by Jim Hinshaw
So how is your year going? We are half over with this trip around the sun, time to take stock, see what has been accomplished, what remains to work on. One of the realities of the hot summer days is that we get really busy, sometimes forgetting to measure. We equate busy with profitability, they are not automatically connected.
Did you set goals last year for this year? Have you been measuring progress? Some people measure quarterly. One opportunity with that method is when you see a trend, 90 days have already gone past, taking correction actions will be three months after the opportunity presented itself.
I have friends who check progress each month, so they can see a trend and put together a plan based on the last 30 days of activity. Better yet, some are checking their numbers each week, having put together a plan that breaks down goals into weekly benchmarks.
I have heard of companies who share numbers as often as daily, including a company email showing employee contribution to overhead and profit for the day. Yep, the day.
You may feel like that is way too much information, they did not start with that model, they moved to it after using longer terms and getting numbers that both encouraged and gave them concern.
What should you measure? List is long, here are a few ideas to start your thinking. First, are the teams doing what they should be doing? How is the gross margin running on your installs, both replacement and new construction? Set targets on GM, measure it continually. One idea is to measure one component, equipment cost or labor are two segments that can cause problems is ignored. When that component goes above a set level, start investigating as to why. Then take corrective action. Sales team, measure close ratio for starters. That would be number of sales divided by number of qualified leads ran. 5 sales out of 10 leads, 50% close ratio. For the service department, are we getting positive reviews, callbacks at a lower level than last year, selling maintenance agreements and accessories? Measure it.
My frustration is that I talk to owners almost daily who have no idea of the business basics. How many names in the data base? How many maintenance agreements in effect? What is the close ratio on all leads? On tech leads? How good are the techs at turning in leads or selling systems if that is your model? What is the average sale? All these numbers compared to last year, the year before. Many have said to me: the weather was bad, we didn’t have a summer/winter this year. Our economy is in the toilet, no construction going on at all. We can’t find good help. We can’t find bad help!
Here is what I am sure of. The bank doesn’t care about the weather, or even the economy, they want their truck payments/building payments each month. So while the weather can affect our business, don’t let it control your business. And as for people, that is a national problem, not your local problem. my response, grow your own. Find someone who likes themselves, is good with people, and train them for our industry. Too many times we are looking for that person with 10 years experience, someone who knows how to diagnose a 12-year-old heat pump that won’t defrost. In many cases those people come with baggage, they want to make your company into the company they left, but get paid more. Find some good people who want to move into a industry where they can actually affect their paycheck by helping customers with comfort issues. Make sure you have a program to reward the team members who help customers with comfort issues, either in spiffs or bonuses, spelled out so all can see how much they make for going above and beyond just fixing the old unit. While in that neighborhood, maye sure you have a system to pay them on a regular basis. Frustrating when they have a great week in sales, and don’t see the paycheck for months down the road. Share the successes, nothing will stimulate an employee better than peer pressure. Help them do better with education and training.
I am a fan of sharing the goals and progress with the teams. Let them know ahead of time what the benchmark from last year was, and what the improvement measurement for this year is. Set those goals, share progress as the months go on, encourage the team and give additional training when goals are not hit. Still have a employee who just doesn’t get it, way too slow, average time spent on tasks is a lot more than the other team members, he may have to change. If he can’t change his way, you may have to change him. Take action, he will spread his concept of slow work to all the others, and they know he is not pulling his share. He may be the most senior, but it may be best for him to seek other employment. The others will thank you for doing what needs to be done.
What to do next? Start by measuring some of the things we shared in this article. Measure some items that you have not measured in the past. Then add in more to get an even clearer picture. You will thank yourself later for doing the job of running your business, not letting it run you. We’ll talk later.