Why Keep Secrets from Your Team?

Nov. 1, 2010
Years ago, I made a statement that's often quoted: "Business owners often tell me they don't want to train their service technicians because they might leave." My reply was: 'What if you don't train them and they stay?'"

Years ago, I made a statement that's often quoted: "Business owners often tell me they don't want to train their service technicians because they might leave." My reply was: 'What if you don't train them and they stay?'"

Technical training efforts have increased tenfold over the years, but many owners still keep some of the most important business facts hidden from service technicians. As has often been said, the issue with finding quality technicians in this industry is not the lack of technicians, but an industry with too many owners.

This is not to suggest that good technicians cannot become great business owners, but too many good technicians who would rather have the job security of working for a good company get fed up with being underpaid by non-communicative business owners. These technicians start their own businesses without adequate cost and pricing information. Then, they become the bane of a market because they sell too cheap, survive on cash flow for a while, and eventually go out of business.

Not every good technician makes a good entrepreneur. As those of you who started as good technicians know, it takes a substantial amount of drive, willingness to accept risk, and either a basic understanding of the cost of being in business or the ability to learn and adapt quickly to the cost realities of being in business for yourself.

My question is: why not communicate the cost of being in business to technicians? Last week, while working with several groups of service technicians, it was amazing to see light bulbs pop on once the technicians understood the cost of a callback. Comments like: "Wow, I never knew government taxes and benefit programs cost that much." "You mean the boss doesn't get to keep $125 of our charge for a service call?" "The cost for phones, insurance, and trucks sure adds up in a hurry. I never thought about that before."

What was even more amazing was to see these same technicians, without any prompting, begin to brainstorm ways to save the company money. Sure, some of the ideas were not necessarily doable, but a number of practical ideas did surface. The owner of this company was amazed to see his employees actually raising money saving ideas — a number of which required more discipline on the part of the technician. These technicians bought into the idea that they make more money, receive more benefits, participate in more training, and get to drive new trucks the more money a company makes.

In talking with the service manager after the meeting, he made an insightful comment. "Too many technicians don't choose becoming a technician as a career. Instead, they stumble into a job, and as an industry and as owners, we treat the profession and the technicians in a way that reinforces this idea." If that stings, think about the accuracy of what he's saying. Count the number of times you've said or heard other owners say, "My primary job is babysitting."

How do we make the position of a service technician a career instead of a job? Start by being a better business person yourself. Make more money and invest a portion of it in training and wages more commiserate with a profession than a job. Compensate technicians based on their contribution to the profits of the company by tracking the performance of their individual trucks and sharing a portion of the profits.

Educate technicians about the cost of a callback, a free give away of a service on flat-rate pricing, an item left off a service ticket on time and material, an unnecessary trip to the supply house. Explain that the raw cost of a service call is approximately $90 when the hourly wage, 40% for benefits, $20 for truck expense and $40 to $50 for overhead are added together. If an hourly service rate is $150 that leaves $60 for profit before taxes. The owner might be able to enjoy half of that as a return on his investment in the business, but the other $30 gets reinvested in the business for new trucks, increased wages, training, better tools, increased cost of benefits.

So a callback, give-away, or unnecessary trip costs everyone. And that's only a portion of the story. The $90 cost comes out of profit, and if the typical HVAC business makes four percent profit before taxes, then $2,250 must be sold to make up the $90 in reduced profit. At an average of $150 generated per service ticket for five calls per day, it takes three days of service calls to make up for a $90 callback. This calculation doesn't take into account lost revenue that could have been generated.

Elevating the role of a service technician from a job to a career is a process, and it starts by communicating with the lifeblood of your company. Perhaps, the shared loss experience of a callback, giveaway, or unnecessary trip is the place to start.

Vicki LaPlant has been working with HVAC contractors for the past 30 years as a trainer and consultant. She is expert in helping people work better together for greater success. She is a Contracting Business.com editorial advisory board member, and can be reached by email at [email protected], or by phone at 903/786-6262.