How Contractors Beat The Labor Shortage
Tab Hunter describes it as a feeling. Floyd Furr knows what it takes to keep them happy. And Jim Mitcham doesn't need employees, just hard workers.
These guys have found a way to overcome the continuing industry labor shortage. We've located two companies offering extraordinary fringe benefits to beat the shortage of quality employees, and another that offers absolutely nothing to its workers - except the chance to run their own business.
Each company's unique environment attracts cream of the crop employees - from fresh out of high school to competitors that have lost the edge.
Tab Hunter Plumbing Inc. is well-known in the Nashville, Tenn., area for one of those crazy jingles that just won't leave your head. His company gets "the job done right" - and it rattles around up there for days. Heck, we wanted to call the guy to do work at our place, and we don't even live anywhere near Nashville.
But he's known even more in local industry circles as being one of the most lucrative plumbing contractors in town. And he's doing it all with a young staff. The company's average age is 27 with more than a third of his company under 25. (His dispatcher is only 19!) That's impressive for a gray industry.
Tab Hunter, who started his company in 1991, has people beating down his door to put on his company's uniform. "Our image is so powerful that parents come up to me and say 'My son is looking for a job. Is there anything you can do?'" says Hunter.
From direct mail pieces to recruiting letters, there's not much that Hunter hasn't tried to keep the flow of people coming. His workers bring a fair amount of perspective employees for job openings, as well. But the main focus of his company is retention, which leads to low turnover. "Retention is a big thing for us. We pay above scale at our company, which is getting out to our competitors and their workers. We always pay better."
And with an abundance of workers to choose from, Hunter points out the obvious: "We're very picky about who we hire." No one is hired in less than two interviews. All workers must go through a series of examinations, background checks, drug testing and security tests. "Once they meet our criteria, fit our image and have the technical ability and people skills that we require, we put them through a 15-day training program."
The program encompasses in-house training and ride-alongs with other techs, along with presentations on writing up invoices, technical repairs and flat rate pricing.
Many of his current workers have come to the business via networking. A lot of the kids are right out of high school, which helps build a strong work environment.
Hunter truly understands his younger workers' personal wants and needs, yet keeps a respectful, non-intimidating work relationship with them. "The relationship we have with the younger people is based on a lot of similar interests," says the 30-year-old Hunter. "In my age group, we have the same music or sports interests. We're either married, getting married or married with small children.
"I relate to the younger workers better. It's like that feeling when you're talking on the phone and have a pad of paper in your hand trying to write down a number while looking for a pencil. We can just flip a pencil and keep on going while never breaking stride. We just click."
Tab Hunter Plumbing, a Contractors 2000 member, prides itself on going out of its way to ensure his workers have things other industries take for granted. For example, the company's 401(k) program, started early this year, is not a common industry perk for such a small company.
Employees at Tab Hunter Plumbing are able to contribute up to $6,000 per year to the program, with a company match of up to 3 percent of the employee's total income. "I know the importance of saving because I have two young children," Hunter says. "I tell the younger guys that now is the time to do it. Your retirement is everything."
His workers are able to contribute the day of hire; however, the company contributions begin after a one- year company tenure. More than a quarter of the company contributes to the program.
Hunter's company outpaces the local competition in medical benefits, too. While other Nashville-based plumbing contractors only pay 50 percent to 75 percent of the medical benefits, Hunter's company pays 100 percent of the medical services. "The recognition we're getting from our competitors is unreal," Hunter admits. "They are raising their eyebrows."
It's the little bonuses of employment - like new trucks, paid uniforms and supplied equipment - that make workers enjoy their time on the job with Hunter. "If we tell someone to look a certain way, we pay for it," says Hunter.
Hunter says the dress code is non-negotiable. He described to a "T" the way his workers must look everyday: Dressed in a white shirt with an American flag on the left arm and the company name and logo on the right. A security badge. Navy blue pants. Clean shaven face. Absolutely no earrings. (Hunter Plumbing has only male technicians.) Wrist watch on the left arm. Brown belt, brown service shoes.
And what happens if the uniforms gets dirty on the job? Two clean back-up uniforms await - one on the truck, one in the shop. It's all part of building a powerful image.
"The feeling of security I have from these people is the best I have ever had," says Hunter. "I think they see my vision and direction of where we are going."
Everyone in the company knows what it takes to make a profit, Hunter says. "We come to the gate every day to
take care of our customer and make a profit. They all understand the importance of their sales to the company.
They are very motivated about the company's profit and longevity because they know we are going to take care
Whatever It TakesPerhaps one of the oddest perks of any we've heard, is the opening of an employee lounge that sounds more like an entertainment complex. That's just one of the multiple approaches that Woodbridge, Va.-based F.H. Furr Plumbing has taken to let its employees know that it cares.
"The employees are making me money, treating my customers well and we've never had so many sunshine letters coming in telling us how great we are," explains Floyd Furr, who has been in business since 1981. "Our competitors think we're too aggressive. They still want to do things the old way because they're afraid of losing their workers."
It's that fear that is driving workers to Furr's door. He admits most of his workers come from competitors that have lost their edge.
"We're finding employees from other companies that have been at the same place for as many as 10 years, and get the usual $0.50 to $0.75 annual raise. They drive an old truck with no shelving, and they don't see any future at the company, so they come to me," Furr says. "We tell these folks, 'You are going to be proud to be a plumber. You are going to be trained once a week. We're going to give you adequate service staff. We're going to give you trucks and equipment. We're going to make you proud of what you look like. We're going to give you perks and benefits.'
