My observation has been that the HVAC companies using a performance-based pay system tend to be the most profitable, and the contractors who own those companies tend to be rather well off financially.
Switching to performance-based pay
Initially, you'll lose service technicians who don't like the new system, and some of them will even consider it unethical. The lack of service technicians can make switching to performance-based pay a major hurdle.
When I was running a company, I let techs who wanted to remain on hourly to do so. Each month I'd analyze the sales figures of these techs, and when the time came to where they would have earned more money on performance-based pay than they did on an hourly wage, they often opted to make the switch on their own.
The technicians with the least interest in making more money tended to be those that were the most interested in the technical aspects of the job. Every company needs at least one or two techs like that, and they usually are worth paying the highest hourly wage you can afford.
Occasionally, an excellent technician on the hourly pay plan complained that the techs who were less technically proficient were making more money than they were, and that if they got the type of calls those techs were running they could sell more.
The technicians with the least interest in making more money tended to be those that were the most interested in the technical aspects of the job. Every company needs at least one or two techs like that, and they usually are worth paying the highest hourly wage you can afford.
When that occurred, I promptly marched them into dispatch and said, "I want the very next opportunity to sell a replacement to go to this technician." I'd then say to the technician, "There's no pressure here. Just do your job to the best of your ability. Whether you sell anything or not, come back to the office so we can go over how the call went." I'd then shake their hand and say, "Congratulations. You just got a raise. Nice going."
Sometimes I'd find out I had a salesman in the rough, and sometimes the tech would find out that sales just isn't the right move for them.
Recruiting
I built a company with a friend of mine, and we were nearly 100% performance-based pay. I did most of the sales training and the recruiting. Nearly all of the recruiting was done by posting very simple "help wanted" ads on craigslist. The ads don't have to be fancy or poetic. Any service technician who saw my ad was obviously looking for a new job.
As we were a start-up company, we were in no position to build techs "from the ground up." I admit that the ad did list the job title as "Experienced HVAC Sales Technician," which is an unpopular term in segments of our industry, but it attracted the kind of people I was looking for.
The ad invited them to either send me a message or a resumé outlining their experience. I was inundated with applicants, but interviewed only a small percentage of them. Many of the responses made mention of having sold the most IAQ or service agreements, etc., in their old job. Those were the people I contacted first.
I'd call them on the phone and explain our system of running calls, which was, in a nutshell, to do a complete inspection on every single call, make a list (that included prices) of every single deficiency they saw, in order of priority, and go over it with the customer. Keep it short and simple, then shut your mouth and allow them to make a decision.
Some of the techs I talked to didn't care for this approach, and some of them loved it. When I explained this to a man who eventually became our best technician, he said, "You don't have to tell me to do that. That is what I do. Doing a complete inspection and providing a comprehensive list protects my reputation as a service technician, as well as the company's, because if there's some kind of situation after I run the call, we usually find out it's a result of them not accepting one of my recommendations, so it takes the liability off of us." Other techs simply told me it would be great to work for a company that allows them the time to do that. Another tech told me that coming to work for us has allowed him to provide the level of service he became a tech to do.
If there was a mutual interest after the initial face-to-face interview, applicants were given the option to volunteer to spend a day or two with one of our techs to observe our system in action and make an informed decision as to whether working together was a good fit.
A big key to success in recruiting is having positive online reviews. It stands to reason that anyone who saw my ad on craigslist was online. If I was considering applying for a job at a company of which I was unfamiliar, before I even contacted them, I'd look up their customer reviews.
Training
We wanted every one of our customers to have the same experience, regardless of which technician ran the call, so we trained at least three mornings per week during the busy season and five mornings per week during the slower seasons.
The format was simple and required no preparation of my part. The technicians handed me their paperwork from the previous day. I looked it over and selected two or three calls that looked like they might have had an interesting story to them. I'd go make copies of their paperwork and distribute them to everyone, then would have the techs tell us all about the call. Whoever ran the call would tell us where the call was, what kind of house it was, what kind of person the customer was, the initial complaint, what they saw, and that all was said. These meetings were invaluable.
Finding and keeping ethical techs
Yes, there are service technicians who oversell just to make more money for themselves. These techs don't tend to stay with any one company for very long.
You probably know which companies in your area are the rip-off companies, so don't hire anyone who's worked for any of those companies for any more than a week or two. I've had techs who worked for rip-off companies tell me that they've changed their ways. No, they haven't. A leopard can't change its stripes. Once a rip-off, always a rip-off.
