EP213: Building a Strong Team: HR Strategies for Contractors with Traci Austin

Thanks so much for having me, Brad.

absolutely. So we work with blue collar trade organizations, mostly, you know, the mom and pop organizations, folks less than, you know, mostly between 10 and 20 employees and really helping them. optimize their people. And what I mean by that is cutting through the noise around, I don't want to work. We don't have any good workers, you know, those kinds of things to get some motivation and then to start to get some systems in place to consistently have high performance and pull in top people you want working with you.

Yeah, so I'll do both HR and so I grew up in construction. So my dad ran, you know, my dad and my grandpa ran a home building business for several years. And my dad now runs a GC. So grew up in that. But then when I went in, went to school, it was not an HR. My mom was an HR. He like how this works. Right. And so ended up in HR and working for a lot of very small organizations, building HR departments from the ground up. And, you know, a lot of those ended up once I shifted over to consulting, ended up being small businesses. So in nonprofits for 10 years, building HR departments, then shifted to consulting.

Yeah. So here's what I would say is it's first a mindset before it is anything else. You know, it is the mindset of knowing, okay, yes, there are some very compliance related things. I'm not going to bore you with that. But like the second you get somebody on payroll, unfortunately, the law says you need to know all the laws. This is where pull an expert in. You don't want to be bogged down with that. pull an expert in that can say, here's what you need to do right now to have yourself protected. Yet having the mindset around, you know, most of the small businesses we work with, like that first employee is a son, a buddy, an uncle, something like that. Right. And it's shifting the mindset from we are now in an employment relationship versus going drinking beers, which we'll do at nine o 'clock tonight. Right. Like there is a shift that does need to happen in the mindset.

work comp. Don't forget work comp. That's going to get you. Oh,

Yeah, that's such a great question. So we have an audit that we're going to do to begin with that really goes through the checklist of all the laws, because there are different laws that kick into place for different numbers of employees. And you have state laws, you have federal laws, then you have laws based on. the jurisdiction like city of Chicago has very different laws than outside of it. Right. And so we're going to go through a checklist with that. Um, you know, there's a lot of systems and tools that you can use that make this so much easier, especially for really small organizations, um, getting the right payroll system that actually has a lot of this stuff built in that keeps you from paper files. Like let's get away from paper files immediately. Um, you know, I like Gusto as a payroll system, not being paid to say that. Right. But like we use Gusto. I like Gusto as a payroll system for small employers, just because it's super easy. You can do everything electronic. You can do your 1099 contractors on there as well. There are some that are construction specific, but that's, that's a pretty easy one that has a pretty low cost to it that allows you to ensure you've got compliance right away. Yeah.

Yeah. It's really important to have an employee handbook. And I know like I get a lot of eye rolls on that, but you know, you, you do need to have an employee handbook because you need to be able to cover those laws. And guess what? If it's not in writing, it didn't happen. So, you know. We need to make sure we have an offer letter. We need to make sure we have a job description and we need to make sure we have a handbook. So the way I like to describe that is your handbook is one to many. You have one handbook for everyone in your organization with the exception as to if they're in different states. So that's a completely different conversation about where are we working versus where's the home office. And, but bottom line is you need an employee handbook that's specific to your state. You need to have a job description that names the essential duties of the position that they are in. And those essential duties need to pair our way with the requirements. So what are the physical requirements? This is really important, especially for the trades, because you don't want to get slammed with a work comp or something like that, or American Disabilities Act. And by signing that, they're saying, yes, they can do it. And it's a requirement of their job. And so that becomes. really important later on. So handbook, job description, and then that we're doing the offer letter. And the offer letter again is one-to-one.

No, no, no. Because guess what? We, you know. In the U. S., other than in Montana, we have employment at will. At will is a doctrine. It is not a law. And I hope I'm not speaking over the heads of your folks here, right? But this is a really important distinction. You are required to follow the laws. Most folks, especially the small businesses, are like, yeah, but we've got employment at will. I can fire them at any time for any reason, right? With the exception of any law. Therefore, your handbook covers the laws. Your job description allows you to say, hey, you can't lift 50 pounds, you know,75% of the time or more. I can terminate you because this is an essential function of the law. And then you all of a sudden get, you know, a lawsuit later and it says, hey, it's an American Disabilities Act lawsuit. And you say, hey, they don't meet the essential functions. And it says right here in the job description that they sign. And so these are ways to protect yourself from some. you know, very expensive, you know, consequences later.

