well, there's no solution there.

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18:14
Speaker 1
Right. Give me hard data and tell me why I should care.

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18:18
Speaker 2
Yeah, yeah.

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18:19
Speaker 1
It's, it's a, you know, if somebody comes in and has the ability to say, this is a leading indicator that statistically, if we're not above this threshold, we're going to have retention rate issues, we're going to experience attrition. The cost per new hire is X. Right. Here's what it costs when we have a fail within our first three years. If we have to replace somebody, I mean. Yeah. And I can think about the differences. I spend a lot of time in my work with the HR professionals within my Clients, businesses. And there's a massive difference between the quality of conversation that we're able to have in one instance and the other. And without question, there's a connection on who's invited to the table. Yeah. Now at the same time I'm sitting here like, I'm sorry, I'm like thinking about chicken or the egg.

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19:17
Speaker 1
Like, am I a part of this problem? Do I need to make sure that. And I'm sure I am to some extent. And that's, and so it's a valuable discussion to be having with you.

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19:28
Speaker 2
So, but to be honest, where you excel is the strategic plan and the vision of organizations. And that's where it starts. And time and time again, when I ask companies, do you have a strategic plan? Well, kind of sorta or not really. Because the reason I ask that is because when I'm looking at hr, from soup to nuts, the recruiting business plan has to align with the strategic plan. It gives us direction as an HR team.

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20:06
Speaker 1
Yeah, I totally agree. Without one, you can't really have the other. And I can only imagine how frustrating it must be to be a very strategic and capable HR professional operating inside a business that doesn't know where the hell it's going. That's got to be excruciating. So you can't have one without the other. I think that's an interesting thought. So let's talk straight talk here for a minute about something that I, I can't help. I, I, I'm really, I'm trying to solve this problem in my mind for the average or sort of typical sized contractor out there that does not have unlimited budget. This is an overhead hire. Right. We can't job cost this higher. If we're, if we're going to hire HR people, we've got to be able to really justify what we're doing here.

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21:04
Speaker 1
At what point do we need to make sure we have an HR person in place? Is there an employee count? Is there a revenue size? Is there, are there any rules of thumb for the point at which I need to be fully prepared to be past the transactional HR and have really HR leadership inside my business?

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21:23
Speaker 2
From my perspective, because I'm very strategic, that has to be out of the gate when you're considering starting a business. You know, think proactively. Okay. I may not need somebody right this minute, but who is that person going to be that's going to handle all the transactional and help me grow? Because you want them as a partner, but if you don't have that person in play. By the time you have 50 employees, it's time.

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21:59
Speaker 1
Okay, that's fair. And I, and now I'm, I can get that perspective. When you first started, I was like, oh, man. So, so it's going to be, I'm going to have, my first hire is going to be an HR person. We have to install metals or, you know, whatever our job is. What you're saying isn't that it's from the start you need to have this seed mindset. Yes. Which is I need to be. And perhaps, man, I don't know if you'll like what I'm about to say, but perhaps you can be strategic about HR in your business without having an HR professional leading that.

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22:38
Speaker 1
In other words, my job can be business owner or I can have vice president of operations, but if they have at least for some period of time in the business the ability to think strategically about HR issues, that could be sufficient. I don't necessarily have to go out and hire an HR professional, but what I'm hearing you say is once you reach maybe that 50 employee mark, it's a, it's time for you to have an HR professional.

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23:03
Speaker 2
Well, and Chad, I would argue, I would counter your point there with, you know, there comes a time where the HR responsibilities pull that CEO, that president, vice president, away from what they do best and helping develop and grow the organization. So there is a point that you need to offload those duties and find somebody who is equally as strategic to be a partner to be able to help the organization grow.

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23:49
Speaker 1
That's a really great point. I love that. And I can't agree with you more that there does reach almost in every business that I've ever come across a point, whether it's HR or sales or marketing or operations for that matter, where there's, there are people who are really in this lane who are carrying this added responsibility that it reaches a certain point where this responsibility isn't getting as much of their attention as it needs. This responsibility isn't getting as much responsive attention as it needs. And ultimately it's time to hand one off. And this is your primary responsibility. So it's time to hand this one off. That makes a lot of sense. That's helpful. And if you're an audience member, you're watching this. Consider, are you there? Have you reached that point where you have been handling the recruiting? Because, man, you love it.

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24:48
Speaker 1
You really enjoy being out in the Field with people. And you're the vice president of operations for a 75 employee company and you're heading up the internship program and you're heading up the employee, all these different types of things. But you're also the vice president of operations.

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25:05
Speaker 2
Right, Right.

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25:06
Speaker 1
It's a lot.

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25:07
Speaker 2
And there's a lot of nuances to all of the HR functionalities. There's just so much involved that, I mean, you take recruiting, we talked about that earlier. You know, from scheduling the interview to ordering the background check to this, that the other. There's all of that behind the scenes. That certainly needs to happen.

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25:29
Speaker 1
And it's time consuming. It's got to happen. So. All right, I'm going to bring Stacy back. There's one thing while I bring Stacy back that I want to just toss on the table with you is that I personally have always felt that one of the most essential functions of a strong human resources department is enabling employee development and training throughout the organization. And I'd like for you to describe, well, first off, if you agree, and second off, what an organization that wants to be a great employee development organization, they want to be awesome at training and developing their people. What role should HR be playing in that environment and what role should others be playing? Because I'll tell you, one of the things I hear a lot is like, well, I don't know, training hr. Are you on that?

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26:22
Speaker 1
And I always, I'm like, that's not fair. That's not quite right. You can't just lay training at HR's feet and walk out. So what's your take? Am I, am I wrong or.

