With recent media attention stating that the Construction Industry is New Zealand’s industry with the highest suicide rate, I thought it appropriate to delve into some of the things that I believe are the root cause behind this statistic.
We have to ask the question: What is the main cause of these suicides and what are some of the contributing factors?
I personally believe that a large contributing factor is financial loss or financial hardship.
High Failure Rate
Unfortunately, the construction industry has a very high failure rate in New Zealand. Too many building companies are becoming insolvent and going into liquidation. Some of the bigger construction names to go under in recent years have been Mainzeal, Ebert and Arrow and then Fletchers losing around $1BN. There are also quite a number of smaller building companies regularly failing that we don’t generally hear about.
There are various reasons for these companies failing. I believe that one of the bigger reasons is around our culture of wanting to get the absolute lowest price. I call this a win-lose scenario as opposed to a win-win scenario. A win-win scenario is where people are happy to pay a fair price for a good job. This is where both the client and the building company win. This culture of wanting everything for absolute bottom dollar puts a major stress on people. It leads to financial hardship and then in extreme cases can lead on to eventual suicide when someone feels hopeless and can’t see a way out.
That is quite a simple way of looking at it and there is obviously a lot more to it than that.
Great at Building but how about as Businessmen?
When we dissect things a bit further, we find that young New Zealand builders are generally really good at building. They then decide to make a go of it and go out on their own and start their own business. But no one told them or gave them training around being a business owner. They find themselves having to sort out tax compliance, GST returns, employ staff and deduct PAYE and Withholding Tax. Then they have to remember to put aside the tax money too.
Unfortunately, all too often they see the dollars in the bank account and don’t realise that most of this money isn’t theirs. It needs to be allocated to paying for purchases, covering tax, paying for ACC levies, and is also accrued holiday pay for employees. They see the money and spend it on a flash new ute or jet-ski. Then a little while down the track things tighten up and crunch, they’ve gotten themselves into trouble.
Industry Organisations That Help
For builders this is where an organisation like Registered Master Builders can help. The great thing about being involved with an association like Registered Master Builders is that they are actually there to help builders on the business side of things. Master Builders have a great business program called “Elevate”. Elevate gives builders training around a lot of the admin and compliance side of things and helps them become a good all-round businessperson.
Mental Health and the Critical Voice
At a recent Master Builder’s conference, we had the pleasure of hearing Mike King speak about Mental Health. Mike King had some brilliant insights around the critical voice in your head. He said that in our New Zealand culture we tend to be very focused around not making any mistakes. He went on to say that even if we get 98% of things right that we still tend to focus on the 2% that we didn’t get right. Then he said that the critical voice in our head can beat us up over it. The great insight that he had was that everyone has the critical voice in their head, but most people can control it.
Unfortunately, there are a number of people where the critical voice dominates, and it becomes a mental illness. I believe that this is sometimes due to a hard upbringing or abuse. This has affected the ability of these people to be able to manage the critical voice effectively.
At Goldline Construction we believe in looking after everyone in the whole construction process. This means paying our builders a fair rate and paying them on time. It means doing the same with all our subcontractors too. When we have happy builders and happy subcontractors then they are happy to do a great job. They will come back to sort out any little issues because they value the ongoing work and relationship.
Our clients may pay a little more than if they went with the cheaper builder down the road. But they know that they will get a great job and they don’t have the same risk of the builder going belly up and not finishing their work.
Unfortunately, in the past the government has been guilty of adopting the win-lose policy of going for the lowest price. This has led to undercutting and unsustainable practises in the construction industry. They are currently addressing this and are adopting new policy. The new policy looks at making decisions around sustainability and the ongoing financial health of the construction company of choice. This new policy came into effect on the 1st of October this year (2019) and can be found here – https://www.beehive.govt.nz/release/new-rules-help-construction-companies
At Goldline Construction our philosophy is that All Shall Prosper. This means the owners prosper because they get a great job done. The subcontractors prosper because they get paid a fair price and on time. And we as a building company prosper because we get paid a fair price for our extensive knowledge and ability to facilitate and manage our jobs well. With this way of operating everyone is happy and great relationships are formed and nurtured. This in turn leads to good ongoing work and sustainable trading. It eliminates the stress that comes from being screwed down on price which flows on to financial hardship.
This article was written by Daniel Hemus. For more great articles you can check out our blog page here.