Right. Now you just named something really important here. So your handbook says what the policy is in your offer letter is any deviation to what's in the handbook policy. That's one off for somebody you're hiring needs to be in that offer letter. Now note, a caveat I'm going to say is be careful here because you want to ensure you're not discriminating against folks where you're only doing it for one class and not another. So that's a different conversation, but it's important to note. So anything like that, you want a name in the offer letter and the offer letter is going to cover some really important things. Where are they working from now? You know, construction trades, it's going to be, you know, it's typically the job site. So you're going to need to write that a little bit differently. But, you know, it's the hourly rage and what it is and benefits and policies all refer to the employee handbook. The reason why you want to refer to the employee handbook or the summary plan description for benefits is you don't want to have to go back and change an offer letter every single time. Right. And for one-offs, like what you just talked about with PTO, you want to name that this is an exception based on hire only for this period of time. And then it reverts back to whatever's in the handbook policy. See what we did there? We pulled it out so that it's just for this, but then it reverts back to the handbook policy after X period of time.

Yeah. So does that PTO, you know, get added in every single pay period that we're going to add in 1.27 hours, right? Or do you get it up front at the beginning of the year? And it matters and it matters based on the state as well. And some states are very, very different than others. I live right on the border of Wisconsin and Illinois. State law is incredibly different between the two states. And so it's really important that you understand what those state laws are, especially if you're working in multiple states.

Right, right. And, you know, so often as I'm explaining to clients or they'll call me after the fact and they just spent four or five grand on a project, you know, to get somebody off the books or to take care of it or unemployment or whatever it is, it's like, well, you know, we could have taken care of this for your entire company for that amount of money. And now they're having to almost pay it twice because now they have to fix it. But yet they still had to pay for the mistake. Yeah. Yeah. You know. On this vein, one thing I want to talk about, because this has happened several times with clients, is defining what your wages are and being really clear around what this is. So often I've had clients say, hey, I'm just going to give them additional compensation because of whatever. But they don't define what it is. There's a distinction between an hourly employee and an employee who you're paying as the same amount every single week. Well, guess what? You know, there's very specific rules around who we can pay hourly and who we can pay based on a salary. And, you know, I've seen so many clients do this incorrectly and have to pay. um, overtime back, and then they audit all your records for three years. So just be really careful of how you are paying folks. If they truly are an hourly employee, which will be most of your, you know, common trades workers, you know, pay them hourly. You have to pay overtime over, you know, those 40 hours in a week.

Right. And here's where most employers get caught. is they get caught in unemployment. And so this is really important, I think, for your folks to hear, is where the investigations start to come in is somebody claims unemployment, you fight it, and then they start asking questions and start bringing up wages. Now, all of a sudden, they're digging into all this, and then it gets elevated. So unemployment... talks with several other agencies. There's about nine different agencies that will end up talking to each other. So that's where most of these things come up is in unemployment. And so I'm just naming that to say, having handbook, job description, and offer letter in place to begin with is going to save you a lot of headache later. Start there.

Right. And it's different for each state. So when you have to pay an employee based on their last day work changes by state. So just know that and where you can find that is if you go on your state website and just look up, you know, last day final paycheck within whatever state, you can find it that way. So I want to make sure you've got some really tangible how to's for folks. If this is like, wait, what do I do? What do I do now? So, but, but that's key is knowing what it is for your state. And it's different for every state. Yeah.

And they have to sign something talking about payroll deduction. So if you are going to deduct, let's say, tools, right? So they have a $200 tool allowance, but you'll allow them to go up to $500. So they need to repay you $300. They need to sign an agreement with you that says, I agree for you to withhold $25 per paycheck for X number of paychecks. And if I am terminated or decide to leave before the final date, I will pay. the x amount within that caveat is every state also says how much you can withhold per paycheck so there's a certain percentage that you can withhold you could never take a whole check the other thing to note is if you have garnishments that start to come in here whether that's child support or tax those garnishments go first there's a very specific order to this again i don't want to go over people's heads I did payroll for several years. I've got those certifications. So with that, make sure you talk to somebody that has that, you know, and using a system like Gusto, they've got folks there that can support it if you're not using a third party for that. But ensure you're getting the advice from somebody that does this every day because it changes significantly.