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26:34
Speaker 2
Training is a part of an HR function. And I would say that anything from leadership development, management, essential skills, those kinds of things are led by the HR team. Now when you get into technical skill sets in the construction space, HR people don't know the technical, you know, how to's part of the job. What HR's role in that particular situation would be that they're facilitating the training. They're finding the technical trainer, whether it's in house or outside of the organization to have those training sessions. And they're making it. So HR absolutely plays a role in training. I would also say that companies need to have career paths. They need to spell that out because the younger generation coming into the workforce, they want to know, if I get hired here, what's my next step and what's my next step?

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27:45
Speaker 2
And you know, I want to see the three to five year plan for me. So it's really important for companies not only to have a really good job description but also paint the picture of if you start here, and these are the training things and certifications that you need to acquire over the next X months year, what have you. This is your projection and that's super important.

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28:13
Speaker 1
I love it. I love it. That seems fair to me. And it seems like there's an internal customer that obviously that HR is serving. But there also needs to be an investment from department leadership alongside HR to make this be successful. So HR not only needs to service its internal customer, but it also needs people to be bought into servicing the internal customer that's inside their department sense. In other words, it needs to have the buy in and support of everyone else so that everyone isn't just pointing the finger at HR and saying, I don't know, we're supposed to have a training program, hr, are you on that? But instead they're building it together. We are already up on time. I'm the worst. But we're going to go a little late. Stacy, what do we have in terms of questions?

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29:18
Speaker 3
We have a great question from Ralph. So how do you make training and employee growth a priority throughout your organization? Allow time away from projects for employee growth? I think that's a big concern for a lot of companies because they don't want to take people off the projects because they have to meet these deadlines and these schedules. But it is important for employee growth.

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29:43
Speaker 2
So.

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29:43
Speaker 3
So what are your thoughts on that?

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29:47
Speaker 2
Well, with any function of HR and this particular question relates to training, there has to be accountability from the top and there has to be buy in from the top. So how do they treat learning and development? And if they have buy into it, then you can formulate as an HR team what that looks like. Dollars to spend for your department for each of your, you know, team members for training, going away to conferences, taking time away from the job, maybe recruiting and hiring more people so that you have that backfill for you to take that time off. A lot of companies are also moving to sabbaticals in construction. It's a very challenging industry and it's high stress, high energy.

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30:45
Speaker 2
So a lot of companies are going to take some sabbatical time after a three, five year period so that they can recharge and train and develop.

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30:57
Speaker 3
Definitely when you were talking earlier about training and things like that, I, when I worked with Shapiro and Duncan, I worked very closely with the HR department and I think marketing also usually ties in as a support system to HR and trying to simplify the message, trying to get forms return that you need, whether it's health benefit forms, meeting deadlines, event planning, employee morale type things. So if you do have marketing support, include them into the HR conversation because they can help you out a lot when it comes to communicating these crucial messages, whether it's safety or HR or health benefits or anything like that, to get that information out and get it returned. It was always kind of a struggle, but we worked together pretty good doing that.

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31:59
Speaker 2
I would 100% agree both for your internal messaging and your external messaging, because you have to paint the story of the culture externally to attract candidates, but internally, all of that messaging around open enrollment, recruiting, employee referral program training and development, compliance. Why we have to do things that we have to do because the federal government and state legislation, you know, are putting, you know, bills in place that we have to comply with.

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32:30
Speaker 3
Yeah. And how can companies better enable a shift to becoming more strategic if they don't have unlimited overhead budgets?

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32:42
Speaker 2
It starts with investing in automation. We have tremendous systems that can do a lot of the transactional duties and it starts there and it will free up that one person team, two person team to be able to spend time planning and being more strategic.

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33:07
Speaker 3
Nice.

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33:08
Speaker 1
That's awesome. I think there's a real hesitance for companies to purchase software that they don't know that. How do I put this? Contractors don't love, don't like purchasing software that doesn't specifically tie into operations or the technical aspect of the work. Right. And I mean with automation, can you give us a sense of the return on investment that you would get for, you know, I don't know. That may be difficult for you to come up with out of thin air, but for X dollars invested, what are we, what are we saving when we bring in the right hr? Automation.

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33:56
Speaker 2
So on the front end you'd have an applicant tracking system which can give you those, the data analytics. As far as the candidates that are applying, who you're hiring, all of that data is critical to the ROI and understanding. You know, is this worth the investment? And then, you know, certainly you have your benefits tracking in there. You have your open enrollment and you have capabilities depending on the system with learning and development and then compliance. I can give you an example of the Affordable Care act requires at a certain number of employees requires you to do reporting. And at my previous employer, we paid over four thousand dollars for that reporting. If you have an app, if you have a, an HR system and you're automated, you can Pull that data out of the system and it saves you.

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34:56
Speaker 2
In that case, it would have saved us $4,000.

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35:00
Speaker 1
Yeah. Yeah. Okay. Got it. I see where you're going with it. And I, you know, I'm assuming that if I were an audience member and I had questions about even any aspect of what we've talked about today, that these are all things you'd be, you know, totally comfortable having a conversation with somebody about if they wanted to reach out.

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35:21
Speaker 2
Absolutely.

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35:22
Speaker 1
If they wanted to reach out to you, where would they get you? Should they reach out via LinkedIn?

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35:27
Speaker 2
Ntphr.com cool. And my email is Kathy Humtphr, LinkedIn. Be happy to talk through any of your HR needs. I do an assessment from soup to nuts, no cost to the company to give you an idea of where you are and where you'd like to be. And then we go from there.

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35:54
Speaker 1
Awesome. Nice.

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35:56
Speaker 3
Thanks for joining us.

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35:57
Speaker 2
Yeah, thank you.

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36:00
Speaker 1
I really enjoy this conversation. Kathy and I have been particularly recently talking a lot, and I still feel like I have a lot to say to you. So. And I love listening to your perspectives on things. You're, you're a great, fun educator. I don't know if that's something you're aware of, but you are, you're very good at it.

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36:21
Speaker 2
Well, thank you.

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36:22
Speaker 1
Yeah, thank you. Very good. So. All right, Kathy, thanks again. Stacy, let's do a little housekeeping to wrap up the last show of three.

