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While cleaning boilers at his first HVAC job during high school, Tom Howard kept a mental list of his bosses’ blunders and swore he wouldn’t make those same management mistakes when he started his own business someday. “I thought, ‘Oh, if I own my own company, I wouldn’t do that. I would treat people better and everybody would love me,’” says Howard, President and Co-owner of Lee’s Air, a leading HVAC and plumbing service provider in Fresno, Calif. “Obviously, that didn’t happen.”
In addition to Lee’s Air, Howard now owns multiple residential and commercial service companies in the central California area, including a pest control company and an engineering company. All three independently-operated businesses tripled their revenue or better in the first four years after Howard purchased them. When he’s not working on his own companies, Howard consults for other small business as co-founder of Blue Collar Profits LLC.
“When I bought my own company, I realized why all of the former business owners and bosses I had acted the way they did,” Howard says. “I realized how hard it was. I had to come to the realization that not everyone was going to like me if I was going to run a real business.”
Howard now understands first-hand how difficult it is to attract and retain the best talent amid a national shortage of workers in the skilled trades industry. It’s a widespread problem of supply and demand, with job opportunities rapidly increasing while fewer workers choose a career in a skilled trade over a four-year degree. Adding to the already urgent problem, millions of Baby Boomers working in skilled trades will soon retire.
“I realized my business couldn’t keep growing if I couldn’t get more people,” Howard says. “I literally could not train them fast enough. We were growing pretty quickly at the time. I really had to figure out how to keep some people and attract new people as well.”
Real Cost of Job Turnover and Training Skilled Technicians
The Bureau of Labor Statistics expects HVAC jobs to be added at a rate of 13% through 2028 — more than twice as fast as the national average for all other occupations. The HVAC industry isn’t the only one feeling the crunch either. Even television’s Mike Rowe from the show “Dirty Jobs” has been called to testify before multiple congressional committees to address the nationwide labor shortage across all skilled trades in the U.S.
Trained and experienced tradesmen know they’re in high demand, making it even more important for owners like Howard to continuously come up with novel ideas to keep the top talent on his team from jumping to a competitor — and attract new employees who he can truly invest in.
Howard, who earned a finance degree from Brigham Young University, did an analysis to quantify the real cost of job turnover at his HVAC company. His internal study found a new technician right out of technical school costs Lee’s Air about $45,000 when accounting for onboarding time, on-the-job training and the increased callback rate until that tech learns the ropes and reaches full competency. A new warehouse worker costs the company approximately $11,000 in training and rookie mistakes, while a dispatcher costs about $18,000 to get up to speed.
Howard says the company realized after the analysis they had to change some things to retain and attract top-tier talent — which ultimately resulted in better profit margins, happier customers and a more satisfied staff.
Here are the three main ways Howard achieved those goals by creating a company culture people want to work in long-term:
1. Give Your Service Employees What They Want
This first one comes with a big asterisk, Howard says. It’s about giving employees what they want within reason, or finding ways to make them feel like they’re getting what they want and improve their outlook on their chosen career path.
The idea came to Howard when he first introduced free snacks. At first, they set the snacks out in a basket for all employees to grab as they passed by. Howard quickly noticed the staff didn’t seem grateful, instead taking several bags of chips or a handful of treats at a time.
He thought about what one of his salespeople always says about “making the invisible visible” by building value the customer can clearly see. When his general manager bought a used vending machine to replace the basket of freebies, they clearly marked how much each snack was worth — although the snacks dispensed for free.
Employees started taking less food, because they had to wait in line and take time to push the buttons, but also because they could see the value of what they were getting.“They were so blown away that we had a vending machine and everything was free that they started telling all of their friends,” Howard says. “They started getting excited."
He realized he needed to package his employee benefits in a visible, tangible way that made the staff feel more positive about the company perks. To do that, Howard says he had to first figure out exactly what his employees really wanted.
Howard started setting aside money at the end of each year to invest in improving company culture and surveyed his employees on what to buy. The first year, the staff decided on massage chairs, which they’ve now had in the office for about five years.
“People got excited about it — it was something they started talking about and telling their friends,” Howard says. “It’s definitely a point of differentiation, which we talk about all of the time with air conditioners, trying to figure out ways to make ourselves not just a commodity and compete on price. I don’t think we do that enough when talking to our employees and advertising to them.”
Howard turned the televisions that served as goal boards into XBox and PlayStation gaming stations and added a donated pool table for the staff to enjoy while on break or before and after their shift.
“Really, the cost of these things are not that high,” says Howard, who used the money set aside to have the pool table set up in the conference room and leveled. “Since they’re one-time costs, you spend it once and it keeps paying dividends for a long time.”
2. Build a Productive Feedback Culture at Your Company
Howard also found inspiration from his prior experience working with a California autism center. The owners always talked to Howard about how behavioral analysis helped children with autism learn. “They showed how the children really need to be rewarded as quickly as possible, because they needed to tie the reward to the action they were doing,” Howard says.
Howard realized they needed a way to instantly reward good work and give company-wide recognition as positive reinforcement. While performance-based pay incentives are certainly popular, they’re not received immediately and the reward isn’t on public display. “A lot of times, when we’re giving out spiffs and bonuses, they do something good on Monday but might not find out about it or get the actual reward until two weeks later on their paycheck,” Howard says.
Lee’s Air began recognizing sales by utilizing the automated text messaging through ServiceTitan to alert the entire sales staff every time someone on the team makes a sale, versus only notifying management for logistic purposes. Howard says it built camaraderie and healthy competition within the company, although one particular employee hated the award system — except for when he made a lot of sales. “But, I’ve got one sales guy who gets all excited every time someone sells something, because he knows we’re building as a team,” Howard says.
