Trend Tracker Dec/Feb 2018July 12th, 2021 by Nathan Hobbs
Low- and No-Cost Benefits
They Can Deliver a Big Payback
By Michael Collins
While addressing the current labor shortage, door and window manufacturers are well-served by increasing worker satisfaction and by making job openings more attractive to candidates. This offers manufacturers the dual benefits of eliminating employee departures and increasing the volume and quality of new hires. While most coverage of the labor shortage has centered on what’s happening to salaries, new research asserts that bigger paychecks aren’t the only—or the best—way to attract and keep workers.
Study results published in October by the National Bureau of Economic Research (NBER) assert that, “individuals are willing to forego substantial earnings for better working conditions,” including flexible scheduling, paid time off, less physically demanding work, and even the opportunity to make an impact on society. For instance, the authors suggest, workers will forego 6.6 percent of their pay, if they can go from zero to 10 days personal time off each year.
“Considering all amenities, we find that a switch from the worst job (having none of the amenities included in our experiments) to the best job (having the best set) is equivalent to a 56 percent wage increase, suggesting that non-wage characteristics play a central role in job choice and compensation,” the study’s authors wrote. The findings come out of a survey of 18,150 people. Numbers on the dollar value of those non-wage benefits were drawn from a subgroup of 1,815 American workers.
The study also explores the debate over how to reconcile the long-term trend for promoting teams and creating shared workspaces, with the more recent embrace of performance bonuses. “We estimate that working by oneself is equivalent to an 8.4 per-cent wage increase relative to working on a team and being evaluated based on the performance of a team,” the authors wrote. “However, we find that most of the value of working by oneself arises from a desire to be evaluated based on one’s own performance, rather than the team’s performance.”
The NBER study doesn’t break down results by industry, but a recent survey by Freightwaves of long-haul trucking companies backs up the value of performance-based programs. Respondents rated those programs as more effective than signing bonuses, annual bonuses, on-the-spot payments and employee recognition programs. With many door and window manufacturers maintaining their own delivery fleets, such incentive programs could provide a boost for hiring among logistical and shipping positions as well.
Among building products distributors, both Builders FirstSource and BMC Stock Holdings have begun performance-based pay programs. BMC’s plan focuses on improved safety, as well as improving deliveries, which company officials report has increased driver productivity by 10 percent or more in most markets.
There’s little debate that giving bonuses for safety improvements more than pays for itself in reduced costs elsewhere. The key takeaway in all of this is that door and window manufacturers must ask themselves what low- and no-cost items they can offer that workers and prospective hires will value.
Michael Collins is an investment banker and a partner in Building Industry Advisors. He specializes in mergers and acquisitions in the door and window industry.
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