Where is the industry going? What can we do today to ensure we’re prepared for the trends and changes coming down the pipeline?

Simple questions with crucial, potentially business-making answers. In this week’s “clip of the week” from Cracking the Code, EGIA Contractor University’s panel of experts lays out some hard truths and powerful predictions that you can start implementing in your business today.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on December 3.

Question: How would you align compensation with performance for a CSR?

Gary Elekes; Founder, EPC Training:

That’s a great question. The CSRs are responsible for booking calls, client satisfaction, the happiness side, the smile that transfers itself through the phone line. We know communication is limited because we don’t have the nonverbal, the body language side; voice intonation. So it’s a combination of things.

Call booking is the number one stat we’re looking for, so time-on-the-call would be something we’d be concerned about, but as long as the booking percentage is there that’s good. And then just in general, attendance and attitude and behavior towards core values.

I think what you do whenever you’re doing a performance-based compensation system is you look simply at: What behaviors do I want to transfer into the customer relationship? How do I want that individual to behave inside the company as part of the team? And how do I want that individual to grow from a career point of view?

So you have three basic criteria that you would look at and you would say, well, compensations and rewards systems go together. So the performance side of the pay system is: how many calls we took, how many did we book, and average time on the call. And you could say those are some pretty basic metrics, but most companies actually aren’t very good at tracking those. So you can use software to do that, but I would encourage you to make that the primary.

The second layer of that then becomes, does the CSR have a career plan? Are they taking workshops? Are they doing web-based learning? Are they completing the exercises that you want? Are they participating in the daily huddles? Are they making progress as an individual within the framework of the company?

So you can tie performance-based bonuses to that. It doesn’t have to be “book a call, get a penny.” It can be, “Did they complete the career-enhancement side of training and development so they become a better team member and a better employee?” So that is a way to create a bonus based on that.

And then the final product of that is part of the team. So we’ve always set up a gross profit bonus as it relates to the departments. So as a department budget, if we have a gross profit of X, once we achieve X as a department, then we begin paying bonuses out to the individual members of the department based on “X plus.”

There’s a million different ways you can structure that, but if $500,000 gross profit dollars is the number we’re seeing in service and we hit $600,000, there’s an increment there of $100,000. So depending on the rest of the performance of the company, a business owner might say “well I need that $100,000 to offset the negatives in another department.” But I would still suggest that some part of that $100,000 should have been driven toward a beginning bonus platform that we accounted for in a 2019 budget that said that the customer service reps, the dispatching function, the whole group of people who were in the call-taking and call-making side of the equation did a great job. So we’re going to create a team bonus, because we achieved something and that’s part of that celebration of success.

And it’s further than just compensation, it’s celebrating that; it’s making sure that people see the success. It’s having a get-together and lunches and doing things that are fun and making sure that you’re pulling people out who are successful and demonstrating that you’re calling them out in front of their peers and giving them recognition, appreciation, respect in front of their group.

So I think you have a combination of things you look at there; there’s always those three layers, and that also goes to other departments that are administrative. You could discuss bookkeeping, you could talk about the management functions, and you could talk about anything that doesn’t necessarily have a direct line toward production, sales, or areas that are pretty easy to measure.

I think when we get into the administrative side you want to be mindful of the fact that you would like them to participate in the success patterns. And so gross profit dollars, based on a department budget that they contribute to, is a good way to do that in addition to their individual metrics.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s call, or to see the schedule and register for future calls, click here.

In the October 2018 Snapshot Survey, we asked contractors all about overcoming seasonality. Here’s one survey question and its results from the summary report, which is now available in its entirety to EGIA members.

Question: In a typical year, does your company layoff (or hire) seasonal employees?

Once an all-too-common occurrence, seasonal layoffs have decreased to some degree in recent years as more and more companies have put an emphasis on seasonal initiatives and year-round planning to prevent the practice. When asked if they hire or layoff seasonally, 82% of contractors we surveyed said they do not, against 18% that do.

Most companies identify finding good people to hire as the primary issue they’re facing, so ensuring that, when the right person is hired, they don’t need to be let go during the offseason is of paramount importance. At the same time, someone who isn’t worth keeping throughout the year may not be an ideal hire just because it’s July, either.

Some best practices to flatten the seasonal cycles and keep employees busy all the time include putting an emphasis on service agreements when employees find themselves in homes during busier times in the year, so techs can focus on maintenance during slow seasons, as well as seasonal marketing initiatives to drive business when it doesn’t happen organically.

Login to access the full research report on local events and home shows.

For a deep dive into local events and event marketing, and to access training materials, recommendations and education pieces, visit the Contracting Best Practices Library at the EGIA Member Dashboard.

Question: How can soft skills increase margins?

Weldon Long; New York Times bestselling author:

That’s a great question and one that really gets me worked up, because I make my living teaching soft skills. It’s like, when I deal with organizations oftentimes outside the HVAC industry it’s very frustrating that sometimes soft skills can be minimized in terms of their importance. Just for the benefit of our listeners, so we’re clear, when we’re talking about soft skills we’re talking about communication skills – which are talking to people, listening to people – negotiating skills, conflict resolution, teamwork, problem-solving, motivation, leadership, those types of things. But a lot of organizations the emphasis is put on the hard skills of maybe being a CPA, or a technical person, a systems programmer, that kind of thing.

But to get more directly to the answer of the question, in terms of how soft skills can drive profitability, let’s just take a couple of them, right? Let’s start with communication skills. Well what’s the number one skill you need to be effective in sales? It’s communication skills, right? It’s your ability to listen, to understand what your homeowner needs, what they want, what emotions might be driving the needs and the wants. Communication skills obviously include our ability to communicate information about our company, how we do our installations, the values of our company. Well obviously, the better we are at the “soft skills” of communication, the better we are at demonstrating to our homeowner that we’re worth a couple of thousand extra bucks. So if I’m a good communicator and a good listener, a good talker, then I can demonstrate why we’re worth a couple of thousand extra bucks, obviously that’s going to have an impact on profitability.

