What Does $5 Get You?
That's a trick question, because what I really meant to ask is, “What does raising your current selling price by $5 an hour get you?”
I ask new clients that question when I first visit. The reason I ask is because I already know from the conversation before my visit that their No. 1 and No. 2 biggest challenges are, “How do I recruit the right people?” and “How do I hang on to them once I get them here?”
These were the same big challenges I had to overcome at my own shop through the years. It got better when we learned to build our own techs from apprentices. But, I still needed seasoned techs from time to time, and I needed them to have the right attitude to fit our corporate culture.
The problem was we typically set the new tech's wages by asking him what he was making at his current job and either matching it or paying a little more. Nothing was based on demonstrated skill. It was based on my immediate need to fill the vacant technician job or face climbing into the truck myself.
Then, the other techs would get wind of what the new guy was getting paid and it became a game of “Let's Make a Deal.” Each tech and I had a tug-of-war going on when it came to raises. I hated the confrontation and it was no fun for the employee who was turned away without a raise.
As owners, we believed we needed to keep our techs' salaries as low as possible to squeeze out a decent profit. Fortunately for us, we moved away from this flawed thinking. And we began to think more about creating salary levels and basing pay raises on demonstrated objective skill levels. If the tech could do the work and do it the right way, he deserved more because he made us more money.
Without that change in our attitude, we'd still be wondering, “How do I recruit the right people?” and “How do I hang on to them once I get them here?” The new salary levels worked for them and for us as well.
But looking back, I realize we could have been more generous with their hourly salary levels. Here's what I mean:
1. Once we knew what our correct selling price had to be, what would it have meant to add $5 an hour to the price? If the customer was OK with the value I delivered at, say $150 an hour, you think they were going to care all that much if it we delivered the same value at $155 an hour?
If you've done your own break-even and arrived at what your true selling price needs to be, am I right when I say it's probably $150 an hour or higher? I'm betting that's the case if you've done the process the right way and you're providing things like healthcare, retirement plans and more. All the things that help you recruit the right people in the first place and then retain them.
Do you think your customers are going to care if you're selling price has to be $5 an hour more? Not likely! If your selling price is already a lot higher than $150 an hour, this becomes even more of a no-brainer.
2. What do I want the additional $5 an hour for? First, I want to raise the salary levels by $3 an hour. You want to become known as the place that attracts the best and pays the best.
If you paid just $3 more an hour, do you think you'll have a tough time recruiting more people than your competition?
What about the other $2 an hour? Patience, I'll get to that.
3. When a new recruit shows up, you can say, “We pay $3 an hour more because we expect more from you. We do things like wearing shoe covers and we put down the red carpets. We require you to fill out all the paperwork. And you need to stay neat and clean.”
Wouldn't it be nice to actually have some leverage to enforce the few company standards you do have?
If you're paying me, a tech, $3 an hour more and you've included healthcare and retirement benefits in your selling price, will I want to come home and tell my spouse I'm losing my job because I didn't want to wear shoe covers? Think of the money as golden handcuffs.
Now, if you have a good bonus and spiff plan designed the right way (to pay themselves bonuses and spiffs by selling ethically), you've just become the company of choice and the company that employees will want to stay with.
4. OK, here's what you're going to do with the extra $2 an hour. You're going to commit to always being in the recruiting business instead of waiting to recruit only when you're desperate. You'll finally be in a better position to make a good hire.
5. That extra $2 an hour will let you run a well-written, big ad that makes you stand out among all the ads so you get the calls you've been looking for.
Adding $2 an hour more to the selling price allows you to run the right ads in the right places with the right frequency. Think of “Help Wanted” ads as just another form of marketing. The difference is this marketing is geared toward techs rather than new customers.
Don't worry. Just because they're calling you doesn't mean you have to hire them. But, I'd recommend you keep their names and contact information for the future. You could actually be selective for a change. Now, wouldn't that be nice!