My husband, Paul, and I began Winans Construction 25 years
ago. We've done new construction, historic renovation, and a
small amount of commercial work, but the bulk of our projects
are in residential remodeling. Last year we did $2.3 million
worth of business.
We've had employees from the very beginning, anywhere between
1 and 15 at any given time. For the past ten years we've
averaged about 8 employees. We started providing benefits early
on. In my experience, you can't hire and retain quality
employees without offering benefits. Benefits allow us to
attract professionally oriented employees whose performance
enhances our relationships with clients and reflects well on
Over the years, we've done a lot of research and have gained a
clear idea of the type and level of benefits offered by most
remodeling contractors. This article is about some of the
things we have discovered and what you might want to consider
for your business. It takes time, effort, and money to set up a
benefits program. A new company might not be able to afford to
offer benefits, but an established firm likely can't afford not
Health care is one of the most important benefits because it's
something that everyone — including you, the business
owner — needs. You may not be able to provide as much
health coverage as you'd like, but anything you can do will be
a help to your employees. The first thing you need to think
about is how much of the employee's premium you can afford to
pay and whether you can cover dependents. You'll also need to
think about dental care, because these days it goes hand in
hand with health care.
Early in our business, our employees were eligible for 100%
coverage for themselves and their families after three months
on the job. But we had to change that policy when the economy
tanked in the early '90s. We grandfathered the coverage for
existing employees and offered different benefits to new hires.
Under the new plan, we picked up the premium for the employee,
but employees had to pay for their families. Some years later
we changed our policy again when a valuable employee got
divorced and suddenly needed health care for his son. Now our
policy is to fully cover the employee after three months and
dependents after three years. Even so, it's not cheap. Right
now, it costs us $2,500 per month for medical benefits for
seven employees, including some dependents.
We also cover dental care premiums. Depending on the insurance
company, this can be part of the medical coverage or a separate
policy. Though we've done it both ways, we recently switched
dental coverage to a separate policy because it was more
flexible and less expensive than getting it with
Write It Down
When we first started our business, we were very
casual with our employees. We took care of the
legal details such as taxes and insurance, but we
had no written employment policies. We found out
the hard way why you should put everything in
writing. We once had a good employee who thought he
heard Paul say we'd give him 10% of the company's
profits at the end of the year. This was news to me
when the employee's wife thanked me for our
generosity at a company event. After I talked with
Paul, it was evident that there had been a huge
misunderstanding. We had to tell the carpenter that
he would not be getting 10% of the profits, but we
did give him a substantial bonus because we felt
bad about the miscommunication. He thought he
should have been given the 10%, however, so he
quit. We lost a good carpenter over a
misunderstanding that wouldn't have happened if
we'd been writing things down.
Create a manual.
Where should you write your policies down? The best
bet is in an employee manual. Everything and
anything that has to do with employees, from hours
worked to types of benefits and when they start, to
job-site rules and safety policies, should be in
your manual. That's the place to go when an
employee asks a policy question. If the answer
isn't there, then formulate a policy, get it out to
your employees in writing, and add it to your
manual. We update ours about every two years, but
we often have new policies or revisions to existing
ones that are distributed to everyone between
revisions. For instance, the tool allowance we
created last year is not in our existing manual,
but all the field employees have the policy and
understand it. Our next version of the manual will
include the new tool allowance policy.
disclaimer. One very important piece of
information to include in your employee manual is a
disclaimer. This should make it clear that the
company has the right to change its policies
whenever it wants, giving you flexibility in the
event of an economic downturn, for example.
Be consistent in
how you offer your benefits. For instance, our paid
holidays policy states that an employee must work a
full day before and a full day after the holiday to
receive the benefit. Notice the word "full." Our
policy used to read that an employee must work the
day before and the day after. The question would
come up, "Can I work a half day on Friday and still
get the paid holiday?" Or, even though I knew the
policy, I would think, "Joe wants to take off early
on Friday, and he's really a great guy, maybe I
should just pay him the holiday anyway." Now if we
receive a request for all or part of a Friday off
before a holiday, I remind the employee that he
won't get paid for the Monday holiday in that case.
I'm not the bad guy — I'm simply reminding
him of the company policy. Writing it down makes it
easy to figure out the right thing to do and
evaluate the benefits we offer on a regular basis.
Is the health care coverage the best we can offer
within our budget? Should we revise our vacation
policy? What about a tool allowance? If you change
any of your benefits, be sure it's written down,
clearly explained, and understood by your
Holidays and Vacation
Employees love paid holidays. After all, what's better than
getting paid to do nothing? This is an inexpensive but
powerfully motivating benefit. Start by deciding how many
holidays you can afford and then decide which ones they'll be.
If you're just putting this in place, start with the biggies:
Fourth of July, Labor Day, Thanksgiving, Christmas, and New
Year's Day. You can add more as it becomes financially
possible. We're up to nine, including a birthday holiday after
a year with the company.
We've found that these days, employees expect to get some paid
vacation. We offer 5 paid days off after one year of
employment, 10 days after four years, and 15 days after ten
years. Employees are not allowed to carry vacation over from
one year to the next. Instead, we pay them for any vacation
days that are left at the end of the year.
