Business Building: What Happens When Owners Won’t Let Go?

Words: George Hedley

In today's construction industry, there is a significant talent shortage, with less than 3% unemployment for critical roles such as project managers, estimators, and field supervisors. To retain top talent in this competitive market, business owners must prioritize their people and be willing to relinquish some control. Let's examine some of the primary reasons why great employees leave good companies.

Owners stuck in the past often resist paying market rates and providing competitive benefits, limiting their ability to hire and retain the best talent. They complain about the "ridiculous" compensation required in today's market, but failing to adapt leads to a downward spiral.

Companies that don't offer above-market pay, results-based incentives, generous profit sharing, and investments in ongoing training and development will continue to lose their most valuable players. Top performers will compare their compensation and growth opportunities to what's available elsewhere and jump ship for better offers.

Micromanagement and lack of autonomy are other key factors. High performers need the power to make decisions, access to cutting-edge tools and technology, adequate support staff, and a positive work environment. They don't want to be bogged down with administrative tasks or treated disrespectfully. Owners must allow them to take on leadership roles, run their own projects, and handle increased responsibilities.

Arnie Young, owner of Sure Contractors, faced these challenges. A survey of his 90 employees revealed that he was the biggest obstacle to accountability. He underpaid, micromanaged, disrespected employees, and refused to delegate. Consequently, he struggled to build a strong management team and increase profits.

Owners should focus on their employees' future aspirations rather than solely on current company problems. Every employee has personal and professional goals, and employers should work with them to achieve those objectives. Most project managers, estimators, and supervisors don't want to remain in the same role for decades. They seek opportunities for advancement, increased responsibility, and better compensation. Companies should have career plans in place to help key people grow and stay engaged.

I learned this lesson when I was running my own construction company. A young concrete foreman repeatedly asked for more responsibility and the chance to run bigger jobs, but I pigeonholed him as a "small job guy." He eventually resigned and started his own company, which grew to match mine within four years. The moral is: don't hold people back by refusing to let go.

As a contractor business coach, I've seen many clients struggle to reach their goals due to an unwillingness to relinquish control. Here are some examples:

● David Robinson is the owner of XL Earthworks, a $15 million underground contractor. After 40 years in the business, he was 65 years old, ready to slow down, but still didn't have a strong management team in place. Why? He continued to save money by being the project manager on several jobs himself, did lots of estimating, and wouldn't pay enough to attract another senior project manager. In other words, he wouldn't let go of his money to get the right players in place so he could grow his business, assign all field operations to a senior manager, focus on building strong customer relationships, and take more time off. He also had a hard time attracting the best available people to work for his company as the future was unclear, there was no formal profit-sharing plan in place for the management team, and commitment to personal development and advancement for managers was an afterthought.

● Billy Packer, the owner of Commercial Drywall, had his two sons working as managers in the "family" business since they got out of high school. He had promised his boys stock ownership for years like a carrot but still hadn't put a succession or stock transfer plan in place as he approached 72 years old. He told me he didn't want to give up control too early. He also significantly underpaid his boys, didn't train them how to price or negotiate work, didn't teach them to manage the books or review the P & L, and they never received any extra pay for producing profitable results. In other words, he never let go of the purse strings or cost management. As a result, the boys never had any motivation or reason to improve or do better. They became complacent, waiting for their father's promises to become real. Unfortunately, the owner died suddenly, leaving the company to his wife, who needed the cash to live her life. The boys still waited and worked at a less-than-profitable pace, hoping for some of the diminishing cash to come their way. The Dad's stubborn reluctance to let go of control or ownership caused years of stress and disappointment for the family while the business continually went downhill.

● Sam and Mary Pace, owners of Fast-Paced General Contractor, called me for help. After meeting several times, we dug in and discovered the basic issues that needed fixing. Sam was having employee problems such as high employee turnover, supervisors not doing a professional job, profit margins always fading on jobs, and low morale throughout the company. The company had a great reputation but couldn't keep employees happy. After my investigation, many issues were discovered. Mary ran the office like a tyrant and wouldn't trust people to handle any contract issues, submittals, change order pricing, billing, invoice approvals, or financial matters. Sam acted as senior project manager, ran the field and ordered all the materials, scheduled every crew worker, managed the truck and equipment mobilization, and negotiated every contract and change order. In other words, the two owners wouldn't let their project managers or field supervisors be in charge of their own projects. Over time, this caused mistrust and hostility among the employees, and several key people left. They were replaced, and the new team members soon left again. The solution was not the people. It was to change how the owners ran their company and treated employees.

● Ken Booker, owner of Control Electric, a $25 million electrical contractor, called looking for a simple bonus plan to entice managers and general superintendents to reward them for a job well done. In other words, he was looking for a silver bullet that would fix the deep challenges that existed within his company. One issue was that the owner never shared the books, job costs, profits, or margins with anyone except the controller. The owner insisted he sign every contract and purchase order. He dictated who worked on what jobs and made every hiring and firing decision. His control freak and lack of trust caused many problems within his company, including backstabbing, infighting, lack of motivation to improve profits, crews working slower than expected, and people continually bad-mouthing the owner behind his back. In fact, the owner was the only person who didn't understand the real problem. As a result, jobs rarely came in on budget, change orders were completed without authorization, progress payment requests went out late, customers weren't happy with the performance, and productivity was too low. The real issue was that employees didn't want to work to their ultimate potential or ability as a result of the owner's powerful controlling management style. He also didn't promote a positive teamwork attitude, and most people really didn't care about achieving results for him. Now what? A bonus plan wouldn't even begin to touch the real problem at Control Electric: the owner won't let go of control.

The best employees want responsibility, trust, and respect. Micromanagement, lack of growth opportunities, and below-market compensation will drive them away. Owners must be willing to change their behaviors, invest in their human capital, and create an environment where top talent can thrive. The real question is: "Would you want to work for you?"

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