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36:34
Speaker 3
Yep.

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36:37
Speaker 1
So, so we are up in the air on exactly when we're coming back, the exact day I. Oh, wait, no, that's not true. We nailed it.

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36:46
Speaker 3
January 31st.

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36:48
Speaker 1
January 31st. This literally just happened over the past week. So we are, our first show back will be January 31st. We'll be running for 12 weeks, pretty much consecutively. Consecutively thereafter, unless there's some holiday that we haven't accounted for and we are looking for guests. So please reach out to Stacy if you or somebody you know should be on our show. And the best way to do that, to reach out to Stacy is right here. Stacey H. Steeltoe.com.com. You can reach out to me as well, but I'll just forward it to Stacy. He handles all the, she handles all the booking. So I'm not qualified to handle that particular aspect of what we do. Stacy, do you have a steel toe? Communications tip of the week.

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37:34
Speaker 3
I just want to remind everybody today that it is giving Tuesday. Make sure that you're supporting your local construction nonprofits that are doing all the hard work to recruit people into this industry to help get people or help get you employees. If you're not donating with money, try donating with your time or just spread the word by sharing the organizations and their messages and what they represent. Please do that today.

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38:08
Speaker 1
Awesome. Thank you, Stacy. So I'll take one moment and just say this, which is the past few years have been extremely busy for most people in the construction industry. Now, depending on if you've been doing commercial interiors exclusively, you might be angry to hear me say that. Or if you've been doing hotels exclusively, there was a pretty tough time during that period, but by and large the industry has been really thriving. There are some very valid indicators that we are heading into a less vibrant time. We're heading into a time where business will be less plentiful and your strategy for your business is going to be that much more important. I've been speaking with a lot of people recently about designing their strategic plan so that their business is more recession resilient or recession proof.

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39:14
Speaker 1
If that's a conversation that you want to have with me, you can reach out to me directly through LinkedIn or via that email. I've been giving a lot of talks on it. I've been giving lots of keynotes on it. So if there's anybody that wants to have that discussion, please do reach out. Best of luck everybody as we enter into the New Year. Happy holidays and all the best from us at the Morning Huddle. Stacy, any final words?

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39:40
Speaker 3
Happy holidays and I look forward to the break, recharging and bringing some new awesome topics and guests for next season.

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39:50
Speaker 1
Same here. We'll see you in 2023.

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39:52
Speaker 3
See ya.

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39:53
Speaker 1
Bye. Bye.

‍ ‍

Join The Morning Huddle for a timely discussion about laws governing how we hire and pay our construction workforce.

Workers are misclassified as 1099 when they should be legally W-2. Subcontractors are hiring labor subs to augment their workforce or, in some cases, to replace them altogether. These labor subs have a varying level of commitment to following the law, and now their prime subs and GCs are on the hook for their mismanagement.

Millions of dollars of penalties have been paid by contractors in the Metro DC region. Attorney General Karl Racine's office appears to be committed to pursuing more wage theft infractions in the city.

No matter where you live, take the time to hear from Hillary Ghent about how Davis Construction has reacted to the heightened focus on this issue and the recommendations they have for the entire subcontracting community to achieve compliance in a manageable way.

Transcript:

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00:01
Speaker 1
All right, it's morning huddle time. Good morning. I'm not saying it works. I wish you God speed, Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today because the world, my friend, has changed. Right. A lot of American construction workers, they have different needs. They have completely different needs.

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00:22
Speaker 2
These awards have a huge, like, criteria that you have to fill out and they usually have a community service or community.

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00:32
Speaker 3
You know, the most productive with a high performance value. And, you know, sometimes it's 11 o' clock at night.

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00:41
Speaker 1
Funny, isn't it? Yeah, not for me.

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00:44
Speaker 3
Not for me.

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00:44
Speaker 1
At 11 o' clock, I am guaranteed to be snoring.

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00:47
Speaker 2
So.

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00:57
Speaker 1
It's morning huddle time. Good morning. I'm Chad Frinke. I'm here with Stacy Holzinger, as always, and our guest, Hillary Gent. Stacy, how are you this morning?

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01:06
Speaker 2
I'm doing good. How are you guys?

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01:09
Speaker 1
Doing good, Doing well.

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01:10
Speaker 3
Thanks for having me.

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01:12
Speaker 1
Thank you so much for joining us, Hillary. So Hillary is in house counsel with Davis Construction, James G. Davis Construction here in the D.C. metro area. Hillary, tell us just a little bit about Davis, terms of like location, size, yada. Give us a little bit of background on the company that you work with.

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01:36
Speaker 3
Sure. So Davis is a general contractor. We're based mainly in the D.C. metro area. Our office is in Rockville and we do work in the Northern Virginia, D.C. maryland area. We also have a Philadelphia office. We're about 400 or so employees and we've been around for more than 50 years. And yeah, awesome.

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02:00
Speaker 1
Certainly in this area, known for doing some of the best looking and highest quality award winning projects. And so kudos to, you know, James G. Davis and all the work that you guys do. I think, you know, also lots of my friends and clients, you know, in the specialty contracting community have really positive relationships with Davis by and large. So you're doing something right overall when you can have a whole bunch of work and subcontractors like you.

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02:31
Speaker 3
Well, that's great to hear and certainly value our partnerships with subcontractors.

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02:36
Speaker 1
And we are going to get into some subcontractor chat today in terms of some of the stuff that we're dealing with. But before we do, I just give a little bit of background. Hillary, how long have you been with James G. Davis and exactly what is your role in that environment?

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02:55
Speaker 3
Sure. So I've been with Davis eight years. I am in house counsel. So one of two attorneys that we have at Davis. Before coming to Davis, I worked at a small construction litigation firm. I worked on a big case for Davis, so got to know our general counsel, my boss now and some of the people at Davis and had an opportunity to come work in house at the end of that case about eight years ago. So in my role, one of the main things I do is contract related. I negotiate and deal with all of our prime contracts so with the owner and then manage subcontractor issues. I work on compliance like for example, wage theft that we're talking about today and just try to hold Davis's hand through all of our various legal issues that come up.

