According to a recent joint survey by the Associated General Contractors of America and Sage Construction and Real Estate, 75 percent of construction firms plan to expand their payrolls in 2018 as contractors are optimistic that economic conditions will remain strong as tax rates and regulatory burdens fall. However, recruiting and retaining skilled tradespeople are considered by many in the industry as an ongoing challenge. The survey also noted that even as firms expand headcount, an overwhelming majority, 82 percent, of firms expect it will either become harder, or remain difficult to recruit and hire qualified workers in 2018, up from 76 percent last year. In addition, 78 percent of firms report they currently are having a hard time finding qualified workers to hire, up from 73 percent at the start of last year.
Our industry reported similar challenges during the October 2017 NWFA Industry Outlook survey with 56 percent of respondents reporting problems finding skilled labor. An aging workforce, more high school graduates choosing to pursue a college degree versus entering the trades, as well as the physical nature of the work involved in both the manufacturing and installation of wood flooring were cited as some of the top reasons our industry finds recruitment and retention difficult.
Companies need to expand and sustain in the face of a rapidly changing economy and skilled, experienced workers are core to this growth. Fortunately, a little creativity and time investment can give you the competitive edge over other employers who are vying for the top-quality talent you need. Appalachian Engineered Flooring, based in North Troy, Vermont, learned this firsthand and has made a remarkable turnaround in employee retention and morale resulting in increased productivity.
A challenging startup
Appalachian Engineered Flooring was founded in the year 2000 by Jean Leduc as a solid hardwood flooring manufacturer in Cowansville, Quebec. As the popularity of engineered flooring grew, Appalachian began purchasing engineered flooring from other manufacturers to meet its customers’ needs. The company decided to invest in the resources needed to produce its own engineered flooring and purchased the building in North Troy. By 2012, the plant was in full production. However, by early 2014, leadership acknowledged that the engineered plant was facing significant obstacles. Personnel turnover was 100 percent per year, manufacturing was inconsistent, and there was excessively high inventory coupled with long lead times.
In the summer of 2014, Jennifer Fraser was appointed General Manager. Fraser is a sixth-generation family member in the wood industry, with a degree in forest engineering and 18-plus years in the flooring industry. In her previous role with Appalachian, she had managed the company’s engineered flooring purchasing program.
Establishing a culture
While the company faced multiple challenges, Fraser knew that the employment issues had to be addressed first. “Turnover was anywhere from one to three people a month, and absenteeism was high,” said Fraser. “It was incredibly difficult to retain the right people; we were losing talented people with potential for future leadership roles who would simply get frustrated and leave.”
The process to transform the organization and genuinely define Appalachian Engineered Flooring as a company began with establishing a strong internal leadership team. The team also hired consultant Dr. Jeff Howe, of Dovetail Partners, Inc. “We needed to understand what changes we needed to make; we knew that we could no longer rely on ‘we’ve always done it this way,’” said Fraser.
The team started by establishing a set of core values including trust, respect, openness, honesty, and good communication. The company vision, “We seek to create a safe, respectful team environment that values the importance of each individual in order to manufacture cost-competitive engineered wood flooring based on our understanding of the needs of our clients,” dovetailed with those values, giving Appalachian a much-needed identity.
“Our consultant, Jeff Howe, was a major catalyst in moving us forward. He came once a month and worked with us in developing a culture where every decision we make is based on our core values,” said Fraser.
Another critical step in the overall transformation involved shutting down the entire plant for a full day to allow all employees to attend a workshop centered on improving communication in the workplace. During the workshop, employees and managers studied different styles of communication and were taught skills in communication, professionalism, active listening, and conflict resolution. While it is a costly exercise to shut down a plant for a whole day, Fraser said the long-term benefits far outweighed any costs. “This workshop empowered our workers to become manufacturing professionals with an active, integral role in the success and future of the company,” said Fraser.
The company also transformed its hiring practices to include behavioral interviewing. Every candidate is now evaluated to ensure that he or she will fit well within the new culture. These changes resulted in dramatic improvements in employee morale, attendance, and sense of commitment to the team. Employee turnover stabilized within four to six months.