Let’s take negotiation. The more effectively I can negotiate – with price, at the end, when I’m trying to close – the better I can negotiate with the homeowner, the better chance I have of negotiating a higher price; therefore higher margins, therefore higher profitability.

Teamwork: I’m working a company right now in California; it’s a pretty large company, probably $40 million to $50 million revenue per year. One of the biggest challenges they’re having right now, is that there’s a lot of conflict between the sales department and the install department. Let’s face it, salespeople are not especially technical, right, because they’re strong on the communication side but not so much on the technical side. And people who are installers, who have a strong mechanical aptitude, sometimes can’t relate to the salespeople. So there’s a lot of conflict between the two groups.

This can affect the profitability of a job, obviously, because sometimes the homeowner may be telling the installer, “Well, the salesperson promised this, this and this.” If there’s bad communication between the sales department and the install department, in many cases the install department will just make the change based on what the homeowner says, because they don’t trust the sales department, and as it turns out the salesman never made that commitment. But that decision on the installer’s part killed the profitability of the job because there was more materials, more labor, that sort of thing.

Well what we’ve been doing the last few months with this company is getting installers and salespeople in the same room and working on facilitating the communication. Team-building stuff. Well, what happened is that the installers are now more willing to call the salesman or saleswoman if there’s a problem before they do some additional repair or additional installation component that would cost the company money; that’s helping the profitability. I mean I could go on for a year and a half here on the impact that so-called soft skills have on profitability. Leadership, motivation – motivation is one that’s a never-ending battle, you know, it’s like Zig Ziglar said: “Motivation is like eating, you’ve got to keep doing it over and over again with your people.” If you’ve got a sales group that’s highly motivated, they’re more likely to stick in there and hold firm on margins; that’s going to help my profitability.

Leadership: the willingness and ability of my team to believe in me and our pricing structure. The stronger leader I am, the more people believe in what I’m saying, then the more willing they are to stick to holding margins at the closing table. So whether we’re talking about teamwork, leadership, motivation, negotiating, all of those things are going to have a huge impact on profitability.

In fact, I don’t even like the term “soft skills.” I know that’s the technical term, so I understand the question, because technically that’s the term. But I don’t think soft skills are soft at all, I think soft skills are hardline, bottom line, because they make a huge difference.
Drew, do you have any comments on that?

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s call, or to see the schedule and register for future calls, click here.

How do you drive business during the slow seasons, when the phone just isn’t ringing on its own? Promotions.

In the latest “clip of the week” from Cracking the Code, Gary Elekes explains how to leverage marketing to ensure your revenue remains consistent throughout the year.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on November 19.

Mastering sales is the theme on the latest episode of Contractor Coffee Club. This time, host Mark Matteson shares the 10 most proven strategies embraced by industry leaders across the board — strategies that result in unrivaled success and, in one particular case, a 95% close ratio.

Question: What vacation benefits should we offer to long-term employees?

Gary Elekes; Founder, EPC Training:

That’s a tough one, because each company has a financial constraint and how the company wants to set up its benefits program has a lot to do with the ability of the company to setup its benefits program.

If you had unlimited resources, obviously, you’d pay 100% of the benefits and you’d setup a benefit program and vacation policy that allowed you to maximize recruiting. But if you’re in a position, like most of us are, where the cost of benefits is pretty much escalating year after year, you have to make some decisions about what you can afford as a business. That goes back to your costing, pricing, your ability to recover cash flow and so forth.

Most companies today are competing with larger companies that are recruiting into our world, meaning that we have to find people and bring them into our trade. So typically that means you have to offer a benefits package that’s at least as competitive, if not more competitive to bring somebody in.

So traditional vacation is starting off at two weeks, once you pass a probationary period of some form; you probably don’t even want to say that in the California world, it’s more of an “employee trial” period now. So you start off with that and then you would escalate that — over the first five years you might consider the idea of adding a day per year, so that by the time they’re at five years they’re at three weeks [vacation].

That would be a competitive platform, based on employment research. In fact I just went through that in one of my companies, where we were evaluating our competitors, we were evaluating all non-industry sectors, and that’s essentially where the average is today. When I started working way back when, it was not that generous.

So that’s the first question. The second question then is how do you package the benefits with that? So 401K, profit-sharing plan, paid time off, those types of benefit need to be a part of that. And then you also have that discussion of, what other benefits do you want to give? Career development, training, cellphones, employee cars. I think one of the things we want to do is be sure to make our employees understand the true nature of the benefits you’re delivering. So a lot of companies won’t necessarily look at all those extra benefits that we provide that’s part of being an AA technician, installer, someone that’s in sales in your company. So I would take the time to put that down on an Excel spreadsheet and really look at what you’re doing to provide all the benefits that includes things like career development training, conferences, stuff like that as well.

It’s a tricky question, I don’t think there’s one right answer, there’s no KPI on this, but it does relate back to the idea that we have to recruit and we have to have a world class type company in our marketplace, or else we’re not going to be able to get the talent we need in order to grow the business. And I think that’s the number one challenge that we face right now is that issue, and benefits are one area where that applies.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s call, or to see the schedule and register for future calls, click here.

Less than 15 years ago, Parker & Sons did $7 million in sales. In 2018, they’ll surpass $100 million. How did they accomplish such incredible growth?

In the latest episode of Contractor Coffee Club, Parker & Sons owner Paul Kelly joins host Mark Matteson to explain exactly what he’s done, what his company focuses on, and what they continue to strive for in order to reach those heights … and continue that growth.