Yeah. They're not building the relationships. And here's what I mean. When we've got a great relationship with somebody, they're more likely to come talk to us because we've built trust. versus going to the state. And so, you know, the key here I see is when we can build those relationships and keep this stuff in house, you need to be honest, you need to make sure you're doing the right things with it, of course, but build a relationship so that they come to you first, it's going to be much less costly that way. So I'm going to name that first, because we could all do that. And it sounds like, you know, a lot of your folks are still playing with tools, right? They're still out on job sites. Build a relationship with your guys, figure and gals, figure out what is it that they want? What is it that they like? What is most important to them? And start building those in conversations and just name, hey, if there's anything that ever comes up on pay this or that or whatever else, let us know because we want to make sure it's right. And that relationship goes a long way. Aside from that, the next thing really is the pay. And I'm actually having this conversation with several clients right now. Pay has gone up so significantly in the last couple of years. I mean, when you look at the stats on it, it was like 13.2% and I think 22, then it was 6%, then it was another 3%. So like we've had some significant increases and I really want you to think about. Is it going to be more productive for me to retain my current team members or to hire new folks in? And my guess is it's going to be better to retain your current team.

Absolutely. And so take a look at what your pay is right now. Are you paying below market? You're truly at risk of losing some of your key people. because it'll cost you a lot more to hire somebody in, but it's also going to take the time to build the trust again, which is what I just talked about, right? Most folks aren't going to leave just because of pay. Something else has to be wrong for them to start looking. But when we can look at that and say, hey, we know that the market just increased almost 20% over the last five years. You know what? What are we going to do to ensure that our rates are, you know, somewhat match that? And even just a little bit incrementally tells, you know, the folks, we really value you. And here's the other things as well. So that's one to take a look at. And then of course, just make sure you're actually keeping track of the time. This is one that comes up quite significantly is that you're not tracking time. So in ins and outs for lunches is really important. Are you auto deducting lunches or are they actually timing in and out for lunches? There's a lot of great contractor apps out there now that. time is included in it with your billing costs, et cetera. But if you're still doing these things via paper, figure out a way to get an electronic timekeeping system because it'll save you tons of headache later. Because otherwise, if you are ever audited, what ends up happening is they're going, you know, it's a he said, she said between. the interview with the employee and then the interview with you and then they come up with what they believe is the right thing and that can be significant significant dollars and so having correct timekeeping is is really important Hey,

Yeah, for sure. And what you're getting into, I absolutely love is we're getting into culture and what is the culture of the organization that we're creating. And if, if we don't intentionally create our culture, the culture creates itself, you know, and it's like, I've walked into trades clients where, you know, we've got come along as being thrown across, across the yard and I'm going, what's happening here. Right. And that's seen as okay. And there's no repercussions to those individuals. Well, we're creating a culture. that we probably don't want to have. And so really think about what is your culture? Here's how we define culture. We define culture as the behaviors that you allow and don't allow inside your organization. It's a simple definition, right? But what are you allowing? And then you start to consciously create it. Like throwing a come along across the yard is probably not a good culture we want to have, right? So we're going to then not allow that behavior, probably terminate that guy because we've got a long list of things that, that does not align with, but then shifting into what is the behavior we want. And as that leader or that owner, you need to emulate that behavior, right? And so that behavior is also how you're showing up to work and what your behaviors are every day as well. And culture is one that can breed mistrust really, really fast and can breed lots of great trust really fast as well.

Yeah. And I find so often as we don't know how to address it. And so there's a four part kind of. thing that I like to use. And I learned this from my coach and, you know, but it's when you show up five minutes late, I received that as being blown off. And I feel disrespected. Is that what you meant by that? Four parts. When you, I received that as I feel, yes, I know we're talking about feelings, but it is important because it impacts the entire culture. Is that what you mean? That is that what you mean puts the accountability back on them to own their actions, their words, and their behaviors.

I stole it or I borrowed it. It wasn't mine to begin with. Always give credit where it's due, right?

is. It

It's repackaged and resold. Yeah.

Right. My joke when, you know, this was taught to me is, can I have a list of words to use for I receive that as, and I feel, you know, but it's like, you know, I received that as being blown off and I feel disrespected or, you know, I received that as, um, you not caring about the team and I feel, you know, whatever, is that what you mean? And it squarely puts it back on them, but it's not in a confrontational way that we're going to start a fight. And I think so many of these tough conversations. you know, I'll call them tough conversations. Whenever we get into accountability conversations, it's like, well, I don't want to have that conversation because I'm afraid I'm going to piss them off and they do all these things great. And then I'm not going to have them as an employee. If we live out of fear, we're lowering the bar of our expectations and we're telling everyone else that that's okay versus standing into what is it that we want and need as an organization and starting to have the accountability be peer to peer versus just top down.

