Shortage of Skilled Workers

This column was originally published in the November/December 2017 issue of C&R. Access the original article and the issue full in the C&R Magazine Archive.

Although we are at the cusp of many technological revolutions in insurance and, as a result, restoration, I think that the biggest challenge in 2018 will be an old-fashioned problem. According to the Bureau of Labor Statistics, the August unemployment rate is 4.2 percent. Many economists consider 3.5 percent to be full employment, and for that reason statistically zero. Twenty states have rates below 4 percent, with five below 3 percent. It is difficult to find people in general to fill roles, and those with skills in restoration, restoration sales and skilled construction trades are even more difficult to find.

Nearly every restoration company with which I have talked in the past year has had challenges in locating people to fill positions in their company. The cost for skilled management staff is escalating quickly and nearly exceeds the billable value for those positions. Subcontractors have their choice of projects and therefore are raising prices, which cuts directly into profit margins.

I am having work completed at my home right now, and it is a challenge to find people to do the work, not to mention the fact that costs are increasing quickly. Many of the contractors I am calling are booked out for months, while others will not even look at a project unless it is of substantial size.

The staffing shortages will cause labor prices to increase for management and frontline staff. In theory, the estimating software pricing databases should allow the prices for restoration services to increase. But, in reality, the pricing databases often have difficulties adjusting to market prices. That may be due to lack of contractor pricing feedback or other issues. The purpose of this is not to uncover the challenges with generating industry market prices, but rather to identify upcoming industry trends.

The other reality is that the pricing databases will likely not reflect increases in management costs because that is a part of the company overhead, which is covered by the 10 percent overhead reimbursement — making this entire pricing farce even more complicated. Maybe the increased labor costs will require the industry 10 and 10 problem to finally be addressed ― but that will not be a 2018 issue, as much as I would like this to happen.

My 2018 top recommendation for restoration professionals is to look at internal processes that address how to attract, properly onboard and retain employees. If these systems are weak in your business, then the management staff will spend much of their discretionary time dealing with issues that revolve around employment, employee engagement and chasing compensation challenges. Maintaining margins with untrained, inexperienced or disengaged staff will be exceptionally challenging.
 

Phil Rosebrook Jr., CR, is a partner in Business Mentors and Restoration Training Online. He specializes in helping restoration companies create and implement a compelling vision for their business. He can be reached at Phillip@businessmentors.net.