OK, I lied to get your attention, but only about the hot stock tip. Getting the most out of your company requires investment in buildings, trucks, inventory, tools and office equipment. We all have these investments and, we would hope, realize a return on investment equal to or exceeding the return we could get on a safe bank CD. Also, we eventually end up with an investment in accounts receivables and operating capital to fuel the ships we call our businesses.
While we want to receive that ROI on the above investments, there isn’t a lot we can do to maximize that return in managing those assets. We can look at rent allocation, dollar volume per truck and turns on inventory. Even with the best effort, a marginal effect is all we can expect. We can, however, receive a major ROI on a key asset we haven’t yet mentioned. That asset is our people. If you look at your income statement, I’d bet the single largest item is your payroll. Yet, many of us spend little time or money on training and education aimed at maximizing their effectiveness and service levels.
Ask yourself a question. “How would a 10% increase in sales, at a 10% higher price, using the same number of employees, affect your bottom line?”
The math I took in school said that this example would add $120,000 to the bottom line of a $1 million company. I’d take that in a heartbeat. All of that is profit with no additional customers or employees. Experts tell us that a well-trained service person with customer skills can sell up to 25% more services at a higher price.
Now back to the investment discussion. Let’s suppose that you take the time and expense, not to mention the personal effort, to put together a monthly training schedule. Let’s mix it up with technical and business subjects, such as customer relations. I would suggest that you hold it during the day on a schedule that includes lunch. We have a program in our company that brings in factory trainers or customer relations educators at 11:00 A.M. for a two-hour session including lunch. This allows one-and-a-half hours for presentation with a question and answer period during lunch. Back to work at 1:00 P.M.
Not only does this allow you to have people come to train during their normal business hours, it tells your people how important you view the matter of training. We pay for an hour and a half and buy lunch. This is all held in our training center, which can comfortably seat 20, complete with audio/visual capability. We also have a lab with furnaces, A/C condensers and a heat pump to work on and demonstrate operation. The majority of the furnaces are hooked up to run. Manufacturers’ reps love to come and donate their time and knowledge in that environment, free and on a regular basis. It sure beats sending the crew to a distributor’s location two hours away and it saves time away from the job and family.
To supplement our in-house training, we also participate in business management education programs offered through the Plumbing-Heating-Cooling Contractors – National Association, the PHCC Educational Foundation and Quality Service Contractors. We’ve been able to easily apply what we’ve learned in areas like business operations, project management, financial management and customer service back in our shop. I encourage everyone who isn’t a member of a trade association to join one so they can be on top of the latest trends and learn how to make their business better.
With a commitment to training, not only will you have a technically better workforce, but customers will be treated better, become more loyal and be less likely to shop around. Most good customers recognize the value of good, professional service and are willing to pay for it. When we get discouraged about losing a customer to price competition, I think we need to recognize that, in most cases, we didn’t do a good enough job demonstrating the value of our company. Only our people can do that, and then, only if we communicate our expectations and give them the tools they need to succeed.
In addition, surveys indicate that employees that are trained appreciate the value of the training and, more importantly, the value you, the boss, place in them. Training and education gives them the confidence to go before your customer and represent your company in the best light. Remember that nothing happens until somebody sells something and your best sales person is in the customer’s home and on the phone when they call in. Put your best foot forward and reap the benefits of having the best-trained and motivated people possible in front of your customer.
The most successful companies seem to train, motivate and reward their staff. They aren’t the cheapest, the biggest or even the flashiest in most cases. They are, however, probably the most fun to run, longest operating, and most profitable in the neighborhood. They are less dependent on the boss and operate within a system that allows them opportunity, responsibility and the satisfaction knowing the customers appreciate them as much as the boss does.
So try making a significant investment and the commitment to helping your people make your company a success. Everyone will benefit.
For more information about educational programs available from PHCC, visit www.phccweb.org or call 800/533-7694.