Yeah, it absolutely has. The other part of this that I see is, you know, look at what your turnover has been. You know, when folks voluntarily leave, why are they leaving? And who's leaving? Are our best performers leaving or our worst performers leaving? If your best performers are leaving, it tells you you have accountability issue and you're not holding your worst performers accountable. And what happens is then when you hire folks in, who's training them? Your worst performers. So now we've just spiraled into the quality of our work. And our expectations are on the floor versus where we want them to be.

Yeah, absolutely. There's two pieces here that I want to talk about. And so. One is triangulation, which we'll talk about in a second. You're going, what is that? And then the second one is, you know, really, I'm a fan of doing surveys on your phone. Have it be a QR code. Everybody has a cell phone. Make them quick and easy. But one of the questions with surveys is, you know, they can be three questions. But, you know, who is the guy that you go to when you have an issue? Who is the guy or the gal that you go to? that you never want to go to because they create a bigger issue for you to solve later. Those two questions tell you who your key people are. And a lot of times they're the really, really quiet ones that don't want to be seen. And they're not going to raise the fuss. They're not going to pat themselves on the back, but they're the ones that behind the scenes are kind of that grease that's keeping everything, everything moving forward. The best way to get to know what's going on is to talk to your people. And sometimes that's formal. Sometimes that's informal. Sometimes that's being out on the tools and just having a conversation again, build the trust, build the trust, build the trust. And sometimes it's just quick surveys that are anonymous that essentially say, Hey, who do you go to and why? And who do you not go to and why? I like that. And by the way, having dropdowns with names versus them having to type it in makes it easier for them to actually answer the thing.

Those questions I just asked, I like to do when we do our annual reviews, when they're doing the self-assessment. But I also like doing some sort of a pulse survey, you know, on at least on a quarterly basis, where you're essentially saying, hey, scale of one to five, how are things going? Scale of one to five, you know, how's the culture? Now, I probably won't use culture with the guys like, hey, how do you feel at work? Scale of one to five, do you want to come here in the morning? Like, you know, like the questions that they can answer that is literally one to five, one to five, one to five. And it will just give you a pulse. Again, make it less than three minutes. Something quick that they can do that gives you a pulse on what's going on. And that allows you to start comparing data over time. Because when we can start comparing data over time and seeing, all right, we've got Tyler, who is kind of the lead here, and we've got Chris, who's the lead here, and we have Javier over here. You know, I'm not asking the name of the guy filling it out. I am asking who their supervisor is. Now we can start to see the distinctions between the supervisors as well.

And in a small environment, if you're less than 15 employees or whatnot, like they don't want to rat each other out. No. Yet at the same time, they don't want to be in a work environment that isn't fun and that they don't want to go to every day. So, I mean, I think that that's another key piece to it. I want to jump back to the triangulation piece as you were talking about the two supervisors, because I don't want to lose this piece because I do think it's really important, is, you know, so often when we've got two employees, two leads, two whatever that aren't getting along, if you're going back and forth between them, you know they're spinning the words and making you the bad guy. Therefore, all three of you get in a room together. Here's what I'm hearing. Help me understand what's happening. And I forced the conversations to happen. And guess what? That little four part thing we just talked about, you know, when you two consistently throw each other under the bus, I received that as a disrespectful to our team. And I feel like you don't want to be here. Is this what you mean? And now you're putting it back on both of them and you're forcing the conversation and then shifting it into some sort of resolution. Right. And. One of the things I love to start with is complaints is we all know how to complain. We know how to complain. And I'll, I'll say, all right, you each get three minutes. I want to hear every single complaint you've got right now. Name it, throw them all out there. All right. Next guy, name them. I want to hear all of them. Is there more? Cause this is your time to name it. So is there more? Let's go. All right. So what do you really want? Cause every complaint is a poorly worded request. So what are the requests that they actually have? When we can get to the request, we've got something we can solve. I can't do much with complaints and it kills our culture. I can do something with requests, but we've got to teach it.

So I know, isn't it fun?