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03:44
Speaker 1
Awesome. So, so let's start to pivot toward our topic today. So wage theft, which is something that you have been kind of, I don't know how willingly I'll be interested in that, but thrust into the public eye here in the past few months, I've certainly gotten a chance to actually see you speak about this and hear you speak and see you speak about this and it's part of what really, you know, Drew, Stacy and I to having you on here because it's, it sounds like just like a, I don't know, ho hum legal issue. It's not, it's big and multifaceted and complicated and so Stacy, you know, I'm going to put you in your role as per usual engaging with the audience here on chat.

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04:39
Speaker 1
But let's make sure that we take some specific questions from, from our audience on, you know, ways to navigate some of these changes. And I should also make sure that I'm giving Hillary the space to provide a legal disclaimer which is yes, Hillary is an attorney, yes, she is an attorney specifically for Davis. But Hillary use the specific language that should be used in this situation to.

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05:09
Speaker 3
Make sure ye just basically I'm not an expert employment lawyer. So you know, I know enough to be dangerous and probably put my foot in my mouth a little bit here. But you know, anyone that has specific questions related to your company and your employment issues, you should really seek out a expert employment lawyer, which I am not.

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05:30
Speaker 1
So very good. All right, good. So there's the legal disclaimer. With that said, we're going to have the opportunity, I think, to talk about, you know, if you have specific questions, we should talk about them. Just understand they're not legal advice and that you should seek legal advice specifically from your attorney. All right, good. Let's, let's get rolling, Stacy. We'll see you in a bit.

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05:51
Speaker 3
See ya.

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05:53
Speaker 1
So, Hillary, I think one of the things that drew me so much into this topic was the fact that the way this law is being, I don't know if there's been a, you know, fundamentally a change in the law or really just an enforcement of a law that's been in place for quite some time, but that the change that it would really kind of force or that it is forcing in the industry is, it's pretty seismic. So take a moment, if we can, and just describe a little bit what is wage theft as it relates to, you know, the construction industry and maybe answer that question about is this a new set of laws or these laws that have existed, you know, how, what's happening right now?

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06:47
Speaker 3
Sure. So wage theft is really just a failure of an employer to pay amounts that are legally due to their employees. So that could be, you know, if minimum wage is $15 an hour and you're paying a worker $10 an hour, you're stealing $5 an hour, you know, from that worker that they're legally due. Failure to pay overtime is another common example. And then another area of focus, I think by the jurisdictions is failure to provide paid sick leave. So I think in the construction industry, one of the main ways that this becomes an issue is in the context of worker misclassification. So for an independent contractor, so the things I just mentioned, you know, overtime, minimum wage, sick pay, that all implies applies to employees.

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07:45
Speaker 3
So the workers working for an employer that are classified as employees, an employer does not have to provide those same things to an independent contractor. So, and the other big difference is withholding taxes. So for an employee, the employer is required to withhold and pay taxes for their employees. Not so for independent contractors. Independent contractors are obligated to file and pay their own tax returns. So the issue really comes up in the construction industry where a company hires somebody as an independent contractor, but that worker works legally, qualifies as an employee, and so should be paid minimum wage over time, sick pay, have their taxes withheld, et cetera.

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08:35
Speaker 1
Yep.

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08:36
Speaker 3
So in the construction industry, long standing industry practice has been to classify workers as independent contractors when legally under, you know, long standing legal principles, they should be properly classified as employees. So that hasn't changed. I think what has changed more recently in the wage theft context is the enforcement of the issue and the roll up of liability from the company that itself is misclassifying its workers to a higher tier subcontractor all the way up to the general contractor. So in. This is recent, in the last couple of years. This exists in D.C. maryland, Virginia and not every state across the country, but it's, you know, continuing to roll out in jurisdictions across the country. So states or jurisdictions themselves are creating laws flowing up that liability and then also giving the workers themselves.

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09:45
Speaker 3
It's not just enforcement by the government agency, they're also giving workers them that ability to seek remuneration up the chain, not just from the company that hired them as well.

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10:00
Speaker 1
Excellent. So that was a phenomenal description. I think. You know, I've been around this now for at least six months where I've been doing lots and lots of research and reading about. I think you just put it so extremely succinctly and I think. Can I just repeat back to you in simple terms how I understand it and then you make any corrections?

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10:23
Speaker 2
Sure.

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10:23
Speaker 1
I think what you're saying is that there. So the first question perhaps is am I actually hiring an independent contractor or is this person qualified, legally qualified to be a W2 employee? And the answer to that I think in most cases now is if that person is out on your job site. Right. If that person, if that person is working for. If that person is working for a company on a job site that they are in most cases legally classified, you know, qualify to be W2 at this point. Not.

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11:06
Speaker 3
Yeah, generally if they're doing the work of your business. So like for example, if you're a painting company and you've got your own employees that are out there painting and you need some additional labor and you go to a, you know, a lower tier and you say, I need some additional labor and they come out and they're painting, then those people, generally speaking should be qualified as employees, not as independent contractors.

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11:32
Speaker 1
If they come out to, if they come out to fix the painting company's trucks, then that would be a subcontractor. Right. That. Or sorry, that would be an independent contractor. That would qualify as that. But if they come out the paint, they're doing the work of the company. Okay. So that's one classification. And, and I think that has been, you know, a hard fought discussion, but one that's largely settled law at this point. Yeah, it's.

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11:59
Speaker 3
Yeah. And I mean it's not that you can't ever have somebody legally qualify as an independent contractor. I think just in the industry, the reality is that generally speaking, if you have somebody out there doing the same work that your company is doing, they should be classified as an Employee.

