Albert Einstein is credited with defining insanity as doing the same thing over and over and expecting different results.
In that same vein, we frequently ask showroom owners to identify their biggest challenges, and the answer is almost invariably the same: ‘finding and retaining top talent.’ That raises the question, what are showrooms doing differently to achieve different results in a market where top talent remains elusive? In many cases, there have been few changes, and most of those resulted from the pandemic that turned the employment paradigm upside down and fundamentally altered the way we live and work.
COVID-19 proved designers could effectively work remotely, and showroom owners learned that they could trust their teams to get the job done. Today, when showrooms are open to the public five to six days a week, flexible schedules are top of mind for both owners and team members.
Facing New Employment Challenges
So, how can showrooms address new employment challenges and build a dream team? They may want to emulate Netflix, which learned a valuable lesson when the dot-com bubble burst in 2001. At that time, the company had 120 employees and was on the verge of its initial public offering. Those plans came to a halt when the market tanked. The IPO was delayed and, faced with the need to lay off a third of its workforce, CEO Reed Hasting and the head of HR Patty McCord reviewed the list of employees and divided them into groups of keepers and those who were not going to make the cut. Keepers were team members who were exceptionally creative, did great work and collaborated with others. The others were let go. What happened after those layoffs is foundational to the success the company achieved in the next two decades, relates Hastings in his book, No Rules Rules: Netflix and the Culture of Reinvention.
After the layoffs, the 80 remaining employees worked harder and longer hours. Surprisingly, a company engineer, who lost three coworkers in the process, expressed relief rather than distress. Despite the longer hours, he was happier and more productive because the team members who were let go underperformed. Previously, he had spent considerable time fixing their mistakes and motivating them to complete their assigned tasks.
From there, Netflix went on a mission to only hire top performers, aiming to build a company that was rich in talent density. To create a culture of innovation and flexibility, Netflix believed it would have to pay top dollar for its creative workforce.
Avoiding Bonus Incentives
To further attract best-in-class talent, Netflix eliminated many of the systems and rules found at other companies. Netflix does not have vacation policies, salary scales, purchasing approval systems, performance bonuses or performance improvement plans. Hastings explained that if you hire the right people, performance bonuses are unnecessary. “An annual bonus won’t make them work harder or smarter,” he remarks. Performance improvement plans don’t work either. If a team member is not meeting expectations, it’s best to part company early.
Netflix also allocates funds other companies earmark for bonuses to improve base salaries. In addition, the firm encourages its team members to meet with recruiters. This practice ensures that Netflix’s compensation program is best-in-class. If a team member receives a higher offer elsewhere, Netflix is prepared to match or exceed that offer with one caveat known as the keeper test – a method for evaluating employees to determine whether they should remain at the company. Managers ask themselves, “If an employee told me they were leaving for a similar job at another company, would I fight hard to keep them?” If the answer is “no,” the employee is offered a generous severance package.
Rewarding High Performers
Showroom owners also know that average employees are detrimental to the showroom’s performance. In many kitchen and bath showrooms, there typically are one or two team members who outperform all the others. These high performers are starkly contrasted by other employees, who often require a disproportionate share of management’s energy and time. What would happen if a showroom could streamline its team to include only top producers?
Jason Price, CEO of Kitchen and Bath of Colorado, which currently operates 10 showrooms in Colorado and Texas under two different brands, is taking a page out of the Netflix playbook by providing a ‘sky’s the limit’ compensation opportunity for its design talent. Designers are paid based on a percentage of their project’s profit. The higher the profit, the more that a designer earns. Under the compensation structure, a recent new hire earned more in her first six months on the job than she did in the entire prior year with her previous employer. The company also is able to attract and retain top talent by paying their designers as payment is received. Price explained, “Our designers receive their first commission check when the contract is signed and a deposit is paid.”
At Leatherman Supply’s two Indiana showrooms, the company’s goal is to pay at the top of the market, and it determines what the market will bear by relying on data from Bath & Kitchen Business Group’s annual compensation and benefit survey.
The firm recently changed its compensation plan from a percentage of profit to a percentage of sales to help save time and reduce complexity. The company was able to change because its designers know what the corporate profitability goals are and consistently achieved them.
The company also offers flexible work schedules. At least one designer is usually in the showroom but, if not, there are other staff members that can greet a walk-in. Leatherman offers a small cash bonus to those willing to work half-day Saturdays and, as a result, he has designers volunteering to work weekends.
Rob Stepp, at his three Creative Kitchens showrooms in West Virginia, also understands the benefits of paying at the top of the market. “I have superstar installers,” Stepp said. “I am confident that they are paid at least 20% higher than their contemporaries. That is one reason they don’t seek greener pastures and why we did not lose anyone during COVID when all of our competitors tried to hire them.”
Stepp also has learned the benefits of providing flexible hours and policies. One of his designers switched from a five-day to four-day work week without any decline in productivity. Leatherman’s most tenured designer spends his winters in Florida, returning periodically to conduct meetings, but otherwise works remotely. Both Leatherman and Stepp understand that it is more profitable and productive to provide the flexibility top producers want instead of creating friction that might cause them to look elsewhere.
As the experiences of companies such as Kitchen and Bath of Colorado, Leatherman Supply and Creative Kitchens demonstrate, reinventing showroom HR practices is not just a luxury – it’s a necessity in today’s competitive labor market. Prioritizing talent density, innovation and workplace flexibility enable showrooms to build teams that consistently deliver exceptional results and unparalleled customer experiences.▪
Tom Cohn is president of Cohn Communications, a multidisciplinary association management and marketing firm headquartered in Washington, DC. Named a 2020 KBDN Innovator, Cohn also serves as exec. v.p. of the Bath & Kitchen Business Group, the nation’s largest shareholder-owned kitchen and bath group purchasing organization.