TRANSFORMING TEAMS

Compensation planning during a pandemic Why it’s more important than ever

2020 has sure been a challenge. Employers have struggled to keep businesses open and have been challenged to develop new markets, products, and services in record time.

If your business is food service, hospitality or leasing office space, 2020 may have been a dismal year. At the other end of the spectrum, grocery stores and home improvement stores have enjoyed hugely successful years. And, of course, the number of tech jobs continues to increase.

Most economists predict the economy will continue to rebound throughout 2021, but at an uneven pace. might be implemented has yet to be determined, but these include: 3. Review Compensation and

The varying impacts of 2020 and • End the tax cuts enacted in the Related Policies and Procedures all the unknowns of 2021 make com- 2017 Tax Cuts and Jobs Act. The legislative changes described pensation planning more important • Increase income taxes for high above require that you review and than ever. Here are the things you income earners (>$400,000). update your minimum wage and paid need to do now to effectively plan for • Restore federal workers’ rights to family and medical leave policies to 2021 and beyond. unionize. comply with state and local require• Remove the Social Security ments. Not all of these changes occur 1. Get (and Stay) Up to Date on Payroll Tax Deferral option. on January 1. Legislative Changes And some of your other policies

States and municipalities have 2. Review Paid Salaries and procedures may be outdated. For enacted legislation that impacts com- If you hired new employees during example: pensation at breakneck speed. This 2019 and early 2020, chances are you • 15 states have now legalized recrepresents a unique challenge for had to hire them at higher salaries – reational marijuana. Your drug testing employers doing business in multiple maybe higher than the salaries of cur- policies may require review/revision as locations. The changes are too numer- rent employees doing the same work. a result. ous to list, but some of the most signif- This issue, known as salary compres- • If you have written policies icant include: sion, can occur throughout an orga- regarding work at home or flexible • 23 states have minimum wage nization but is most common when schedules, COVID-19 may have made increases scheduled for 2021. entry-level employees, hired at $14 to them irrelevant or, worse, inaccurate. • 10 states have approved a $15 $15 an hour because of competition Now is the time to review those as minimum wage. for candidates, make the same or more well. • Nine states now offer paid family and medical leave. than lead or first-level supervisors. If you typically give year-end salary 4. Plan Year-End Bonuses and

At the federal level, Biden has increases, now is the time to make the Incentives vowed to take several actions to sup- determination of whether you’ll award Because of COVID-19, many orgaport workers. When and how these them and the amounts necessary to nizations and individuals will not maintain both external competitiveness achieve their 2020 business objectives. and internal equity. 22 n The Merchant Magazine n December 2020 Building-Products.

You may have done all the necessary work to establish goals and a budget early in the year only to find they are no longer relevant.

If your organization often awards discretionary year-end bonuses, you may find that option unaffordable this year.

Now is the time to determine if, when, and how you will pay 2020 bonuses and incentives. Managing employee expectations is key, and that requires thoughtful communication planning and implementation.

5. Plan 2021 Salary Increases

Early projections for 2021 forecast base salary increases from 2.3% (Economic Research Institute) to 2.9% (World at Work). These forecasts were made in the fall of 2020 and consider the volatility of 2020 and the uncertainty of 2021.

These forecasts, combined with your organization’s unique issues related to affordability, external competitiveness, and internal equity should be considered as you plan 2021 salary increases.

6. Plan 2021 Bonuses and Incentives

The high-risk business environment and uncertainty expected in 2021 may require changes to 2021 incentive planning. Setting lower goals and/or changing the mix of performance measures are probably the first steps to consider. Doing this, however, requires consideration of the total cost of the incentive plans relative to adjusted goals and metrics.

Similarly, those with longer-term incentive plans and goals (e.g., three-year plans) should consider changing to shorter-term plans since long-term goal setting in times of serious economic uncertainty becomes virtually impossible.

7. Understand Your Competitive Markets and How They Have Changed or Remained the Same

If you’ve historically hired a lot of entry-level employees, you may think that hiring them in 2021 will be easier because so many are unemployed. But think again. You may have different competitors. Grocery chains are recruiting record numbers of employees, as are other large retailers like Amazon, Target and Walmart. And they’re pretty much all paying $15 an hour, whether it’s legally required or not.

And if you hire specialized tech employees, expect the market for skilled personnel to remain as tight as ever. And expect a lot of these new hires to request flexible schedules and/or the ability to work from home.

8. Develop a Comprehensive Employee Communication Strategy

Employee communications have been particularly challenging this year, often including discussions about furloughs, layoffs, termination and deferred or canceled salary increases. Add in the difficulties of communicating with employees working at home, and the challenges become overwhelming.

It’s critical to develop your year-end employee communications now. The three key components of your communication strategy should be: • Legislative changes and how they will impact policies, procedures and employee paychecks • Plans for year-end base salary increases, incentive plan payouts, and discretionary bonuses • 2021 planned changes to base salaries, incentive plans, and related compensation policies and procedures

And don’t forget to recognize your employees and thank them for their contributions and sacrifices. It has been a tough year for all of us!