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12:19
Speaker 1
Yeah, I heard in one of the forums that I sat in on, I heard the speaker who's an employment lawyer say, say guys, if there's somebody working out on the job site doing the work of your company, they really need to not be an independent contractor at this point. That's just something you need to be, you know, as a general rule be thinking about. So then the next piece of this is the as you said, long standing norms. And I think I found in different market sectors it's more, you know, common than in others. So in wood frame multifamily as example, it's really common that, that the vast majority of the subcontracting community is using very few of their own in house labor, if any. And they're really leveraging third party, right.

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13:13
Speaker 1
A lower tier subcontractor that was really there to provide the laboratory on that job. And so that's been their business model. You know, that's been, it's really been the way that they've been running things for a long time. So all of a sudden the ability to not just punish the lower tier subcontractor for violating wage theft by, you know, and again, how does that happen? Paying people a piecework that maybe doesn't ultimately add up to minimum wage. Whoops, that person worked slow. So it didn't add up to minimum wage. Paying people piece work and they are putting in 12 hour days and it doesn't add up to minimum wage plus at least overtime. There's another opportunity. Right. So, so exactly as you described it.

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14:03
Speaker 1
But now these companies, these entire companies who, you know, this electrical contractor who has very few actual electricians on their team, but mostly just kind of employs, you know, management level folks, project managers, estimators, and then you know, maybe foreman and superintendents, they, how are they supposed to get these people out on their project? You know, how are they supposed to staff their projects when they don't actually have internal staff? So you as Davis, why did you make the decision to start, you know, kind of requiring that your subcontractors do this? And, and I'll say you're pretty early on in that, right? Like it's, they're not every GC is, has embraced this idea. Why did, why did Davis say guys we're not just going to let the law handle this, we're going to handle this, we're going to write it into our contract?

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15:01
Speaker 3
Well let me just clarify one thing. You said it's not that you can't use labor subcontractor. You don't have to. You know, we're not saying that, you know, a company has to have everyone on their payroll. If you use a labor subcontractor, their workers need to be properly classified.

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15:23
Speaker 1
Thank you. And that's something that I should have said that I'll take 20 seconds and clarify that for me. What I'm, what I'm specifically talking about is a norm that has been created where those labor subcontractors tend to pay their employees as independent contractors, and that the prime subcontractor who hires that subcontractor is doing nothing wrong by hiring that subcontract. By hiring that labor sub. But now that prime subcontractor, as well as the general are liable for that. For that labor subcontractors, wage theft violations, if they should occur, which they probably are like, occurring. Just, just based on the fact that they're misclassified.

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16:11
Speaker 3
Yeah. Yeah. So why did David, you know, why is Davis doing this? I think several reasons. One, you know, the flow up of liability. It's, it's added risk to Davis. So there's that. There's the fact that not only is there added liability, but it's massive added liability. So it's not just the amount of the wages that weren't paid, it's three times the amount of the wages that weren't paid, plus other penalties and things like that. Then there's the fact that this is continuing to be enforced. You've seen, you know, other general contractors have been targeted by the D.C. attorney General. Davis and every other general contractor in the area has been sued civilly for this issue. And if you haven't yet, you will. So, you know, there's a lot of legal focus, legal reason for this.

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17:14
Speaker 3
And then there's also, you know, we've been hearing clients asking about it. We've had clients say, you know, we're hearing about this wage theft issue. We want all the workers on our job sites to be paid correctly. You know, what are you doing, Davis, to ensure that they're being paid correctly? And there's the, you know, the moral aspect on our end as well. You know, you're working on a Davis job. The workers that are working hard should be paid appropriately. So, you know, there was a lot of different factors. This issue has been, you know, kind of bubbling for a couple of years, and we've made a push in the last year to really make this an area of focus for us corporately.

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17:58
Speaker 3
We've, you know, we rolled out a new subcontract exhibit that doesn't really say anything different than what our subcontract has already said. Yeah, I mean what it says is you have to comply with employment laws which you know, you're already legally obligated to do that regardless of whether Davis or any general contractor tells you and you need to maintain records to show compliance. And then if there's not compliance and you know, Davis gets tagged for something that was caused by you or your lower tier, then you're, you are responsible to Davis for that. So you know, that's what the rider says, which is pretty much what the subcontractor already says. Just expand it a little bit. And then, you know, like I said, it's been an area of focus for our company.

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18:44
Speaker 3
So we've updated our pre qualification form to you know, ask some questions about how do you, as a subcontractor that's going to work on a Davis project, how do you hire people, what do you do subcontractor to look at your lower tiers and how they're classifying their workers. So you know, we can, that gets factored into pre qualification for working on Davis jobs. And this is really a top down issue at Davis. You know, we, this is coming from, you know, the very top at Davis that this is an important issue for us. We've rolled out company wide education as well.

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19:26
Speaker 1
So I, I, I, you know, like it or not, the stepped up enforcement and this rollup clause, right, that they're, that, I mean it's really creating change and I applaud you guys for not waiting to be, you know, not waiting for this to be a problem but instead, you know, working to get out in front of it. You're not alone, but you are leading in that area. So what does this mean fundamentally to the industry and to your subcontractors? What, what do you imagine happening and what are you already hearing? This is, you know, it's relatively new, but you have been doing it. What, what's, what's the feedback so far?

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20:15
Speaker 3
So through abc has held a couple of seminars on this issue. One kind of, you know, targeted to general contractors, another to subcontractors. And then we had sort of a joint session, you know, for everyone to sort of talk about. I think the hope, the goal is that the whole industry, you know, moves in a new way to no longer misclassifying workers on the job sites, having the workers be paid the legally due, you know, benefits and payment that they're entitled to. But I think it's a difficult issue. It's been long standing industry practice, as you said, you know, people built their business model and you know, in a different way. And so it's a big ship to turn. But we are trying, I think, you know, sort of step one is education.