Take every customer complaint on being oversold seriously. Go to the job. Check out the situation with your own eyes. Get both sides of the story.
Get rid of dishonest techs immediately, regardless of the income they generate or any kind of hardship being short-handed may cause. That sets an example for everyone. Honest, righteous people will not stay at a company that keeps thieves on board.
Charlie Greer is the creator of “Tec Daddy’s Service Technician Survival School on DVD,” the video series that provides contractors with a year’s supply of short, pre-planned technician training meetings. For Charlie’s speaking schedule, information on his products and seminars, call 800/963-HVAC (4822), visit www.hvacprofitboosters.com or email him at charlie@hvacprofitboosters.com.
It's impossible to quantify the cost of a bad hire. It's better to be short-handed than it is to hire people you shouldn't have. I've done a lot of recruiting in my 35 years in this business, and I never hired anyone I wasn't completely convinced would be a sure-fire winner.
Here are tips on interviewing potential hires that I don't think you'll see elsewhere.
Never hire anyone on their first interview. They will never be that person again.
Remember that interviewees are putting their best foot forward. If they smell bad, are poorly groomed, make inappropriate comments, or are uncooperative or impatient in any way, they will be from now on.
Never hire anyone on their first interview. They will never be that person again.
Prior to the first interview:
Timeliness. The candidate must be on time for their first interview. Anyone who is even one minute late for their first interview is a person who runs habitually late. Experience taught me not to bother giving an in-person interview to, or hire, anyone who arrived late for their first interview.
Legible handwriting. Even if your employment application is digital and they type it in, have them hand write some things. Other people are going to need to be able to read their handwriting in order to properly do their job, so it's got to be legible.
During the interview:
Don't do all the talking. Let candidates talk about as much as they desire. The more they talk, the more comfortable they'll get around you, and the more you'll learn about them.
If they can't at least describe some sort of sales procedure, they're not a salesperson.
Show candidates who will be selling for you your prices. Ask them if they've ever sold at those prices and if they believe they can sell at those prices.
Pick a product and ask them how they would go about selling it to you. If they can't at least describe some sort of sales procedure, they're not a salesperson. Period.
Walk candidates out to their vehicle. See how it looks inside. If they're going to be driving one of your company vehicles, that's how the inside of it will look.
Between interviews:
Did the job candidate initiate any kind of follow-up communication? My experience has been that just about anyone who follows-up in writing, be it a letter, an email, a text, or a "Thank You" card, will probably get hired.
Contact their previous employer. It's true that most previous employers will only confirm dates of employment, but that's not always the case. A great question is, "Would you re-hire the employee if they asked for their job back?"
Contact their references. References tend to be more open and honest than previous employers. It's true that candidates only list people they're confident will give them a good reference, but that doesn't always go according to their plan. For instance, my son-in-law had already tried three jobs in sales, and failed miserably in all three of them. When he applied for yet another sales position, they called me and asked me if I thought he'd make a good salesman. I told them the truth, and as far as I'm concerned, I did him a favor.
If you can't reach a job candidate about a second interview, can you imagine how difficult it will be to get that person on the phone to run a late night, holiday, or weekend call?
Do a nationwide background check. I almost hired a murderer once.
Call the job candidate on the telephone to schedule the second interview. Don't leave a voice mail if there is no answer. Just keep calling every now and then until you can get them on the phone. People do screen their calls, but wouldn't someone who applied for a job at your company, and that you told you'd be calling, be on the lookout for your call? If you can't reach a job candidate about a second interview, can you imagine how difficult it will be to get that person on the phone to run a late night, holiday, or weekend call?
Second Interview:
"Nobody told me about that in the interview!" is one thing you don't want to hear the first day on the job. There are certain measures you can take to avoid this. They are:
- Show candidates every single piece of paperwork they'll be required to submit and any software they'll be required to use.
- Show candidates their work area, and make sure they're happy with it and feel they could be comfortable working there.
- Make sure the candidate understand the hours they're required to work, and any on-call schedule.
Introduce candidates to some of the women in your employ. Don't hire candidates women don't like.
CHARLIE GREER was recently voted the 'Favorite Industry Trainer," and is a member of the HVAC Hall of Fame. For information on Charlie's products, or to get him out to your shop, call 1-800-963-HVAC (4822) or go to https://ift.tt/2l2Morv. Email your sales questions to charlie@charliegreer.com.
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Does Performance-Based Pay Work? - Contracting Business
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