The buzz around the industry for the past number of years has centered on the installation sector and how the shortage of qualified installers can be dealt with. The Installation Summit in Dallas in early August brought to light a number of ideas and opinions from a host of players from all sectors of the industry each anxious to help come up with an answer to help bring this situation to a close and find a way to produce a sufficient number of installers with the knowledge and the hand skills to successfully install the products manufactured by this industry.
The input was varied and brought to light a number of starting points and a number of takes as to the nature of the problem. Several suggestions impressed this observer. One was that retailers and everyone else should really first consider controlling their own destiny, and secondly, that perhaps the system itself culprit. The problem first appeared with the advent of the independent contractor installer in the 1960s replacing installers that were primarily employees of the retailers they did work for. Under this pre-60s model, retailers were more inclined to foot the bill for installer training and installers were better equipped to correctly train apprentices to ultimately develop into skilled master installers.
As the move to independent contractors, away employee installers continued to develop, it was suggested that with each successive generation a diminished level of skill was passed down to newcomers in the trade. That’s not to say that many installers did indeed decide to control their own destiny and took advantage of the training and certification that was available, developing themselves into master craftsman and first class businesspeople. But that was not the case for the majority. And that leads us today 50 years of so from the proposed onset of this cycle where we find an environment that finds several well-developed training and certification options that go underused because most retailers don’t see a future in footing the bill for training independents who will perhaps end up doing work for a competitor. This observer would not be surprised to see the majority of installers in 10-12 years working as employees, employed by retailers or byworkrooms in metro areas around the country.
We recently conducted and interview with Aaron Ribner, CEO at Romanoff Renovations, and Al Perreca, VP support services at Romanoff, one of the nation’s largest volume floor covering installers. Romanoff provides installation services across the board, including Home Depot. Romanoff has controlled its own destiny and developed a program that has gone a long way toward solving their installation problems. Here are some excerpts from that conversation, which you can found in its entirety on TalkFloor.com.
TF: Fill us in a bit on the Romanoff organization and some of its history.
Ribner: We are a 40-year-old wholesale floor covering service provider across the United States. We have 47 locations in 25 states. We install about 50 million square feet of floor coverings every year.
TF: Do you install products other than floor coverings?
Ribner: We do. Flooring is about 85% of our portfolio. We also do general construction and remodeling.
TF: The geographic growth of the company, how did that take place?
Ribner: We started in Georgia in the Atlanta area. At one point, we were a small retail business selling product and labor and over time it evolved to be more of a wholesaler of services. We also added additional facilities. The backend of our business is a proprietary Enterprise Relationship Platform (ERP) that was built by our development team. It allows us to manage projects and leverage that platform as we grew geographically.
TF: If we’re talking in five to 10 years, are you likely to be in a number of additional states?
Ribner: Our primary prospective is not focused on being the biggest or to grow geographically. One of the primary pushes to the West Coast was to get enough scale so we could do some things differently in the installation industry. We have the same problems that many people have in the industry in terms of providing quality service and the development of the labor force that supports that. There are many things that can be done on a larger scale that are more difficult on a smaller scale. Our prospective in the next three or four years is to have a great deal of refinement in the processes we do. We are really not looking for more geographic growth at this time. We may be in that place five or 10 years down the road? Maybe.
TF: I also understand that the company is involved with big box retailers. Talk about that relationship and how that developed.
Ribner: The big box organizations have a different need in terms of how their businesses are structured. They typically do not have receiving and local storage capability, so they focus more on the front side of the equation and the order side, looking for fulfillment organizations to handle the back side of the business. Whether that be in the appliance business and in the installation business where they have partners that will provide the back-end fulfillment. We found that to be a fun niche to be in. It is definitely a complex one, and it’s an area where we are managing tens of thousands of projects instead of just a few.
TF: Romanoff has spent a great deal of time perfecting and developing people and various systems to get the company in the place where it is today. Talk about the situation you saw in the installation sector and the problems you had to overcome to get the company to the point it is today.
Ribner: When we look at our business and how we grow, we have the same challenges that anyone in the flooring industry, and to a larger extent the same problems everyone in the construction industry, has. Finding qualified, quality people to provide trade skills is becoming more challenging, partly because the business is growing and because we have an aging population. Five years ago, the average age of installers in our business was in the early 40s; today it’s in the mid-forties. So, we were looking at how we can continue to sustain and to grow our business. If we don’t have a sustainable model, then we are not in business anymore. Two or three years ago we began spending time looking at this differently and that was the genesis.
Perreca: With the aging out of the contractors, and when there is sufficient work to go around, contractors are basically controlling the environment. On the other side, when things are slow and there is not enough work the retailers are in control. With the aging of the nation’s contractors as they begin to think about retirement, they may not have prepared for that stage of life. We looked at the entire problem, not just the labor shortage but how various sectors of the industry treat each other and ultimately we looked at the lives of the people providing installation and in the end how their lives are being enhanced.
TF: How have you recruited installers over the years?
Perreca: Traditionally we have recruited much like many other organizations have. We go to supply houses. In the past when I have been managing a location, if I see a van where a crew is working on carpet I approach them and give them my business card. If I was driving down the road and see an installer’s van, I take a picture of the phone number. More recently I have even sought out ads on Craig’s List, and in some very labor-stricken markets we have offered recruitment bonuses.