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21:12
Speaker 3
I think not, you know, mal intent or not, I think there's a lot of people out there doing things that this is the way it's always been done and they, you know, they think that it's normal and they don't necessarily know that there's anything wrong with the way that they have been doing business. Certainly, you know, there are bad actors out there, but there's probably a lot that didn't appreciate the issue. So trying to get the education piece out there and hope that as more people understand the issue, you know, there's change.

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21:48
Speaker 1
I think, you know, it bears calling out the elephant in the room with the whole why people have been 1099. Right. Like overall and certainly not, you know, hard and fast rule. Right. But overall, isn't it fair to say that the majority of the labor subcontractors who are 1099 ING people and who are the potential root cause. Not, you know, I'm not saying they have been doing things wrong.

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22:20
Speaker 3
Right.

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22:21
Speaker 1
But they're the potential root cause of these wage theft issues. The reason these people are 1099 is because they can't be W2 that in fact they're an undocumented worker class. That the entire construction industry, certainly in our region and I can only imagine in other regions across the country has become completely dependent on to perform the work in the field, which is again, it's an undocumented, primarily Latin American workforce that is 1099 because they don't have legal status in the US when you think about that, what is, you know, what are companies actually able to do to get into compliance here? What, what are you know, how do you navigate that? Hey, everybody now has to be W2. You know, all these people throw up their heads and say, like, how do I w to somebody that isn't documented? What do I do?

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23:28
Speaker 3
Yeah, well, there's two pieces to it. One is, you know, by law, a, you have to, you can only hire people that are legally authorized to work in the U.S. so that's one way to put people on W2. You know, obviously, I think it's known, as you said, in the industry, there's undocumented workers. And that's just not going to happen, that everybody is going to be legally authorized to work in the industry. So the other way that I understand that, you know, companies have worked towards the W2 compliance, not necessarily legally authorized to work in the US compliance, but is that the workers can get an ITIN, which is an individual Tax Identification Number, and that issued, that can be issued to an undocumented worker.

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24:25
Speaker 3
And that allows the employer to withhold taxes for that and pay taxes for that worker and also gives the workers themselves certain benefits. Like, for example, in many states having an. It allows you to get a driver's license and open a bank account and send your kids to the local schools and things like that. So what we are seeing, some of the companies that are working to solve this wage theft issue, they have converted to ensuring that all of their workers have these itins. They are all paid W2 and, you know, taxes withheld and paid. And so, you know, that is one way towards dealing with the misclassification and wage theft issue.

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25:23
Speaker 1
Yeah, man, this, the labor force, that takes a leap of faith for the, for that worker, right. For that worker to have the guts to put themselves on the radar if they're currently undocumented. I, I, you know, I don't, I know you're, I'm, now I'm putting you in a situation, you don't have answer to this question. But my, you know, this is as I start to imagine what this is going to look like at scale, so that, not only does Davis do it, but that, you know, and the handful that have already done it, you know, made the same kind of move to say, hey, this is how we're doing it moving forward, folks. And if you're not in compliance with this, then you're out of compliance with us. There's going to have to be a sea change with those employees.

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26:18
Speaker 1
Now, do you think that there's a strategic advantage for the subcontractors who don't comply, you know, on projects, obviously they're not going to win work with Davis, but in other environments, you know, where somebody isn't. So let's say subcontractor A is working really hard to get all of their, you know, labor subs on W2 and make sure that everybody is doing things in this really official and legal capacity. Subcontractor B is gambling. Do you think there's a strategic advantage for subcontractor B in the short term. Oh, did I. Sorry.

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27:00
Speaker 3
So from what we've. You were a little delayed chat.

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27:06
Speaker 1
Oh, my fault.

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27:07
Speaker 2
We can hear you. You're good.

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27:11
Speaker 3
Okay, good. From what I have heard from the subcontractors that we work with that are putting measures in place to ensure their lower tiers are complying, some of the challenges that they have faced are having the workers say, you're going to make me get an ITIN and withhold my taxes. And I don't want to deal with that. I'm going to go, you know, work for another company that isn't going to do that. And so the hope is that the more part of the change here is that if everyone is requiring the ITIN process or making sure that everyone is paid W2 as opposed to independent contractor, that there's not going to be the other company to go to that's not doing it. You know, that's not requiring that.

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28:06
Speaker 3
That everyone will require that, you know, level the playing as far as, you know, an advantage for the people that are doing it right from. Again, what I've heard from our subcontractors is, you know, yes, there's an aspect of it that is more expensive and that, you know, the worker who was making $20 an hour without taxes withheld, they still want to get their, you know, at the end of the day, net $20 an hour if you're going to withhold taxes. So you're having to increase their what they were paid hourly. But, you know, they have seen some efficiencies in, you know, now I'm paying attention to when everyone clocked in and when everyone clocked out.

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28:50
Speaker 3
And you know, I'm seeing the actual hours worked on the job site and maybe I was overpaying before, you know, for paying for hours that weren't actually worked. But now, you know, I know you were there from, you know, seven to three or you know, whatever it is. And, and that's what your paycheck is for. So, you know, we. That benefit.

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29:15
Speaker 1
So. So one thought that I have on this is that, you know, maybe the, the subs that continue to kind of be on the wrong side of the law here will have a strategic advantage once until that general contractor ends up getting nailed for a lawsuit because they hired that subcontractor and that subcontractor was using labor brokers that hadn't gone through the process of securing ITINs vetting their employees, yada, yada. And, and so, you know, it's, they might be lower this time, but once that, you know, once the treble damages and the fines come in and, you know, everybody's, you know, written a seven figure fine, you know, check what you thought you saved went away really fast.

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30:08
Speaker 1
And, and so it speaks to what you're saying, Hillary, about the whole idea that we're, we're trying to, it needs to be kind of a movement and people do need to get on board with this. And it's happening, it's absolutely happening, particularly in the district. I imagine that it's going to be happening outside the district. I already know I have clients that are in the southwest and that are in the south, where it's starting to happen in those markets. This is going to be more than just a localized issue. And I know it already is a localized issue. You know, you look at New York City, you look at, you know, down in Florida, I know that they're enforcing this in Miami. So anyway, we have a couple of questions here.