In recent years, prospective employees have been asking about
retirement plans during their interviews. If you're making
money and can afford to give a year-end bonus, you could
leverage the value of those dollars by contributing them to a
tax-deferred retirement plan, instead. It's easy to establish
that type of plan because it doesn't require employee
We established our plan in 1987. As officers of the
corporation, Paul and I decide how much to contribute when we
create our annual budget. If we hit our profit targets, we make
that contribution and allocate it to eligible employees on an
across-the-board percentage based on wages. Contributions are
deductible for the company and tax-deferred for employees. The
maximum yearly contribution of an employer was recently raised
by the federal government to 25% of an eligible employee's
wages. We've been averaging a contribution of about 10% over
the past ten years.
Last year we created a tool allowance for field employees. The
company's tools were aging and were not being cared for as well
as one might take care of one's own tools. We asked all our
field employees for their input and came up with a new system.
Our policy now is that after three months on the job,
carpenters accrue $40 per month to spend on tools. They can
save the allowance for large purchases or spend it in small
increments along the way. Employees need the approval of the
production manager for purchases over $40. This ensures that
the money is spent on tools that will benefit the company and
are appropriate to the skill level of the carpenter who's
buying them. For example, there's no need for an
apprentice-level carpenter to buy a $300 miter saw when what he
really needs is a pry bar and a recip saw.
To avoid confusion before the new tool
policy could be included in a new version of the employee
manual, the company gave field employees written copies of the
policy as soon as it was in force.
Vehicles and Mileage
High-volume firms sometimes provide company vehicles to select
employees. We're a smaller company and have only a single
company van, but we do reimburse for certain kinds of mileage.
Employees have to cover their own commutes, but we pay 32¢
per mile for trips between jobs or to pick up material.
I've heard of companies that give employees a fixed monthly
truck allowance. In addition to mileage, we pay employees $35
per month to keep magnetic signs with the name of our business
on their trucks. The trucks must be clean and in good
condition, and the drivers must exercise caution and courtesy.
The signs advertise our company while putting extra dollars in
our employees' pockets.
We provide field employees with company shirts that they're
required to wear at work after 90 days of employment.
Carpenters can choose between T-shirts and golf-style shirts
and are given replacements yearly. We also provide hats,
sweatshirts, jackets, and vests. Company clothing helps us
project a professional image and helps employees by reducing
what they have to spend on work clothes.
Our carpenters love going to trade shows. It's easy when the
show is local, but we've also paid to send people to
out-of-town shows such as JLC Live. They're expected to attend
seminars, visit the trade show floor, and report on what they
saw when they return. Going to shows helps employees upgrade
their skills and boosts their level of enthusiasm.
Add It Up
We review each employee's compensation package with that
employee annually. We have a spreadsheet that lists each
benefit — from the obvious, such as wages, health care,
holidays, and vacation, to the more obscure such as training,
clothing, tool allowance, and truck signs. We show the cost of
the benefits on an hourly and annual basis and then the total
hourly and annual compensation, taking all the benefits into
consideration. For instance, someone earning $21 per hour may
have a total compensation package worth $26.92 per hour when
all the benefits are added in.
Employees tend to focus heavily on their
hourly pay. This spreadsheet is used to show them the value of
the additional benefits they receive.
In order to offer benefits to employees, you need to be in
good enough financial shape. Assuming it was profitable, create
a budget based on your performance last year. Then factor in
the cost of the benefits you want to offer. You'll want to earn
at least as much as you did last year, in compensation and net
profit, so take a look at the impact the added benefits will
have on your bottom line. You may need to increase your sales
volume or raise your gross profit percentage in order to make
up the difference. By the way, formulating an annual budget and
measuring your performance against it as the year goes on will
give you a good handle on your finances and the health of your
You may be wondering how we know what other remodeling
companies are offering, or where to get information about
setting up health care and retirement plans. We belong to a
number of professional organizations, including a local
contractors' group called the Splinter Group. In 1988, we
devised a survey on benefits and asked other members to fill it
out. The results gave all of us a picture of what similar
companies were offering. Since then, we've conducted at least
two more surveys and have been asked by others in the group to
participate in more surveys than I can count. The surveys are a
great reality check on whether our pay and benefits are in line
with those of our counterparts.
My number one recommendation is to get involved with a local
chapter of a trade organization such as NARI or NAHB.
Membership has allowed us to network and socialize with other
contractors, and that has helped us become better employers and
business people. Also, consider joining a peer review group
such as Remodelers Advantage Roundtables
(www.remodelersadvantage.com) or Business
Networks (www.businessnetworks.com). This is a
fabulous way to meet contractors from other parts of the
country and see how they do business.
Our relationships with other remodelers have been a great
source of information. We've been able to find out such things
as who colleagues are using for health care coverage or how
they started their 401K programs. In all our years as members
of these groups, we've never encountered anyone who wasn't
willing to help or to provide information. Of course, we've
always been willing to reciprocate by sharing our information.
Our participation in trade organizations has helped us find
business and software consultants, accountants, lawyers, office
help, bookkeepers, and innumerable trade contractors. We've
also gotten benefit program referrals from our accountant,
lawyer, and insurance broker.
In a Nutshell
Benefits are not difficult to put into place. Do a budget
first and keep on top of costs. Be on the lookout for what you
can add and what you might need to change or revise. Write
everything down, review all new policies with your staff as
they are added, and have an escape clause. Remind each employee
annually of what he or she is receiving. Remember, the more you
give, the more you get.
Nina Winans, CR,is co-owner with her husband, Paul, of
Winans Construction, Inc., in Oakland, Calif.