Raising the Ceiling, and the Floor

I recently was invited to speak to the monthly lunch meeting of the local chapter of the National Association of Professional Mortgage Women about the current and future state of the local housing economy. After my remarks, I was asked an excellent question. The question was prefaced this way:

Given the current slowdown, many of the pseudo-professionals (and non-professionals) are no longer in business. Those who are still builders today are the true professionals – like HBA members. The result is that the overall quality of professionalism in home building may never have been higher than it is right now. 

Knowing the professionalism of our members, and their resilience through this downturn, I couldn’t agree more.

The question: How can we ensure that our current high level of professionalism in home building is maintained once the housing economy is surging again, and the less professional practitioners want to return? 

I’ve spent enough time listening to the “setting the table” vision of HBA leaders like President Rusty MacLachlan and Government Affairs Chairman Matt Bailey to know how to answer that question. In fact, it is right in the HBA’s wheelhouse.

Every member of the HBA of Greater Springfield is required (among other things) to carry workers compensation and general liability insurance. We have observed that, in general, those who carry these forms of insurance tend to be the more professional members of the industry. Since workers compensation insurance is required by Missouri law and general liability insurance is basic good business (and protects consumers), you wouldn’t think these membership standards would be particularly controversial. Think again.

While I am told that most fulltime builders carry GL insurance, our fights generally come over our workers comp requirement. It can be very expensive, and many in the industry operate under the mistaken assumption that they are exempt from the requirement. They usually are familiar with the law’s requirement that any business in the construction industry must carry workers compensation insurance if that business has one or more employee. Since they utilize subcontractors rather than actual W-2 employees, they reason they are not required to carry the insurance. 

The problem with that reasoning is that Missouri’s workers compensation law goes on to define “employee” to include: W-2 employees, subcontractors, volunteers, or family members. So, unless you drive every nail and lay every brick personally, you are required to carry workers compensation insurance in Missouri.

Since builders who operate without workers compensation insurance are violating state law, why would any city or county building regulations department issue a building permit to them? They shouldn’t. Yet most of them do. Cities and counties should instead follow the example of the City of Branson and a handful of other jurisdictions that require current proof of workers compensation insurance to pull a building permit, and to complete inspections and receive a certificate of occupancy. 

The HBA of Greater Springfield is advocating for just such changes in city and county permitting departments throughout our ten-county service territory. Matt Bailey’s Government Affairs Committee has set the goal of establishing proof-of-insurance requirements in more than one of these jurisdictions by the end of 2009. To that end, we have had productive meetings with the Missouri Attorney General’s staff about co-hosting education programs about workers compensation law for local and county building officials and elected officials, and working together to encourage progress on this issue at the local level.

We strongly believe that now is the time to pursue more aggressive enforcement of state law in this regard. Because of the correlation between those who carry the proper insurance and industry professionalism, a requirement at permitting to show proof of insurance would help raise the “floor” in our industry.

But we shouldn’t be content just raising the “floor.” We also should raise the “ceiling” of professionalism by continuing to elevate our own HBA standards of professionalism. That’s why our president has appointed Brett Godfrey as the HBA’s Education Czar. Brett has been charged with offering unprecedented professional education opportunities and access to HBA members and, over time, creating a culture of education and professionalism among all HBA members. A comprehensive continuing education program for HBA members already is well underway. As you learn more about the opportunities available, I think you will agree that our “ceiling” for professionalism has never been higher.

This is what our president means when he talks about “setting the table” for future success. Based on the important steps we are taking now to create a level playing field, professional standards, and continuing education, I am excited about what the future holds for HBA members and our industry.