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30:52
Speaker 1
And I know, Stacy, you're a trooper, you, but you're super under the weather today, so I don't want to make you overdo it. So I'll. All right, you got, you want to take a shot at Ike's?

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31:06
Speaker 2
Well, you can take a shot at Ikes. I think that's more in your. And then I'll get to Josh.

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31:11
Speaker 1
All right, very good. So, so Hillary, Ike Casey, who is the president of the associate, the ASA, right. The American Subcontractor association in D.C. he asked a question where he said, I understand someone Maybe in the D.C. aG's office has hired 40 Spanish speaking people to visit construction job sites to entice workers to file claims. Do you know if this is true and if so, what do you recommend to your subs to address this? And I'll maybe just add like a couple of seconds of clarity for the audience on this.

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31:49
Speaker 1
The idea would be that if you can, as Hillary mentioned, if the individual on the job site actually has the ability to go and file claims themselves and you're able to identify somebody that, who says, yes, I'm not being paid appropriately, then that person can, you know, go to the boss or, I'm sorry, can literally go to a lawyer. Right. Or in file suit against the people who've hired them, thus, you know, starting to snowball this situation. So that would be theoretically the motivation of the DCAG's office, if in fact they're Hiring Spanish speaking people to go out, visit job sites and say, hey, how you being paid? And hey, you know, that's illegal and you can file a suit. So there's a little bit of detail for the audience on it. But Hillary, back to the question. I've not heard this.

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32:43
Speaker 1
Have you heard this?

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32:45
Speaker 3
I have not heard that either. Yeah, I haven't heard that. I wouldn't be surprised if that was true, but I haven't heard that. And I think at least from the civil service civil lawsuit side, where the workers themselves are filing lawsuits, putting aside the ag, it's really a plaintiff lawyer's dream because just need to convince someone you're going to get what you weren't paid times three. And you can sue your direct employer, you can sue the person above them and all of them are jointly and severally liable and they have to pay your attorney's fees. So it's a plaintiff's lawyer's dream. And I'm surprised that there haven't been more lawsuits than there already are on this topic. But I guess as far as what do we recommend that subcontractors do?

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33:41
Speaker 3
I mean, I think if the, you know, if the jurisdiction is entitled to send people to the job sites, there's not a whole lot that can be done about that. So I guess my recommendation would be make sure everyone's being paid correctly and then you don't have a problem.

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33:58
Speaker 1
Yeah, I was just going to say I think that the way that they're setting this up is that the only way to do this is to get in compliance. You've got to get in compliance. And, and so if you're not, you're, you are going to be a target, particularly inside Washington, D.C. but definitely, you know, also in Maryland and also in Virginia. But, you know, for sure, you know, if, as if we needed more reasons, as if subcontractors needed more reasons to be afraid of working in D.C. there's another. So. All right, Stacey, I think we have one or two other questions.

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34:39
Speaker 2
Josh was curious. How are contractors vetting the labor brokers?

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34:47
Speaker 1
That's a good question.

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34:48
Speaker 3
So I don't know. Yeah, I don't know what, I don't know personally what, you know, many different subcontractors are doing. I know, you know, some of the ones that we've talked to, they sort of have trusted brokers that they work with that they've, you know, put them through training and sat down and said, you know, this is what we are going to require of you know, if you want to work with us. And so it's really kind of establishing that relationship and having that education and those discussions. I've also heard this is one thing that Gilbane, I believe is doing is they have expanded their pre qualification process beyond just their first tier subcontractors. They've started pre qualifying the next tier down.

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35:34
Speaker 3
So I'm not sure what that process looks like, but that is something that another general contractor is doing as far as looking at this issue.

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35:44
Speaker 1
I love that. That's great. That's. And that's a really interesting thought that the general contractor is taking on that extra step. I wonder what that looks like in terms of actual overhead and enforcement and how plausible that's going to be to, you know, how sustainable that'll be at scale and whether, you know, I'm sure Davis is looking at it saying how's it going? Should we be doing something similar?

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36:10
Speaker 1
But you know, I think frankly in the short term, while the violations would, I mean again, this is anecdotal, I don't have hard stats, but I just know, I just know that it's a staggering number of companies that are currently out of compliance on this that I would say if, you know, in the short term it probably does pay to be hyperventilated, vigilant and just, you know, really not in a putative way, but really in kind of like. And I know this is a part of what you talked about as well, right? It's about helping your subcontractors to figure this out. And it's about the subcontractors helping their labor subcontractors to figure this out. And it's about everybody kind of pulling together and doing it, you know, in lock step.

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37:01
Speaker 1
Ike said something in response which I thought he said, you know, but the employer spends a ton of money defending him or herself. Right? So he said, good answer. But, but the, you know, back to this thought of the AG having 40 Spanish speaking people out there trying to drum up lawsuits. I'll just say that one of the things that's on my mind is if I were a labor subcontractor or if I were a subcontractor, prime sub, I might, you know, proactively brand on and message on how we are solving this problem, you know, kind of, you know, putting it out there in the public sphere, being really proactive about like branding and marketing my business on. We are, you know, super proactive about making sure that our subcontractors are this and that, our employees are that and we never, you know, misclassify.

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37:51
Speaker 1
It's not going to be, it's not going to be like a, you know, a defense against all. But I think, you know, if you can brand your company in a way where the AG's office or whoever. Right. Looks at you as one of the good guys, you maybe do deflect some of the pressure, you know, that way. So anyway, good guys, I think we're, we're over on time and I, I knew that would happen, but you know, fascinating conversation. Stacy, do you have any other follow on questions?

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38:26
Speaker 2
I don't know if we could sneak this in real quick, but just to follow up with Joshua, he was also curious what happens if one of the non compliant employees gets injured on the job?

