Installations are a critical step in KBB sales, so should retailers employ their own fitters, subcontract the jobs out or a combination of the two? Retail consultant Toby Griffin considers the pros and cons of the various options.
When you are closing a sale and a customer asks you if you employ your own fitters, you know they want to hear a ‘yes’. This will be easy to say if they are, but a more carefully worded reply is required if they are not. Is this an important issue for them? They probably wouldn’t have raised it if it wasn’t. Either way you’ll soon find out.
Having worked in KBB businesses where all, some or none of the installations are subcontracted, I can say that overall I haven’t seen a noticeable difference on the final delivery of the project in each situation.
So why then do different businesses have such fundamentally different approaches to the employment relationships with their fitting teams? What benefits and drawbacks does subcontracting have over normal employment, and visa-versa?
Drawing upon my own experience, and having sought valued opinions from across the industry, it seems to boil down to the following key factors: control, rewards, costs and liability, size of business, and image.
A boss and employee relationship bears many of the same hallmarks as that between a contractee and contractor. The employee/contractor is expected to perform the role assigned competently, in a timely fashion, and be considerate of the end-customer’s needs. In return for this, the boss/contractee will remunerate as agreed.
But, let’s be honest here, the power dynamic is different in these two relationships, with a boss having direct authority over the employee, whereas a contractor is seen as more of an equal. Notably, this was the crux of the argument that Uber drivers took to court a few years ago, as they said they were subordinated to Uber, and their status and relationship had many of the traits of an employee. For the record, they won a partial victory, ensuring aspects like holiday pay and minimum wage compliance would be enshrined in their halfway-house status as a ‘worker’, rather than a subcontractor or employee.
On this subject, and with direct relevance to our sector, Paul Beechinor, managing director of Alexander Kitchens in Horsham, says: “HMRC are clamping down on labour-only subcontractors who work for the same company all of the time on day work. Price work is the way round it, but can be difficult to administer in the KBB industry with so many trades involved”.
But, outside of the legalities, the power and control dynamic starts to explain why many installers and companies prefer either employed or contractor status. For the self-employed installer, they are their own boss, picking and choosing when they work, what jobs they do, and who they work for.
For the company, they can engage the fitter only when they need them, thereby linking their costs to revenue. For an employed installer, they have traded in less flexibility and choice for the other advantages listed later. And for the employer, Mark Conacher, MD of Liberty Fitting Services in Dundee, tells me: “I like to employ the core trades, as it gives me control, and makes me proud to feel that I’m giving job security to my team”.
The next big factor to consider is rewards. Speaking to self-employed kitchen fitter Anthony Omerod, he says: “The prices that you will get from the company you subcontract from are usually a lot more than as an employed installer.” And in my experience, this can be up to twice as much. So, on the face of it, being a subcontractor is far more lucrative.
Cost and liabilities
Moving directly on from rewards, the big counterbalance to this is costs and liabilities. This is where the bigger rewards given to subcontractors
can be eaten into at a high rate of knots and their responsibilities and liabilities extend way beyond that of a normal employee.
Steve Roots, MD of Roots Kitchens, Bedrooms and Bathrooms in Kent, says: “I find the total cost of employment vs subcontracting almost the same when it reaches the bottom line. Subcontractors have overheads, admin, they have to account for their own – or their employees’ – holidays, training, public liability insurance, etc. Employees often think they are being paid less but don’t appreciate the overhead costs of holiday pay, pensions, and national insurance.”
Size of business
Another big element that affects whether installers are employed or not is the size of the business. Smaller independents don’t perhaps have the consistency of demand to guarantee requiring certain tradespeople all of the time.
Adam Crotty, joint MD of Kesseler Birmingham, says: “I would definitely explore the option of employing our installation team in the future. However, as we are the new kids on the block, it isn’t yet feasible to entertain this.”
This view is backed up by Steve Roots of Roots KBB, who says: “If you’re large enough to be able to guarantee work every day for a trade, then employment is logical. But if you can’t guarantee work every day, then subcontractors are logical”.
This relationship between size and employment swings back the other way, however, with pretty much all of the national brands subcontracting their fits. It seems they favour the simplicity of the subcontracting model.
The image a company presents is not to be under-estimated from a marketing perspective. Kelly Abel, director at Laings in Inverurie, Scotland, says: “Our customers expect their fitting teams to arrive in logoed vans, and wearing our company polo shirts, as it is a part of the prestige of buying from us, and they also like the trust aspect.”
It does seem that some customers perceive a company that employs its installers as somehow more reliable, established and steady. And there is no doubting that having your company’s logo travelling around the locality can only help with brand awareness.
So, which way is best? As with a lot of practices in our industry it seems to depend on what you’ve got used to. Many independent KBB businesses even operate a hybrid model – mixing employed and self-employed installers. Barry Abrahams, owner of the Arlington Group, certainly thinks this is best for his business: “Employ, with subbies for contract work.”
Irrespective of the legal status, though, good handling of the personal relationship is vital. Olive Forster, owner of Olive’s Bathrooms in Towcester, Northamptonshire, sums it up: “Like most things in business it’s about time and people managing that gets the best results. Making people feel and known to be valued”.
However it is done though, the overriding point of view across the industry is that the priority is for the job to be done well. As Kesseler Birmingham’s Crotty sums it up: “For me, the most important thing is having the highest-quality, professional teams to handle our installations. Irrespective of whether they are directly employed or subcontracted, they will always represent your company’s reputation”.