A Question Of Value
In my past columns I’ve consistently beat the drum for increased compensation and fringe benefits for the service technicians and journeymen who are the most important employees in our contracting businesses. They labor very hard, and are the crucial link with customers — at least on the service side of our business. How these men and women perform their jobs can make or break our companies.
Yet, all industry compensation surveys show them to be, on average, grossly under-compensated compared to what other skilled and nonskilled people are paid throughout our economy. The most credible source of nonunion pay scales comes from an organization called PAS Inc., which reports average wages nationwide of around $16 an hour for plumbing and HVAC service techs. That translates to about $32,000 a year. Moreover, since PAS tracks mainly commercial-industrial mechanical contractors, I suspect their figures are a bit higher than the average residential PHC contractor pays.
And, of course, “average” means that many contractors are paying even less. In some parts of the country services techs make less than $10 an hour. The excuse is always that the cost of living isn’t as high as in the big urban centers. That may be so, but I don’t think there’s anywhere in this country where $8 or $9 an hour represents a decent wage for a skilled PHC technician. Nor do most contractors in our industry offer fringe benefits like paid vacation, health care and retirement plans that compare well with those of other industries.
Union pay scales around the country tend to be about a third higher overall, which projects to an annual income of between $40,000-$45,000 without overtime. This is better, but still not enough to my way of thinking.
So what should the skilled PHC service tech earn? That’s the question most asked of me by hundreds of contractors who have responded to my columns dealing with this subject.
There is no standard answer. Pay scales will vary by region and by company. But one thing’s for sure: You can’t pay your people what they’re worth if you are wedded to the traditional “going rate” for PHC services that prevails in your area.
Comparing Value: One way to answer the question of how much to pay is to compare what our employees make compared with workers in other fields. Auto assembly line workers cost Ford, General Motors, Chrysler and other companies on average $45 per hour in wages and fringe benefits. This translates into $90,000 dollars per year for a 2,000-hour year.
How can they afford it? Let’s rephrase the question: How can we afford it? That’s because you and I pay for 100 percent of those costs every time we buy a car. Cut auto workers’ pay and benefits in half, and we might save a few thousand dollars in the price of an automobile. But the UAW and auto industry management have come to grips with the fact that their employees are not only valuable workers, but also human beings who deserve a decent standard of living.
Keep in mind that auto assembly lines involve fairly simple tasks that most people can learn in a matter of hours or days. Most of the work is categorized as unskilled or semi skilled at best. You don’t have to put someone through years of apprenticeship training to become an auto assembler. You can hire someone off the street and have that person contributing in a productive way within a week.
Information Technology: A recent press release that I came across on the Internet revealed a salary survey for information technology workers by RHI Consulting, a leading specialized staffing service that provides information technology professionals on a project basis. Their annual salary survey is based upon an in-depth analysis of thousands of job orders managed by the company’s U.S. offices. Key findings in the 1999 RHI Consulting Salary Guide revealed the following:
- Database administrators will earn between $61,250 and $88,000.
- Webmasters can expect starting salaries of between $51,000 and $73,000.
- Software package implementation specialists, i.e., people who install “off the shelf” business application software, will experience starting salaries between $56,000 and $80,000.
- Electronic commerce specialists will earn between $45,000 and $73,000.
- Project managers will earn between $60,000 and $80,750.
- Software developers with installation and development expertise will earn between $50,000 and $65,000.
- Network administrators will earn between $42,750 and $59,750.
- Chief information officers will earn between $113,500 and $180,000.
- Help desk managers will earn between $67,500 and $85,500.
Granted, these are not unskilled positions. Information technology workers tend to be people with computer science degrees or college graduates in other subjects with extensive computer training.
But does that make them any more valuable than our PHC service technicians? Does it take any less time to train a good service tech than it does to earn a college degree? Does a top service technician have to be any less intelligent than the people who design and maintain corporate Web sites? Does the work that our techs do in protecting people’s health and safety, working in often dangerous conditions with electrical and fuel connections, have less intrinsic value than communicating via the Internet?
Crux Of The Problem: Deep down, many people in our industry think so. I am haunted by a story told to me by my friend Jim Olsztynski years ago.
As anyone who has heard my seminars knows, I firmly believe that every PHC contractor should shoot for personal compensation of at least $100,000 a year in return for all the risk and aggravation involved in running one’s own PHC business. Less than that, you’re probably better off working for someone else.
Jim was attending a seminar I put on at an NAPHCC convention. I had just finished the segment of my presentation in which I discussed the $100,000 a year goal when it was time for a break. While exiting the room, Jim overhead one contractor in attendance say to another, “There’s not a contractor in the world worth $100,000 a year!”
It wasn’t just one man’s idiotic opinion. This is an attitude that I’ve since discovered is widespread within the industry. The sad truth of the matter is that to a great many contractors, the average technician income of $32,000 a year sounds like “good money.” They think just because they have to scrimp and pinch every penny, all of their customers are in just as bad of shape.
If contractors don’t truly believe that they and their key employees are worth more than the pitiful industry averages, how can we ever convince the marketplace to pay the prices needed to provide an equitable living for all of us? And if we don’t, how will we ever attract talented young people to the industry?
Examples Galore: I’ve heard all the excuses. “It can’t be done … maybe in your market, but mine is different … I’d go out of business charging more than the going rate.” Yet, I have received hundreds of letters from followers who have taken my advice and learned to sell on the basis of value rather than price. They have become number crunchers and flat raters. They have finally learned to meet the needs, wants and the desires of the customer. They have learned that the customer wants to know the price of the job upfront.
They have had the courage to get their prices where they should be. They have learned to cope with the disparaging comments of their once friendly competitors that accuse them of “ripping off” the public. God willing, those are the people who will lead this crazy industry to a higher plateau in the next millennium.