They also built performance boards based on customized reports pulled from ServiceTitan data, which populate roughly 15 Google Slides sent out each morning. The daily analytics displayed in the office track various performance metrics — from lead generation and conversions to sales totals for each job. Individual leads are listed by status and include the price of completed work for everyone in the company to see.
Knowing the status of their leads and which ones led to a sale not only bolsters performance, but also simplifies office logistics. “That really stopped the guys calling into the office asking all of the time, ‘Did my lead sell? Am I getting my spiff?’ ” Howard says. “Not only did it slow down the calls in the office, but also gave them those immediate rewards they’re looking for.”
When the skilled tradesmen get their daily performance report detailing something positive they did the day prior, Howard says it gives them something to get excited about. “It’s really easy for people to feel like they only get talked to at work when something goes wrong, but if they’re doing something well, they rarely hear about it,” Howard says. “Once we got these performance boards set up, you could easily see the guys and gals in the field who were doing really well. It would remind you as a business owner to touch base with those high performers.”
Howard searched for other instant, non-monetary ways to incentivize positive performance for simple but important tasks, like getting a customer review, and ultimately decided to implement a year-long competition within the office.
In addition to sometimes receiving a small bonus for menial tasks, management started handing out numbered ping pong balls they painted in the company colors when workers did something worthwhile. At the end of the year, the company pulled the ping pong balls from a big jar to give away things like an iPad and a TV.
Howard liked that he could hand out the balls to immediately recognize positive performance throughout the year, and says the yearly drawing helped build enthusiasm among the team members. “It cost me the same amount of money for the stuff that I had to [buy], whether I had 20 employees or 75,” Howard says. “I’m really big on cutting overhead, and this was a really good way.”
3. Market Your Company Culture to Attract New Talent
Spreading the word about your company’s employee perks and culture is the single most important aspect of acquiring fresh talent, according to Howard. “We can retain all of the people we want, but if we’re not attracting new people, we just aren’t going to have the people we need.”
To spread the word about their employee benefits, Lee’s Air decided to create a low-budget YouTube video using a cell phone camera to highlight the company’s culture and give a behind-the-scenes peek into their unique workplace environment.
In the video, they interview current employees who left a competitor to work there and asked them to explain why they liked their job. “We had people coming in from four or five different companies around town,” Howard says. “We wanted people to see that it’s not bad to make a change.”
While the video only got 825 views on YouTube, their exposure exploded to more than 62,000 views when they posted the video on Facebook and spent $800 to boost the marketing video to reach a targeted audience in a specified area for two weeks. It was a lot cheaper than a traditional radio ad and the video included rich details a radio or online search ad could never convey.
“Here’s the deal, these people who are in the video and even other employees at our company, they get excited when they’re in a video, right?” Howard explains. “So, they’re going to share it with their friends, probably about a half dozen times. And, the reality is their friends on Facebook are pretty much everyone they work with and people they see at the supply house.”
Howard says even in a city the size of Fresno, which is a tight-knit community when you work in the service industry, the impact of the video rippled throughout the area. “It was just absolutely amazing to see what happened after that, because we started getting phone calls like crazy,” he says.
One team member witnessed a supply house staffer watching the promotional video on his phone while a competitor placed an order less than 10 feet away, even turning the phone to show everyone what he was seeing on the screen: “You’re never going to believe this. Lee’s Air has a pool table in their conference room!”
Just a couple of days later, when Howard went in early to open the office, he says there were four job seekers already lined up outside the locked front door. “I had two top-level employees from another company say, ‘Look, I will take less money. I don’t care what it takes,’” Howard says. “I mean, it was insane.”
Howard credits the video promoting the company culture, along with their retention efforts, for making the biggest impact on his bottom line. “It made such a big difference in our company. We went from $5 million in sales to $9.4 million, and the year before that we went from $3 million to $5 million,” Howard says. “We’ve kept growing much further beyond that, and we wouldn’t have been able to sustain that kind of growth unless we had the talent we needed.”
Treat Your Employees Like Loyal Customers
To help retain and gain quality employees, your company must show them they’re getting more than just a paycheck. Develop a work culture that motivates employees using productive feedback and incentives they really want — and consider offering incentives to those employees who don’t want to be a part of the culture you’re cultivating.
"I think attracting and keeping employees is just like attracting new customers and keeping existing ones,” Howard says. “Unfortunately in our industry, we spend a lot of time trying to figure out how to sell air conditioners and get more customers, but we don’t realize we should be spending the same amount of time marketing to new employees and our existing employees to keep them.”
Howard wants to make sure everyone who works for him truly wants to be a part of the team, so he borrowed an idea from e-commerce giants Amazon and Zappos and offered employees a $1,500 bonus if they decided in the next seven days they didn’t want to work there anymore. “We call it the employee relocation program,” Howard says. “Anyone who doesn’t want to be here, I really want to help you move onto the next thing, I really do.”
He says the offer was targeted at the few naysayers on the staff who complained about not buying into the company culture. Only one employee, who said he already planned to resign, took the money to cover costs related to his mother’s recent death, and Howard says he was happy to help in that instance.
“Look, if you’re not willing to get paid to leave, you really shouldn’t be complaining. I mean, you’re free to go,” Howard explains. “It really weeded out people who sat around and just whined about it. Funny thing is, most of them didn’t leave. They just stopped whining.
“It totally changed the culture here,” Howard concludes. “And, it made this a better place to work and be each day.”