Well, but here's the deal. It's justified from where they're standing. If you're complaining about something, it's justified from where you're standing. It might not be justified from where I'm standing, but from where you're standing, it is a valid complaint. When I can meet you where you're at and say, Brad, I see from where you're standing the complaint that you have 100%. I don't see it that way. Here's how I see it. But I get where you're at. How do we move you to X, Y, or Z? When we can validate where somebody is versus making them wrong immediately, we've got much more room to build that trust and get a win-win outcome.

For sure. There's two assessments that we use to do that. And they're both, you know. One of them is validated for hire and that's the predictive index. So, you know, we use that with almost all of our clients. And then the other one is the five languages of appreciation. So you've probably heard of the five love languages. Like that was a big thing for a while. The five languages of appreciation is really tied into work. And exactly what you were saying is like, Hey, I want the pat on the back. Hey, I want you just to come stand next to me and work with me. And that's how I know you appreciate me. I want you to publicly throw out all over the place, you know, that I'm amazing and I'm great. And, you know, I just need those, you know, words of affirmation quietly because I want quality time with you. And that's how I know you appreciate me. So there's some really low cost assessments that are out there that have been statistically validated to be accurate that can make a huge difference in. employee engagement and and and that's key

Yeah. So predictive index is, it can be used for multiple different things. So it can be used for hiring folks. So essentially saying, Hey, what's the natural behavioral of an individual? And then what is, what does this job need? Right? So we need a craftsman or an artisan. We need somebody that's very process oriented in detail. focused, they are analytical, and they're going to be responsive and work through a team. That's a lot of what our trades folks are, right? Is that they're this artists and craftsmen, you know, very process focused, detail focused, hey. If I have a deadline, it's written in stone and it needs to be perfect, right? Like I'm going to take pride when I walk out of that house of how it looks, right? I'm going to take pride of, you know, the beam that I just placed in my welds. You know, I don't want a bunch of bubble spider welds going to like, I want those things to be beautiful, right? That pride comes from somebody that's more like a craftsman or that has that high attention to detail. Well, if you've got a job. that is not that and you put a minute a sales job you know you've got a sales job that is you're going to lead independently you need to talk all day long when you see something you have to make changes you're not going to have a process to follow you know you you put like your best welder out in a sales job, they're probably not going to be successful. But if you put that salesperson in a welding job with all this detail-oriented work, they're probably not going to be successful. So that's one thing that PI does. Another is, how does our team actually work together to get to the result that we need to get to as a team? Another one is, as a leader, am I leading you the way you need to be led?

Yeah.

Yeah. So to build that strong, engaged team that stays around, figure out what they want. I mean, you know, just ask them. You know, ask them when you're hiring them, ask them as things are going so that we know exactly what that is and continue to check in, you know, hold your individuals accountable. You know, so we talked kind of about this four step thing of, you know, when you, I receive that as I feel, is that what you mean? Like that's one way of holding folks accountable. And what happens is you'll start to see everyone start to step up. And so, you know, we run leadership programs and it's amazing when we bring three or four people in and do the coaching, and I'm sure you do this as well. All of a sudden there's huge shifts in the quality and quantity of work getting done. And sure, you've got by wins on things. Clarity is key. So, you know, if you're asking somebody to do something, tell them by when, otherwise you're setting them up to fail.

Right. Yeah, absolutely. Absolutely. I've had so many consultants that are like, Tracy, this has been absolutely amazing, but I'm ready for the next thing. And I couldn't have done that without XYZ. They got their SHRM certifications. They, you know, learned the leadership skills. They learned accountability at a higher level. They learned some of the sales and they're like, I'm ready to go. I said, great. You know what our specialization is and I know what yours is. It's different. I'd love to be a referral source for you. Yeah.

Fears would just came in, right? Like, you know, why do we do this all the time? Because we're afraid, you know? So sometimes it's just asking yourself the question of why am I doing the right thing? And if the answer is I'm not sure, what am I afraid of? And that question of what am I afraid of will so often give you the answer to what you need to do. And it's typically not going to be the easy action to take.

Yeah. Yeah. Yeah.

Yeah. So I just finished reading 10 times is easier than two times. Dan Sullivan, phenomenal.

And who, not how is another great one. Who do you need to bring in on your team for you to truly be successful? So, you know, those are two good ones. I probably have 20, but we'll leave it there.

Absolutely. Thank you, Brad.