As an Employer of Qualified Electricians - are you Winning or Losing?

With 30% of the industry over the age of 50 (ABS stats) and 25% of apprentices not finishing (TAFE discussions I've had) there is an acute shortage of talent.

As an employer are you winning or losing?

Here's what winning looks like.

There is an opportunity cost of staff being unavailable while work exists - and you know as an employer there is ample work existing.

Every employer, every business owner makes a margin - which is the premise of being in business. And if you are not - well good luck.

Lets look at the sums.

If you are an electrical contractor or employer you should be charging out work at $130 to $150 per hour. If you have too much work and you cannot address it yourself one typically employs staff - so as to multiply. Of course not all do - but then you are not in business. You are running a hobby.

For those running a business each hour, each day, each week, each month that you have work and do not employ staff when you need to, you are losing margin.

So lets say you have work able to be contracted out at $150 per hour. And you are sticking to saying to A-Grades you will only pay them $38-$45 per hour where no one responds to your approaches. Lets say you bite the bullet and pay $55 per hour (which will help attract staff) your gross margin earnt would be between $95 - $75 per hour. So each week an A-Grade is not available, you lose 40 hours a week x $95-$75 which means, you lose between $3,800 to 3,000 in gross margin each week.

So if you have been sitting for two months without staff you've lost $3,800 - $3,000 times 8 weeks = $30,400 - $24,000. And if that's multiplied by 3-5 staff you could take on, well the margin you are missing out of, adds up.

Astute employers who are seeing the light are biting the bullet and saying - lets get on with it. Pay the guys where the market is at and get on with earning higher gross and hence larger net margin remembering that larger gross allows your overheads to be amortised over a larger gross. Those are the winners.

Those who are not, are not only finding it hard to get staff - losing out on opportunities but they are also losing existing staff regularly (re-training staff also has a cost right). Those are the losers in this new environment.

Economics says that if demand goes up (VEU Program, Safety Checks for rental properties, Solar, infrastructure projects regularly coming up, etc) and supply goes down (30% of A-Grades are above 50 years old and 25% of apprentices do not finish) then price must rise.

Why does this industry continue to believe that economics does not apply to it and continue to offer $38 to $45 per hour from an era of the past?

This is not a socialist argument - its a business decision.

Are you winning or losing in this strategic war for talent?

If you want to discuss options, email me and I am happy to provide various options (mergers with other RECs, sharing resources, incentivisation strategies to retain staff, HR strategies, etc)