Susan Palé, CCP Affinity HR Group contact@affinityhrgroup.com

Honsador Purchases Kauai Truss Plant

CanWel Building Materials Group’s Honsador division has acquired the Vickers Island Truss’ truss design and manufacturing operation in Lihue, Hi.

Founded in 1995, privately owned Island Truss is the only truss plant on Kauai.

“Island Truss is a very reputable and well-respected brand on Kauai and in surrounding markets and we are very pleased to be able to further solidify and expand our presence in the Hawaiian market with this acquisition,” said Amar Doman, chairman and CEO of CanWel. “We welcome our new employees at Island Truss, and thank David Vickers for building such a strong business over the years. We are very proud to have this great company in the CanWel family and excited to have David as part of our team as he heads up our Honsador truss division, bringing his excellence and experience to our truss operations at Honolulu and Hilo.”

West Fraser Buying Norbord

West Fraser Timber, Vancouver, B.C., is acquiring Norbord, Toronto, Ont., in a $3.1-billion, all-stock deal.

When the deal closes, expected in the first quarter of 2021, the combined company will operate as West Fraser and become the top global producer of both lumber and OSB.

The companies have entered into a definitive agreement pursuant to which West Fraser will acquire all of the shares of Norbord. Upon closing, current West Fraser shareholders will own approximately 56% of the company, with current Norbord shareholders owning 44%.

West Fraser intends to retain all Norbord mills in North America and Europe, as well as current Norbord management and employees to continue to grow the engineered wood business. West Fraser will continue to maintain a significant office presence in Vancouver, Toronto, Quesnel and Memphis, as well as in Norbord’s existing European locations.

West Fraser will continue to be led by Raymond Ferris as CEO and Chris Virostek as CFO. Norbord CEO Peter Wijnbergen will become president, engineered wood, responsible for OSB, plywood, particleboard, MDF and veneer operations.

Sean McLaren, currently West Fraser’s VP, U.S. lumber, will be appointed president, solid wood, responsible for all of the company’s lumber operations.

West Fraser’s board of directors will continue to be chaired by Hank Ketcham. Two of Norbord’s current independent directors will join the West Fraser board.

Plywood Mill Sued Over Death

The mother of an electrician who lost his life at Columbia Forest Products’ hardwood plywood mill in Klamath Falls, Or., has filed a wrongful death lawsuit.

The plaintiff is suing Columbia for nearly $5.5 million three years after her son, Francis Crispen, fell into a vat of scalding liquid while he was repairing an electrical cord that operates a motor at the mill. She alleges the plant failed to install the proper safety equipment, such as guard rails or other fall protection, that could have prevented the fatality.

Maibec Acquires Stave Lake

Maibec Inc. has agreed to purchase Waldun Forest Ltd.’s Stave Lake Cedar Mills prefinishing facility in Dewdney, B.C., as well as the assets and brand rights for Stave Lake Cedar Shingles, value-added western red cedar and yellow cedar shingles.

Stave Lake Cedar Mill will operate under the name of Maibec Stave Lake, and Waldun will remain a major shingle supplier to the plant.

Originating in 1939, Stave Lake Cedar Mills was acquired by Waldun in 1992, determined to make the best line of R&R shingles in the industry.

“Maibec is very excited to finally add western red cedar shingles to its portfolio,” said CEO Patrick Labonté. “Purchasing a facility on the West Coast is a major milestone for Maibec. It will enable us to cover the Canadian and the U.S. markets with innovative and high quality prefinished products from one coast to the other. This facility will be a stepping stone for our western expansion. “

Fortune Acquires Larson

Fortune Brands Home & Security has agreed to acquire storm, screen and security door manufacturer Larson Manufacturing, Brookings, S.D., for $660 million.

Fortune is also renaming its Doors & Security segment to “Outdoors & Security” to better represent its brands, such Therma-Tru and Fiberon.

“The acquisition of Larson is aligned with our strategic focus on the fast-growing outdoor living space,” said CEO Nicholas Fink. “The Larson suite of products creates a bridge from the inside to the outside of the home, and further strengthens Fortune Brands’ offerings in doors and decking.”

NEWS Briefs

84 Lumber plans to open new lumberyards early next year in Stockton, Ca., and Boise, Id.

Beacon Hill Hardware , Colorado Springs, Co., sustained “significant damage” in a Nov. 10 fire of undetermined origin.

Cascade Hardware True Value, Cascade, Id., is building a larger replacement store.

Ace Hardware Corp. inked a lease for 128,982 sq. ft. of warehousing space at Airport Distribution Center in Denver, Co.

Urban Lumber Co ., Springfield, Or., has acquired Urban Hardwoods LLC, Seattle, Wa.

Weyerhaeuser has completed the sale of 85,000 acres of timberland in mid-Coastal Oregon and 149,000 acres in southern Oregon for approximately $40 million in cash to Hancock Natural Resource Group.

