Hiring in a hot economy is the key to growth this year.
Any edge you can get, in both recruiting and retaining employees, is worth exploring.
To this end, I am currently reading about Netflix’s explosive success in Reed Hasting’s new book, No Rules Rules. It outlines Netflix’s intentional approach to building up their company talent density and innovative culture.
You might think that Netflix’s success came easy (i.e. right place at the right time) but the book outlines all the gutsy decisions they made along the way to build up their talent advantage and their high-empowerment culture.
One of their most gutsy decisions is to pay at the top of the market.
They decided that no matter what, they would not lose a great employee due to being wooed away for more money. When a valued employee can prove there is a better offer out there e.g. from Google or Facebook, then Netflix will match it. (Sounds crazy, right?)
And it’s up to all the senior managers to research ‘the market’ pay rates for all their managers, so that they can keep on top of their worth.
Note: Netflix only does this for non-operational roles, i.e. roles where the managers creatively can have multi-fold impact on revenues, profits and competitive growth of the business.
So how does this apply to the landscape industry?
First, consider the following:
The boom will be bigger.
We are headed to new heights.
This means you will experience inflation as demand outstrips supply. You have already experienced this in direct costs (labor, subs and materials), and it will likely continue. Price this into your current services!
Labor rates will continue to go up.
With the economy going up, labor rates will continue to rise, which means you have to focus even more on hiring and retaining great employees.
I recently took a poll on LinkedIn, and 90% of respondents reported that they are paying their employees above market rates. I wonder who they are comparing themselves to? Many owners I talk to are not aware of the market rate beyond that of foremen and supervisors.
Hiring in this economy.
Based on everything I have laid out, you have three choices:
- Hire below market, keep wages lagging, and put up with terrible and uneven performance.
- Hire at market, but make sure your culture outpaces the market.
- Get educated and hire above market, while also making sure your culture and your critical perks are more attractive than your competitors.
The third choice is going to make you the most competitive.
Paying more doesn’t guarantee success.
The key is to expect more from your employees when you pay more.
And that’s a challenge in today’s market. Raising the bar in your organization means not putting up with mediocrity, not turning a blind eye to bad behavior, and not enabling rule breakers.
This is especially challenging in an employee’s market where you feel forced to put up with poor behavior. It’s the old chicken and egg challenge, however: if you are too chicken to hold people accountable, you will end up holding the egg.
- Don’t get behind the eight ball as inflation hits our industry.
- Be willing to look for people in the higher end of the market, including outside the green industry.
- Be able to hold all your people accountable to operating at the same, higher level.
No matter how you pay, it’s a stronger culture with higher standards that will separate you from the pack.
Good luck, hold on, and enjoy the ride.