Transplanting talent

Jeff Berghoff, Berghoff Design GroupTo determine how much his company should spend on labor in a down economy, Jeff Berghoff took a step back in time to 2008. He pressed rewind on his $13 million firm, which designs, builds and maintains distinctive gardens for estates in Paradise Valley and Scottsdale, Ariz.

“We felt if this is the worst economy since the Great Depression, let’s prepare,” says Berghoff, president, Berghoff Design Group.

He consulted 2002 records, when the company’s revenues were $8 million.

“We asked ourselves, ‘What kind of company were we then, and how did we make money then?’” Berghoff says. “We knew whatever we did then we needed to do today because 2009 was probably not going to be a great year.”

The maintenance division was going gangbusters and had a record year in 2009 – all of those completed design/build projects filtered into the maintenance division, and new crews were actually required to manage the accounts. But the construction backlog had dried up. Projects were near completion or already finished. Designers were selling, but not nearly the volume as in 2007.

To accommodate for the shift in business, Berghoff redistributed labor. He transferred talented construction crew members to the maintenance division, then weeded out the maintenance crews so only the strongest workers remained.

“We wanted to keep our well-trained construction guys and repurpose them in a sense, and retain them,” Berghoff says, figuring construction would eventually rebound and then his core people would still be on board. Meanwhile, he actually needed to add three more maintenance crews in 2009 to keep up with the influx of work.

The plan went over well with construction workers who were offered transfers. Most of them took the opportunity. Others planned to move out of state, or decided not to stay on board. The result was a strong maintenance work force and lean construction division that could manage the lightened workload. “The guys were happy to have a job,” he says. “And we wanted to move them into maintenance because we knew more of those accounts were coming online,”

Meanwhile, Berghoff altered designers’ schedules to a four-day, 32-hour workweek, cutting pay by 20 percent. The prior August, he had let go one draftsman, and he didn’t hire an intern for 2009. He had developed his core group and wanted them to stay on board – but something had to give. “I wanted to keep them all busy, and by going to this four-day, 32-hour workweek, we were able to keep costs down,” he says. “If designers aren’t busy, construction isn’t going to be busy.”

But already business is picking up on the construction side. Berghoff expects to add two more crews for 2010, noting he’ll cherry-pick workers who had shifted to maintenance to rejoin the construction division.

Customers who used to wait six months to meet with Berghoff to discuss a design can book him the same day if they want. Construction is still slow, but profitable. “We’re getting by,” Berghoff says.

Maintenance is a different story, with a happy ending. “Everything fell into place,” he says, noting the company converts most of its design/build clients into maintenance customers. Because the firm manages estates, customers are not interested in bringing in fly-by-nighters to manage their properties.

Berghoff’s main goal concerning labor for 2010 is to keep everyone busy. “Our workload is picking up again, and we have been working on homes in design and everything is lining up – clients are moving forward,” he says, optimistic. “We’ll need those construction crews to break ground.”

The author is a freelance writer based in Bay Village, Ohio.