Northwest Hardwoods , Tacoma, Wa., has filed to reorganize under Chapter 11 bankruptcy protection, shortly after reaching a restructuring deal with most of its note holders that will cut its debt by $270 million.

Metrie is celebrating the 30th anniversary of its Ferndale, Wa., facility.

MI and Milgard Windows & Doors raised a record $1.4 million for charity at its annual MI Foundation Charity Golf Outing in October. As part of this event, the foundation is donating 600,000 meals to food banks in communities where MI operates manufacturing facilities.

Trex Co . was named #57 on Fortune’s 2020 list of the 100 fastestgrowing companies in the world.

Investment Firm to Acquire US LBM

US LBM, Buffalo Grove, Il., has signed a definitive agreement for Bain Capital Private Equity to acquire a majority stake in the company. US LBM will continue to operate under the leadership of president and CEO L.T. Gibson and the current management team.

Founded in 2009 with 16 locations in three states, US LBM has grown to be a leading national distributor of specialty building materials with over 250 locations. Its unique operating model combines the advantages of its national scale and central team of industry experts with the high service levels, local expertise, entrepreneurial culture, and customer relationships of its 37 operating divisions.

Bain’s global experience in building materials includes investments in businesses such as HD Supply and MKM Building Supplies. Kelso & Co. has been US LBM’s investment partner since August 2015.

The transaction is expected to close this month. HD Supply Returning to Home Depot

Home Depot has agreed to re-acquire HD Supply.

According to Home Depot CEO Craig Menear, “HD Supply complements our existing MRO (maintenance, repair & operations) business with a robust product offering and value-added service capabilities, an experienced salesforce that enhances the strong team we have in place, as well as an extensive, MRO-specific distribution network throughout the U.S. and Canada.”

The deal is expected to be completed during Home Depot’s fiscal fourth quarter, which ends on Jan. 31, 2021.

HD Supply is one of the largest building material distributors in North America, serving 300,000 customers from 44 distribution centers in 25 states and two provinces.

Stora Enso OK’ed to Sell CLT into US

Stora Enso has received approval for producing and delivering CLT (cross-laminated timber) panels to the U.S. in accordance to the International Building Code and certified in compliance with the North American CLT standard ANSI/APA PRG 320-2019, Standard for Performance-Rated Cross-Laminated Timber.

The changes in the 2021 issue of the code now allow to construct buildings from mass timber of up to 18 stories, compared with just five before.

The CLT panels by Stora Enso will be manufactured in its biggest mill, at Ybbs in Austria. The company is also pursuing the same certification for Zdirec mill in the Czech Republic, which is currently adding a fourth production line. The CLT panels can be produced up to 9.68 ft. wide and up to 52.5 ft. wide.

Steve Lieberman, business development manager for North America, said, “Previously, we have been restricted to buildings no taller than five stories or special one-off assignments, so this is a real game changer for us. It took some months to get it, but now we have the ‘license to operate,’ and this is very exciting news for the North American market.”

The ESR-4381 certification makes the CLT panels compliant with the 2018, 2015, 2012 and 2009 IBC, making Stora Enso CLT panels acceptable for structural use in the U.S. The ESL-1170 report states compliance with the National Building Code of Canada 2015.

In addition, Stora Enso has completed the ICC-ES Evaluation Report ESR-4381 supplements for the State of California and the city of Los Angeles.

TREX has partnered with Albertsons’ nearly 1,700 pharmacies to collect over 54,000 lbs. of medication bottles to recycle into composite decking.

Do it Best, Orgill Move Markets Online

Do it Best Corp. and Orgill are switching their spring markets to virtual events.

Do it Best’s spring market will be held from March 7-19.

“While we had to pivot quickly to move our fall market to an online format, it far exceeded expectations,” said Do it Best president and CEO Dan Starr. “We posted a strong increase in overall attendance and number of stores participating along with substantial growth in member purchases. We were able to connect with our members on special deals, new products, and training opportunities. With what we’ve learned, we’re looking to make the spring market even better, drawing in more members to lock in all the great savings available.”

Do it Best is also considering other opportunities to bring members, vendors and staff together in late spring for a special event. More info will be provided in early 2021.

The next fall market is scheduled for Sept. 17-20 at the Indiana Convention Center in Indianapolis, In.

Orgill meanwhile will replace its spring market with the first of several online buying events planned for the new year. Similar to its successful e-Volution online market held last August, it will run from Feb. 8-19. A pre-event planning period is set for Feb. 1-7.

Plans for additional online buying events and interactive educational conferences will be unveiled in early 2021, including an August fall market in Chicago. Going forward, Orgill will take “a more dynamic approach to its physical shows that will incorporate online, live and hybrid events.”

“The days of a stand-alone physical event are a thing of the past,” said Greg Stine, executive VP. “We believe that this expanded strategy will provide a platform of support for our dealers, allowing them to efficiently buy products and gain knowledge that will help them grow and strengthen their businesses.”