"These guys come to the company and say 'I'm making twice as much as before, I'm much happier and my wife is much happier.' And for us the customer is much happier. Everyone wins," Furr says.
Furr found that by providing a better income to the technicians, they were willing to do their job more thoroughly, more professionally and were more capable of looking for add- on sales that the customer truly needs.
He started tacking on benefits like paying for 30 minutes travel time to a job, even if it takes five minutes. If his workers answer a service call after 6 p.m. Monday through Friday or on Saturday, they receive an additional 30 minutes paid time. "We find guys are willing to volunteer for those calls for the extra pay," says Furr. "It's another bonus to get our guys to take care of the customer after hours."
F.H. Furr Plumbing, with nearly $4 million in annual revenues, gives its worker an added bonus if he can sell extended warranties, upgraded equipment or service contracts while on the call. The company sells on average more than 20 service contracts each week.
Furr also makes a point of paying his workers for performance, not for seniority. The company has designed a test with four technician levels that shows where the employee should be after a certain period on board. If the employee is in a higher level, he receives more pay. His guys are receiving about 50 percent more than when they were just working for time and material.
"We want guys who are hustling around, not a guy who has been in the industry for 30 years and isn't a performer, isn't motivated and isn't going to do anything because he is just putting in his time and receiving his annual raise," Furr says. "You could be in the trade for two years with a high performance level and make the highest level of pay possible in our company."
Furr says he tracks every possible number and reviews it with his service managers and technicians once a week to let them know where they stand in the company and why.
Currently, F.H. Furr Plumbing has 34 employees, owns 25 trucks (featured as the PM's Truck of the Month in May 1999), and is growing. It expects six additional trucks on the road by spring next year. The company has outgrown its 6,500 sq. ft. office, so it purchased an additional 2,000 sq. ft. this month.
More than half that space will be turned into an "employee lounge" with a big screen television, multiple smaller televisions (to view training videos), pool and ping pong tables and free arcade games. Every employee will receive a key to the 24-hour lounge when it opens this spring, and will be encouraged to bring their families - mainly children - to come play. The lounge has been in the works for the last year and a half, Furr says.
"It's another benefit to show the employees we do care," Furr adds. "We just gave them a place of their own."
Running The Show With No EmployeesJim Mitcham takes a different approach to overcoming the labor crisis he faces in Rockville, Md. His small plumbing shop has several workers, but no employees. Mitcham subcontracts out all of his workers, including his dispatcher.
Mitcham doesn't offer his workers a gamut of benefits like Hunter or Furr. Instead, he offers them the chance to go into business for themselves.
"We look for people who are at the point in their career where they're thinking about going into business for themselves, but aren't quite there," says Mitcham, whose . "We invite them to come talk to us about the way we operate our system."
If Mitcham likes what he sees in the plumber and vice versa, he requires him to invest in a white van and equip it with the necessary service tools. The new hire must also purchase vehicle, liability and workman's compensation insurance.
"They have to understand and believe in the company," says Mitcham.
In return, the company supplies a master's license, a blue vertical stripped uniform shirt, matching truck lettering and all the work the contractor desires. Overall profits, divvied weekly, are split on a 60/40 basis, with the contractor receiving 60 percent of the profit and Mitcham the remaining 40 percent.
"It's a trouble-free way to operate a business," Mitcham explains. "It's easy to encourage these guys to sell. I don't have any material theft because I don't have any material. I don't have any equipment problems because it is their truck and tools. It's the easiest way I have ever run a business."
Mitcham owned a traditional plumbing company - P&W Plumbing - for 19 years with more than 20 employees prior to his current venture. Unlike his old company, he notes, his four workers and dispatcher need little encouragement from him. "I don't monitor them to see what they are doing. It's their own business, and these guys are very concerned about their image."
The company meets biweekly over a two-hour breakfast at a local restaurant to discuss how to improve company sales. Each worker heads into a job carrying a briefcase containing tools and a flat rate book. Training is provided either in-house or at special courses, or through PHCC or Quality Service Contractor programs.
Similar to Furr, Mitcham's company aggressively sells service agreements. More than 40 percent of the company's work is sold after they are on the job.
"They don't need to be fired up to get going or treat the customer right," Mitcham adds. "We stress very hard the concept of being clean and neat and presenting the right image. The trucks are always clean, and we always arrive when promised or call to let them know we'll be late."
Mitcham markets the company through a quarterly newsletter, networking groups, local church bulletins and the Yellow Pages. The company has some cable television commercials in the works, too.
Mitcham says the biggest advantage for his workers is that he's making them businesspeople. "There are all kinds of tax advantages for them." Several of his technicians will make more than $100,000 this year, he says. The workers can construct a flex schedule that fits their needs, and take all the vacation time they want, albeit unpaid.
And while two of the company's workers have already left to start successful plumbing businesses, Mitcham has no problem finding more ambitious workers who want to fit the system. When the company is ready to expand, there are workers waiting to jump on board.
"There are many benefits above and beyond starting a business on your own," Mitcham explains. "Some of the guys have a problem developing customers, and they often cut their prices, which will cut their profits. They have problems getting their system off - we already have ours in place.
"We've built our record showing this is a viable way to run a business."