It’s no secret: anyone who has ever worked inside a professional flooring contractor firm or depends on them for a continuous stream of orders to support their manufacturing capacity knows that the world of the contractor is changing. Many of our members are disrupting others, and a few are being disrupted. You can trace this same evolution in the commercial carpet industry moving from hundreds of mills to a handful that control the market today.
While the carpet industry consolidated, other flooring product producers continued to take share until they captured nearly half of the commercial market. Ultimately non-carpet manufacturers became acquisition targets as the larger carpet companies panicked over losing half the market share after spending so much money to consolidate capacity. They planned and executed well but forgot the strategy. This is healthy as a few stalwarts eventually battle for top position and hundreds of firms compete in the swirl using radically different business models. The smaller players continue to offer unique value propositions to delight targeted clients looking for differentiation and innovation.
Disruptors always have a place in the market no matter how mature, and little attention has been paid to the flooring contractor firms that approach the market differently. Some of these Starnet entrepreneurs avoid general contractor-controlled work, add additional product types and work scope to capture more customer spend, offer change management and design services, and offer lifecycle of the building master service agreement models. These examples of highly disruptive approaches force change, internally and externally, and they provide new paths for professional flooring contractors to compete in the recent “we are big” era that we have not seen since the early 2000s.
What unwinds these scaled business stories that play so well in the boardroom? People unwind them. Changing healthcare plans, moving manufacturing sites, ending financial support for associate and vendor networking trips, or changing OEM adhesive vendors solely on price can start a chain reaction of attrition. It has caused outright rebellions inside acquired manufacturing and service contractor companies. Layer a compensation plan change on top of any of these disruptions and brands can fold into oblivion over a few quarters. Existing vendor networks can revolt and devalue a business built over decades in a few months by failing to connect with the new leadership or simply by walking away from bullying tactics. End user clients can suffer the most in these times of rapid change.
A New Day
This is an exciting time when flooring contractors are seeing investor interest in their service company models, labor scarcity is protecting fair margins, and they can quickly deploy technology at the action level to be more effective in managing demanding stakeholders to defer risk.
As flooring contractors make dramatic strategic shifts to avoid becoming an envelope in an email world, their most important asset — PEOPLE — needs are also shifting.
From an outsider’s perspective, one of the most notable shifts could perhaps be the rise of the interior contractor concept. This change from flooring only to additional services has accelerated in the past few years. It is also impacting the world of the office furniture dealer, where brands are compressed at the top, and hundreds of smaller “brandless” companies are taking market share from the historical leaders. Office furniture dealers increasingly manage space planning, branding, prefabricated construction, kitchen/canteen design, wayfinding, interior graphics and signage as examples.
Many of the Starnet members reluctantly added different interior products at the request of favored clients, and soon these added capabilities became core competencies. We have members adding light interior construction to their scope of work because it allows them to differentiate and protect their best customers from competitors. This concept so far has been far from celebrated. At many Starnet meetings examples such as rumblings about added risk and difficulty with the union representatives have emerged as doubtful critiques of the approach. If you are happy with your work schedule and happy with your income, why the push?
Associate Opportunity
The associates working at member companies who offer additional products beyond flooring have a lot to offer when it comes to passionate knowledge around commercial interiors. As industry roles continue to evolve, there is increasing empowerment for this expanded role. These new interior contractor models attract the best talent for the professional growth challenge as well as the increased opportunity to capture top clients.
Some of the positive impacts:
- Protect key clients and reduce contact points with potential competitors
- Unleash the top-line revenue potential (and income) of veteran salespeople
- Increase the value to be delivered with A & D community partners
- Deliver outcomes through more of the interior space, not just the floor
- Provide meaningful paths for associate professional growth — office/sales and field labor
- Increase the time field teams are deployed to a project site for efficiency in billable hours
- Keeping mid-career associates learning and energized
The talent shortage in our industry is a critical problem that is only getting worse. Organizations already face a severe shortage of key talent, and most of our members say they will have a meaningful skills gap in the coming years. The answer to this challenge is not to narrow down the potential opportunities for associates joining the company. The answer is to share the vast potential of career experiences in support of value offered to clients. This approach will also offer the greatest professional growth opportunities and the most interesting day-to-day engagement at work. High-level professional people will meet the challenge of complexity with technology tools and look favorably on the varied workday.
At a moment when many workers are exercising greater self-determination in the job market, exploring mobility inside a member company is much healthier than watching that employee exit for career advancement or learning opportunities elsewhere. Having a broader portfolio affords the employers more flexibility to provide a varied career track. Many employers across all industries do not have internal advancement paths that are wide enough to keep people growing over time. Individuals who want to reinvent themselves and take on more senior roles or responsibilities often must go to a new environment to do so. Organizations that make learning and development, especially in support of clients, a priority can create a virtuous cycle. This interior contractor approach will improve the odds of success in attracting, advancing, and retaining talent.
Employer Opportunity
In a Gallup survey from June 2021, 65 percent of U.S. workers shared that learning new
skills is an extremely or very important factor in deciding whether to take a new job. Furthermore, 61 percent said it was extremely or very important in deciding whether to stay at their current job. Most employers can benefit from challenging the status quo on the products and services they provide and use the impact it has on the types of associates they attract and select for open roles. Instead of searching for external candidates with “construction experience” and no bad habits from another flooring company, leading member organizations can use this evolution of the flooring contractor to create systems to attract candidates based on their capacity to learn, resilience, adaptability, and other transferable skills.
Not all companies are equally good at developing people, which is the primary hesitation from taking on the risk of evolving from a flooring contractor to a specialty interior contractor or adding exterior scopes of work. Size is not the differentiator, as we find that small member companies can be much more effective than larger counterparts in developing their people. Member companies with a strong culture, offering a structured training system, and providing flexible opportunities for internal achievement (lateral and upward) seem to be able to expand. People join these Starnet member companies to build knowledge and networks, understanding that their experience will provide a valuable signal to their industry peers and clients for the remainder of their careers.
