The age old issue: Employee or subcontractor

Home Inside FCNews The age old issue: Employee or subcontractor

January 5/12, 2015; Volume 28/Number 14

By Ray Piña

Though it’s critically important to control the installation process, dealers are often conflicted between investing in the accountability and quality control of employing in-house installers versus the savings associated with sourcing outside subcontractors.

Ken Weisbacher, owner of Carpetland Carpet One Floor & Home, which has two locations in Ohio and one in Kentucky, is one of the most successful flooring retailers in the nation. He said employing full-time installers unnecessarily increases overhead while making it harder to secure price-sensitive bids in a competitive marketplace.

“Subcontractors are only paid when we have jobs for them, whereas employees are paid regardless of the work available,” he said. “Using subcontractors allows us to exactly satisfy the demand for labor.”

Subcontractors aren’t just an advantage during down times; they also provide significant savings when managing serendipitous periods of prosperity, according to Mike Blanton, owner, president and CEO of Dalton Carpet One Floor & Home. “Subcontractors give you the ability to grow quickly but then cut back if you have to. One of the tactics we’re using is hiring field superintendents to monitor the work our subcontractors do. When it comes to commercial work—the fastest growing segment—subcontractors work best because of the size of their crews and their ability to travel.”

What’s more, subcontractors limit retailer liability once the product leaves the showroom, according to Brian Nelson, regional manager for Pennsylvania’s Big Bob’s Flooring Outlets. “In the event of accidental property damage, the independent contractor is held liable, not the retailer. You also don’t have miscellaneous costs like health insurance and unemployment if a particular installer doesn’t work out.”

Contrary to popular belief, utilizing subcontractors is not a cost-cutting, responsibility-thwarting endeavor, according to Mike Cote, owner of Massachusetts-based Carpets of Cape Cod and a former subcontracting installer. Instead, Cote insists subcontracting is the best way to ensure efficiency and quality while removing any possibility of resentment between store owners and installers.

“People become complacent if they don’t have an incentive to perform,” he said. “I was hungry as a young installer and saw it as an opportunity to earn as much as I was willing to work for. In my experience, hourly installers just don’t work out. They either feel they are being overworked or the employer feels they’re not working up to their potential.”

This, of course, is all very short sighted, according to retailers who couldn’t imagine a non-employee providing the crucial last step of installation, as well as the parting impression of the business to customers—customers who are likely to blab about a bad experience on the Internet.

“Customers are definitely more comfortable with employees showing up to their houses or jobsites than they are with subcontractors,” said Hank Longo, sales manager at New Jersey-based All County Exteriors. “You have direct control of employees. You can train them to provide the exact experience you want them to provide. Giving up that control is risky.”

And even though subcontractors provide a means of reducing costs and mitigating liability to some extent, at the end of the day, if an installation failure should arise the customer will call the retailer. Failure to address any problems, even those unquestionably caused by the subcontractor, can have devastating effects on a local retailer, according to proponents of in-house crews.

“We own the problem,” said Sue Allwein, owner of Annville, Pa.-based Allweins Carpet One Floor & Home. “The reason we have in-house installers is it allows us to control the quality of our work. There’s consistency in how we handle projects. There’s a reputation that we’re very hands-on and that’s the foundation of our business, and that is backed by our installers.”

Choosing to invest in in-house installers or outsource the work is circumstantial, Blanton said. After years of relying on subcontractors, he concedes he’s now looking to hire employees because it’s becoming more difficult to find qualified, reliable subcontractors.

 

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