The True Cost of Success

By Genevieve Ventiere, Brokerage Marketing Manager

With the costs of building materials continuing to rise, many businesses within the wood industry are seeing a huge increase in demand for building products. The current boom in building and need for materials has led to huge profits for businesses in the wood industry and building sectors. But, is there a hidden cost to success?

A business is only as good as its employees. Your clients need people to keep machinery running, to keep shelves stocked, and to load, unload and deliver materials. They also need employees to be efficient, reliable, and safety conscious for the business to run smoothly, to keep customers satisfied, and to keep up with an ongoing increase in demand.

Producers need to recommend to their customers to continually equate sales and profit with their employees and employee safety, because no matter what’s going on in the market, a business will not be successful without its employees.

Over the last few years, PLM has seen its customers experience significant financial success due to the increase in demand for building materials. What we have also seen is an increase in the number of employees needed for our insureds to meet their customers’ expectations. There are several major concerns that producers should be ensuring their clients take into consideration when they are being tasked with hiring in a hurry during an economic boom.

1. Demand for employees is nearly as high as demand for materials. Good employees are becoming harder to find and retain. Producers should be asking business owners and managers in a time like this – one of economic success and growth – what makes a good employee? Worker experience is important in the hiring of new employees, but as a business owner, what else are your clients offering employees? Owners and managers need to make sure they are offering complete and ongoing training for all employees and across all job functions. If a business is hiring new employees without extensive resumes due to shortages in the applicant pool, they need to make sure they’re protecting these workers by training them to do the required job(s) safely, efficiently, and with a focus on quality. This way, the employer can ensure they are doing their best to protect their workers from injury and their businesses from workers’ compensation claims, lawsuits, and productivity loss.
2. While owners and managers search for new employees, in many cases, existing employees have been overworked and as a result, have been looking for shortcuts. There are some cases in which business owners are, in fact, incentivizing workers with more money to encourage longer shifts or higher productivity requirements. Still, situations exist in which employees are not getting paid fairly for the additional work they are doing or are only getting standard overtime wages. While pay increases are generally necessary and appreciated by employees, they are not the only important consideration in employee retention or in keeping staff safe. Producers need to ensure training is still a priority at lumber businesses, but also make sure businesses owners are doing what they can to limit shifts and highlight the importance of proper usage of machinery and equipment. Removing machine guards, turning off warning alarms, adding or increasing delivery routes, and easing safety standards for the sake of higher production output is ultimately not in the best interest of the business or its employees.
3. Profit and pay are not the only concern for businesses and their employees. From an employee standpoint, while increased wages are great, work/life balance is also essential. From an employer’s standpoint, paying employees higher wages to do more in less time can ultimately backfire in a big way. It can be a delicate balance to make sure existing employees get the compensation and scheduling they have earned and come to expect while adding new employees at times of heightened productivity. Making sure all employees understand company policy regarding scheduling, time worked, and the importance of breaks and time off as needed is of the utmost importance.
4. It may be tempting for your clients to offer some extended services or new products during a time when business is booming, and why not? Unfortunately, this is not the time to add services without preparation. The important thing to consider is how this affects their employees’ safety and wellbeing.

• If they are adding heavier or larger products to their offerings, are their employees trained to use forklifts, two-person lift systems, and back-safety equipment properly?
• If they have added delivery routes or expanded the radius of delivery have employees been trained or hired specifically for CDL driving? Are they making sure employees are trained regularly with regard to mobile phone usage while driving? Are their delivery vehicles equipped with telematics to help prevent speeding or other unsafe practices they engage in to get deliveries to customers on time?
• Are they using profits to bring in new machinery and equipment to keep up with demand? Have their employees been trained thoroughly on their usage and features?

To truly measure productivity during an economic boom, your clients need to be reviewing their profits in conjunction with how they are reaching them. If their current employees are overworked and taking shortcuts, if their new employees are not being trained thoroughly, if all employees are not being compensated well – both financially and with regard to work/life balance – they will inevitably see an increase, sometimes drastic, in employee injuries. The cost of an injured employee is much larger than one often considers. Employee injury can not only cause pain and suffering for the individual, it can greatly decrease or halt production, could lead to workers’ compensation and liability claims, as well as increases in their premiums. An employee injury can result in lawsuits, and most importantly, can cause employee mistrust, dissatisfaction, and potentially turnover.

Business success and increased profit margins are deeply satisfying, but also only a part of the equation. A business is only as good as the people who keep it running, and their safety and commitment to productivity are a business’s best assets.