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38:38
Speaker 3
Well, I'm well in my wheelhouse there. I mean, I would think workers compensation would kick in, but I'm not sure how that works. If you've got somebody misclassified, if that's another hole there, I, I don't know the answer to that question.

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38:58
Speaker 1
We had a guest, we had a guest last year, Oscar Garcia. Who is he? He owns a consulting firm that really helps companies to, helps contractors to make it a more Latin American friendly environment. You know, inside the, in one of the things that he said without hesitation, he said, you know, a lot of it gets swept under the rug. A lot of it is, it's, you know, vastly underreported the number of incidents that happen to undocumented misclassified workers. And it's a part of what, you know, people need to be vigilant about and look out for, is that, you know, the safety of that community is really tied into all of this. Right.

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39:51
Speaker 1
So, so without question, Josh, you know, solving this problem, while it's a huge pain in the butt and a very legitimate one for the people who are trying to say, like, man, this totally changes my business model and I don't know how to navigate this. I think short term pain, long term, it's going to be a big win for the industry. I really do think that through this process we become a more humane, better place to be for employees, regardless of their background. And I'm again, you know, kudos to Davis, kudos to you, Hillary, for, you know, fearlessly participating in the public square here and trying to, you know, help people through what is a very painful process.

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40:45
Speaker 1
But, but you know, hopefully one that creates positive change in the industry, which is, you know, Again, I don't know if that's the motivation from the AG's office. I think the motivation might be tax revenue. But there's a, but there's a. You know, the side benefit is maybe it becomes, like I say, a happier, more humane place for people to work.

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41:06
Speaker 3
So, yeah, certainly the hope.

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41:09
Speaker 1
All right, awesome. Hillary, any final words before we part?

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41:14
Speaker 3
I don't think so. Thank you all for having me and giving us a platform to continue the conversation. You know, as you said, Chad, I think it's a really important issue. And Davis is certainly not perfect. You know, we haven't, we don't have the silver bullet. We're, you know, we're still trying to figure it out too, but you know that we appreciate the opportunity to continue to spread the message and hope that catches on.

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41:36
Speaker 1
So, yeah, keep making those honest, good faith efforts. That's, that's all anybody can do. That's all anybody can do. So good for you. Thank you so much. And, and you do officially win the award for the most beautiful actual background. Well done. Here, here. Oh, Hillary, if people wanted to reach out to you, how would be the best way to do it?

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41:59
Speaker 3
Sure, It's H G H E N t@davis construction.com.

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42:06
Speaker 1
All right, great. H LinkedIn. Yeah, or on LinkedIn. Okay, good. So either place@davis construction.com or on LinkedIn. So h gent@davisconstruction.com or LinkedIn. Thank you, Hillary. We appreciate you. We'll see you soon, I'm sure.

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42:23
Speaker 2
All right.

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42:24
Speaker 1
All right, Stacy, let's talk a little bit about next week and what we have coming up. Before we do, I wondered if you have a steel toe Communication marketing tip of the week.

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42:37
Speaker 2
Sure. I wanted to talk a little bit about repurposing content. I get a lot of questions. People run out of ideas on what to post about. Think about, you know, any webinars that you did throughout the year. That's a great place to find little nuggets of information or go to your YouTube channel, really review any of your analytics to see what key points people are, you know, looking at your videos and cut them down into little clips. Same with any other channels that you're working on. Review your content every three to six months and repurpose, repost things that people already find popular. Just, you know, work smarter.

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43:24
Speaker 1
Stacy, that tip is so smart, but it also stresses me out and makes me realize that I probably need to hire you. You okay? It's like I don't have the time to do that, but it's great. And I. I totally agree. So next week we have Greg Stone, who is another attorney, actually, funny enough, not planned, but Greg's actually going to be on talking about something that I didn't know was even a thing, which is intellectual property. Right. Intellectual property in the construction industry. And. And, you know, there are so many things that we haven't even, you know, considered as contractors and, you know, that are means and methods and specific strategies that we've been using to create efficiencies and things like that in our business.

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44:09
Speaker 1
Some of that stuff actually might be protectable intellectual property information that you can keep employees from leaving and taking and bringing to your competitor and things along those lines. And yet it is one of the spaces where the fewest intellectual property support is in place. So Greg is going to talk about some of the things that you can legitimately do. So first off, how to identify what intellectual property you have, and then second, what you can legitimately do to protect that intellectual property as a construction business. It should be, at the very least, a conversation where you learn a ton and I'm sure, very interesting as. I'm sorry, entertaining as well, because Greg is hysterical and he's a really great guy. So I look forward to. To that discussion. Stacey, anything else before we wrap up?

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45:02
Speaker 2
Yes, I did want to announce that we got Amy Marks, the queen of prefab, to our show, and she'll be joining us October 25th. So excited for that.

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45:13
Speaker 1
That is going to be awesome. Yeah, that was like. It was like a negotiation between our people and her people. It was.

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45:20
Speaker 2
They all just went to the big auto desk conference, which I heard was great.

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45:25
Speaker 1
So that. That will be fantastic. So that's in a couple of weeks, so keep tuning in, folks. Be live, check us out. If you can't check us out live, catch us wherever you catch your podcast. And you know what, do us a favor and tell somebody this week about the morning huddle. Help to spread the word and, you know, help us to. To try to create this, you know, maintain this platform where. Where people can talk about positive change that they're bringing to the industry. We'd really appreciate it.

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45:54
Speaker 2
Thank you.

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45:55
Speaker 1
See you.

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45:56
Speaker 3
Have a great morning.

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45:57
Speaker 2
See you.

‍

Demand for qualified workers in the construction industry is high, and supply is low. That's no surprise, but rather than accepting such a disappointing reality, people like Jennifer Sproul are working hard to solve the problem.

She is the President of the Maryland Center for Construction Education and Innovation, whose mission is to develop, promote, and connect career opportunities in the built environment.

Join us as we talk about the workforce development puzzle and the proactive steps we can take to solve it for the industry.