“Once the culture and the people started to stabilize, it was really neat. We were keeping our good people, and if people did leave, they were people that didn’t fit the culture anyway,” said Fraser. “We are also attracting the full age range of employees.”
Investing in performance
Improving productivity and performance came through the implementation of the Wood Career Alliance’s (WCA) Skill Standards. Appalachian Engineered Flooring has a 90-page skills standards book that covers more than 15 skill sets. Each employee has a skills passport that tracks his or her proficiency advances in each skill. These standards serve as a structured tool for training and cross-training employees, and also help in setting employee goals and as a basis for performance reviews.
The passport is a portable credential that employees can take with them if they move on to another company, and their skills credentials are also stored in the WCA database. “The passport program has motivated our people to see woodworking as a career instead of just a job,” Fraser said. “It is exciting to see them want to grow their skills. They know their passports are transferable; if they do grow beyond us and choose to move on to another company, they don’t have to start over to prove themselves. Fortunately for us, they are happy to be here.”
The company has also implemented facets of lean manufacturing. Similar to the communication workshop, the team shut down the entire plant for a full day to allow employees to participate in lean training. Dashboards of goals and key performance indicators were developed by the employees and posted in the plant. In November 2014, Appalachian began receiving formal coaching on lean manufacturing management through tools from the Vermont Manufacturing Extension Center and the Northern Forest Center. As a result of its lean program, the company has been able to focus on reducing those facets of production that do not add value to the customer, such as extra piece movement/waiting, over-processing, over-production, and defects while significantly reducing lead time.
Learning from within
Once workers are engaged and passionate, they can be even further motivated by technological, process, and management changes, especially if they are involved in the development and implementation of those changes. They also need to see how those changes will benefit both the company and themselves.
An idea board was set up in the break room where employees, at any level, could post suggestions for improvement in the areas of team, safety, quality, delivery, and cost – without fear of criticism. To date, there have been hundreds of suggestions that have been moved over to the completed column and many in line to be addressed.
Employees are also involved in every decision-making process. “We have a very flat organization structure. We know that good ideas don’t have to come from the top down, they can come from the floor up. Say we do a glue line modification. The operator is going to be involved in the decision making since he knows what he needs to make that line operate. It’s not a bunch of engineers in an office picking what’s going to be done. He’s going to have full input from the beginning to the end. That way, when the change comes, the employee is much more accepting,” said Fraser.
She continued, “It’s vital that employees are included because they are the ones doing the job every day. Change is hard, and if you don’t include them in changes when you’re going through rapid growth, it becomes a stressful workplace.”
The future looks bright
Within 18 months of the start of these turnaround efforts, Appalachian Engineered celebrated its first 365-day period without a safety incident, versus happening every three to four months typically. The team is currently on their third cycle of no loss time (376, 304, and 531 days) and has achieved a culture of safety. Also during those 18 months, inventory was reduced by more than 50 percent within 10 months, and production increased 29 percent with significant improvement in value-added activities with no capital investments. Sales volumes initially increased at 24 percent per month with lead times dropping from three weeks to four days. Claims have been reduced to 0.3 percent of sales dollars ($3,000 per $1 million in sales).
Current production has seen a 421 percent increase with 94 percent of the products delivered within four days to the client. The customer base has expanded dramatically, and investments are being made back into the company and its employees. The company has also been able to reinvest more than $1 million each year with no loans, and salaries have been increased for all employees.
Fraser is excited about what lies ahead. “We’re gearing up for growth this next year, it’s exciting what’s going on with our customers.”
She closed with solid advice for our industry. “I realize the statistics are showing there is a labor shortage, and everybody is saying that they can’t keep good people,” she explains. “But when you dive deeper into the stats, seven to 10 employees report that they are actively disengaged from their workplace. You can own that. Learn from your experiences, be open to experimenting. It goes against statistics for this mill to be able to keep finding and keeping these great people. But we’re able to, and I’ve got the best crew I could ever want.”
Stacy Brown is the Editor/Publisher of Hardwood Floors magazine, the official magazine of the National Wood Flooring Association. She can be reached at stacy.brown@nwfa.org.