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Manpower Mix
Whenever a business is growing, one of the biggest issues that surfaces is adding manpower to the mix. At our company, we regularly hear from company owners who say, "I can't handle it all myself. I need to add people but who do I hire and in what position within the company?" While there are as almost many different organizational structures as there are remodeling companies out there, I'll include examples of the "typical" structures of successful remodeling.
There are two main criteria for determining the optimum organization for you:
Size of the company's typical job. Rule of thumb: the larger the job, the more you can do with less organizationally. In other words, you'll need significantly fewer employees in every department if you company's typical, meat-and-potatoes job averages $100,000+. Now there are two issues to consider here. What is average job? Theoretically, you should be able to take your annual volume and divide it by the number of jobs you've done to determine the average job size. But in some companies, the jobs could range from very large to very small. So a better way to look at this would be to ask, what is the company's typical job? With what type of project does the company excel? For what kind of job is the company really set up to handle efficiently?
Annual Volume. What volume did the company produce last year? What volume do you plan on producing in the coming year?
While organizational charts seem confining to some, it's really a wonderfully simple, graphic method of showing what the company looks like - who the employees are, what relationship they have to one another and the owner - and what the company could look like with the addition of new employees. It's a great tool to help you visualize how a new employee would fit in and what responsibilities he/she would have.
There are three main departments within every remodeling company - sales, production and administration. Your decisions on volume and job size will affect each of these departments. Your ultimate goal is to have each department working as efficiently as possible with each person in each department working at maximum production.
Let's look at two different companies at two different volume levels -- $1,000,000 and $3,000,000.
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Company A has an average job size of $25,000.
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Company B has an average job size of $100,000.
Production Department
Having the right manpower in place is critical if the company is
to meet its production goals. The key players are the Production
Manager and the Carpenters. If all the stars align -- the projects
are in close proximity, are of medium complexity and are produced
by carpenters who act as true Lead Carpenters - a good production
manager should be able to handle $1,000,000 in $25,000 jobs and
up to $1,500,000 in $100,000 jobs.
In the Lead Carpenter approach, supervisory responsibilities are pushed down to the job site through the lead carpenters. Leads are typically responsible for material ordering, job schedule, subcontractor coordination, tracking progress and profitability of the job. This system frees the production manager's time allowing him to focus on other big picture issues and handle more volume.
In this ideal world, a lead carpenter could handle up to $300,000 in annual volume according to Remodeling magazine's benchmarks. However, the type of job is critical. For example, it's possible that a lead handling very high end projects such as elaborate kitchens with lots of detail, Smallbone cabinetry and granite counter tops could actually handle more volume than this. One remodeling company doing this high-end work produces $3,000,000 with only five leads. That's $600,000 annually per lead. Another lead producing screened porches or basic additions could only produce a fraction of that amount.
Sales
While there are a variety of structures within a sales department,
the most typical is to have a salesperson be responsible for sales,
design and estimating. With these responsibilities, a good salesperson
should sell $600,000 to $1,000,000 in full line work and $300,000
in specialty work (windows, doors, siding.) Again, you can see the
dramatic affect that the size of the jobs has on the end result.
Administration
At $1,000,000 in volume, a full time office manager is critical.
At $3,000,000 more support is needed and usually comes in the form
of a full time receptionist or administrative assistant.
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Official Charity of 2008
Remodelers Advantage Inc.
535 Main Street, Suite 211
Laurel, MD 20707
ofc: 301-490-5620
fax: 301-498-6869
Info@RemodelersAdvantage.com