Holding off on hiring

Business is resurgent at Mike Moffitt’s home-remodeling company, but that doesn’t mean he plans to hire anytime soon.

 

Along about the first week of September, the phones began ringing again at Granite Transformations, which renovates kitchens and baths. But times for the Las Vegas company have been so tough for so long that Moffitt just isn’t ready to add to his staff.

 

"The town seems to have bottomed out in the last quarter of last year, and it’s not getting any worse than it had been in the previous 18 months," Moffitt said. "But it hasn’t turned around enough. We’re waiting and seeing."

 

That cautious approach to hiring is widespread, according to a recent Review-Journal business survey.

 

The online questionnaire, which nearly 100 people answered from Nov. 22 to Jan. 4, found that more than half of respondents plan to hold the line on staffing in 2010, with no additions or cuts. Nearly 30 percent of participants expect to hire new workers by year’s end, while just 14.5 percent of respondents said they’d cut work forces further.

 

Less than 10 percent of respondents said they’d cut pay this year, and 61.4 percent said they avoided pay and benefits cuts even in the worst times.

 

The survey results jibe with what Bill Werksman, owner of local headhunting firm Resource Partners, sees among his clients. They seem to have moved past the worst of their downsizing, he said, and most of them held steady against compensation cuts.

 

"Everybody is watching their bottom line a lot harder. They’re not replacing people, or they’re scaling back on employee-training programs," Werksman said. "Pay and benefits are definitely the last things they’d cut, because that’s where it really hurts employees. People can live with no more bagels or doughnuts on Fridays, and they can live with a less lavish Christmas party, but cutting into pay and benefits is a different story."

 

Some respondents said they anticipate a strong 2010, so they’ll be able to expand company rosters.

 

"I’m a gaming consultant and (expect) to have an excellent year in 2010," wrote Bill Zender. "A majority of my business comes from outside the Las Vegas area. My degree of local business will increase slightly due to medium and smaller casinos’ need to improve their competitive edge."

 

Mark DeBacker of Blue Bridge Financial also reported plans to hire.

 

"While we see the financial and real estate sectors suffering into the foreseeable future in the valley, our company looks to expand through providing alternative asset classes to financial institutions," DeBacker wrote.

 

But one respondent who didn’t leave his name said he was taking a "wait-and-see approach."

 

"Continued pressure on the economy may result in further layoffs," he wrote.

 

Plans at insurance brokerage Orgill/Singer sound fairly typical.

 

Like most survey respondents, company President Eric Springall said he doesn’t expect the business to add or cut workers in 2010. Orgill/Singer will focus on efficiencies, accomplishing more with the same number of employees. The company has also dodged pay cuts, though it has a salary freeze in place that executives don’t intend to lift now. Incentive programs will stay in place.

 

"We’re not down on Las Vegas. We’re positive about it," Springall said. "But we know we’re being affected by a worldwide and national economy that’s down, and we are prepared to weather the storm."

 

Springall added that his staffing plans could "change in a heartbeat." He doesn’t expect any noticeable drop in business, but if the unthinkable happened and the brokerage’s revenue dropped more than 10 percent, he’d have to cut employees. On the flip side, if a new market comes along to add to Orgill/Singer’s top line in revenue, the company’s staff could expand.

 

Among companies that do add workers these days, that kind of strategic hiring for specific new ventures is the order of the day, Werksman said. Businesses aren’t bringing on fresh employees merely to replace departing staffers. Instead, they’re developing "business-case reasoning" and justifications for any work-force additions they might make. Maybe they want to enter a different market, or they might perform a competitive analysis on breaking into a new sector.

 

"They’re looking for new avenues in which to develop their business," Werksman said. "In the past, a lot of businesses could rely on local markets, but now, they have to look outside Las Vegas to find markets that can keep their business flowing and growing."

 

For housing-reliant Granite Transformations, business has done anything but grow.

 

At its 2005 peak, the company had 50 workers. Today, it employs 13.

 

"We started cutting in 2007, and we’ve been cutting all the way," Moffitt said.

 

But thanks to a vibrant foreclosure market, with its abundance of homes in need of repairs, the renovation business is booming. Sales today are double what they were at the recession’s nadir, Moffitt said.

 

Still, after more than two years of unrelenting downturn, Moffitt’s too gun-shy to begin hiring or increasing pay just yet. President Barack Obama has proposed a $5,000 tax credit for each net new employee companies hire in 2010, but that’s too little to make a difference now, Moffitt said.

 

"Unless somebody can start understanding what small-business owners need, I don’t see any incentive to start hiring," he said.

 

Q What are your plans for staffing in 2010?

 

14.5% I may have to cut more staff

 

28.9% I plan to hire more people

 

54.2%

 

I’m hoping to keep staffing at current levels

 

2.4% No answer

 

Q Are you planning to give pay raises in 2010?

 

30.1% Normal raises and bonuses

 

18.1% Smaller-than-normal raises and bonuses

 

42.2% No raises or bonuses

 

8.4% I may have to implement pay cuts

 

1.2% No answer

 

inside the poll

 

In an online survey conducted in December and January, the Review-Journal asked local businesspeople to discuss their expectations for 2010, and to share their thoughts about the future of our economy. Here’s how they answered some key questions:

 

Q Did you cut any of your benefits or employee pay because of the recession?

 

Yes 38.6%

 

No 61.4%

 

Q If yes, what changes did you make?

 

Forced employees to take furloughs or pay cuts 34.4%

 

Cut benefits 28.1%

 

Raised insurance premiums and deductibles 12.5%

 

All of the above 9.4%

 

Other 15.6%

 

Q If you reduced employee pay or cut benefits, are you planning to restore them in 2010?

 

Yes, I want to restore pay and benefits 44.3%

 

No, not until I see a real turnaround 55.7%

 

Q Are you worried about retaining workers after a turnaround begins because of cost-cutting you did during the recession?

 

Yes 14.5%

 

No 81.9%

 

No Answer 3.6%

 

Source: las vegas Review-Journal

 

The Review-Journal conducted its business survey online from Nov. 22 to Jan. 4. Nearly 100 respondents participated. Read about their answers in this and other stories:

 

■ Feb. 8 Business Press: Employers discuss how they’re keeping morale up in down times.

 

■ Feb. 9 Review-Journal: Executives will tell us whether they plan to pick up hiring or increase pay in 2010.

 

■ Feb. 10 Review-Journal: Company managers share thoughts on how they want state lawmakers to handle Nevada’s revenue shortfall.

 

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.

 

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