TF: It was suggested at the Installation Summit that the system itself may well be one of the culprits in perpetuating the problems in the installation sector. What are your thoughts on this?
Perreca: I agree with that and I think that is an area where we have struggled a great deal as an industry, and it’s why we are looking at this situation of labor as a whole and how we are rethinking a solution of the labor issue and the labor shortage. Many contractors are living day-to-day and not considering the future. I agree with that point made at the Summit that this is a part of the problem in our industry and if we are not willing to face that problem and develop solutions, we will continue to fail.
TF: Aaron, what do you think would happen if contractors were offered jobs tomorrow? How many independent contractors do you think we would have left?
Ribner: I think there are places in the industry for multiple structures in terms of how the business is supported. There are multiple types of retailers with multiple types of formats. We have small retailers and large retailers with different kinds of need. That applies on the installer side as well. There is a large pool of labor that enjoys being independent contractors. They have businesses that they are happy with and those businesses are successful. If the industry were to offer them jobs tomorrow that would likely be something these people would not want. We have seen this within our business. There are many advantages to being a contractor. You pick the jobs you want, you pick the times you want to work. That said, I think you need other models to supplement that.
The youth today that are graduating from high school are going to need a different structure. Yes, there are some that would like to start their own business and be their own boss, but the bulk of them are looking for a different type of opportunity. And if we don’t restructure the business in a way that provides an opportunity then we are going to lose out on that potential labor pool.
Perreca: I absolutely agree. We have approached our contractors with an opportunity to become employees. What we have found is that as we start to bring in this new labor there is a handful of contractors in these markets that approach us to learn more about its opportunities. There are definitely some that want to remain contractors and there are others that want more, a career path and better understanding of what retirement will look like.
TF: Millennials and younger people have different goals than their parents and grandparents, and getting into the trades does not appear to coincide with many of those goals.
Ribner: If we go back 30 or 40 years ago, kids graduated from high school with basic life skills. There was no presumption that graduates would go on to college. Today, the educational process has moved more toward college prep. There are many who do seek to own their own businesses and work when they want to and not when they don’t, like the Uber model. There needs to be a model for them. There also is a large contingent of people that don’t desire to be that businessperson and don’t want to run their own environment, but they are interested in a career, the ability to progress in that career and they want a little more safety.
A few years ago, Al and our leadership team and I sat down to talk about the situation in the industry—where are we going to get the workforce of the future. We were watching the age of the labor pool. So we approached the situation from a fundamentally different direction. What if we set everything we knew about the flooring business aside, and went out and looked at the best from companies like Starbucks and Amazon and companies that are providing fulfillment in a very different way than it is traditionally done in the flooring business? What if we went in a totally different direction and decided to grow our own workforce? So we started down that path and it’s been a definite evolution. At this point, we are a little over two years in. And have made fairly substantial investment in that direction.
In the first half of this year, we have added over 50 people who have never been in the flooring industry before. This year, those people will install a little over 1 million square yards of carpet. It is entirely possible to grow and groom a workforce of flooring installers.
TF: Talk about your recruitment efforts. The people you bring into the workforce, do you bring them in as apprentices?
Perreca: Yes. We look to a number of sources for recruiting. We have spoken with local schools, we have partnered with Goodwill in Atlanta and with vocational schools. We’re trying to think out for the box, and talking with people that are unemployed or underemployed.
We have a couple of different models depending on the situation and the particular city. We have intensive internal training we put new hires through and then we team them with a lead installer. Any of our lead installers who work with these green helpers have also gone through their own training focused on how to teach installation skills to others. The system has a progression. We watch these apprentices’ skills develop and we do regular assessments. Once the lead installer thinks the apprentice is ready to be a lead installer, he takes a formalized test; if they pass, then we matriculate that helper into a lead installer. We work with the local manager who assigns him to appropriate jobs so they can develop slowly and don’t become discouraged.
Ribner: Al touched on an important point we see out there. If you were to go to a HMO to get a flu shot, for example, the lab tech can give you the flu shot, the nurse practitioner can, the doctor can, the surgeon can and the specialist can. Much too often many people want a surgeon on every single job. We definitely need surgeons in our business, we need people who have that master level of expertise. But if I were to look at the compensation structure of the five individuals at the HMO, it will be radically different from the lab tech to the surgeon so it’s important to have the right skill set on the right project at the right point of time. And you also need to recognize that a surgeon is not required on every job.
There are 12x15 drops in a basement that new lead installers can be put on where they can be very successful in their early days, but it does require a bit more energy and complexity in scheduling those jobs. It needs a bit more attention to detail in terms of how the worker needs to be managed, and that’s really a fundamental difference between the employee model and a contractor model.
What we have done is an investment in the future and it’s a long-term investment. We have looked at it as a five-year project to really understand how the compensation model can be rebuilt, the specifics attracting and paying people. Let’s face it: most people just don’t understand the concept of pay-per-yard.
All of those components: how people are paid, how they are taught, how they are matriculated and how they are managed, the entire process requires a fair amount of development. I would say on average we have made two steps forward and one step back. Our culture is to try things and we don’t always get everything right.
Editor’s note: As mentioned, there is more to this conversation than space permits. Check out the entire interview by visiting www.TalkFloor.com and clicking on the Floor Radio tab.
We’d love to hear your feedback of this and other conversations you’ve watched or listened to on the site, as well as any people or companies you’d like to see interviewed. You can contact Dave Foster at firstname.lastname@example.org.