Restoration Rewind Delta Development Group Monthly Newsletter
September 2016
What’s Old is New Again By Michael Mastous Almost 25 years ago I started one of the first full-service property restoration firms in the US based out of Southern California. Quick Response Disaster Control and Construction. The operation is currently owned by some of the limited partners that I had at the time. I’ve often been asked what has changed in the industry over the last 25 years. My answer is very little, if any, has changed. Customer Service: Setting proper expectations and dealing with an often traumatized customer, has not changed. Showing up when scheduled to perform the work we have contracted for, has not changed. Having competent employees and subcontractors that value the customer’s home or business, and treat it as their own, has not changed. Insurance Relations: Building a relationship of trust and communication with the carriers, has not changed. Supporting a referral source that often does not understand construction or restoration and often needs to be educated and understood, has not changed. Building an ethical estimate and not over scoping or taking advantage of the insurance relationship, has not changed. Employees: Finding the best available employees and building a quality customer service driven business, has not changed. Training and educating staff on a continual basis as to industry best practices, has not changed. Treating all employees with respect and recognizing the over-the-top work that they do on a regular basis, has not changed.
Communication: Yes, communication has changed in the last 25 years. I can remember when carrying a pager and having to get to a pay telephone to return calls, was a necessity in doing business. While the ways we communicate have changed, the act of communication has changed very little. Returning all customer phone calls in a prompt and courteous manner, has not changed. Showing up to a customer’s job site at the scheduled appointment time, and making sure that your subcontractors follow the same procedures has not changed. Providing a timely and accurate estimate to your customer and your referral sources, has not changed. It is impossible to say that any industry hasn’t see changes over the last 25 years. Overall there have been many changes, in all industries. However, the basic principles discussed above will always be key in building a quality restoration company. Some things never change!
CASH IN THE DOOR! Based on July Royalties… Delta Disaster Services of Southern Colorado HITS IT OUT OF THE PARK! What a great month with over $350,000 cash in the door. Congratulations Emmis, Rosey and the rest of the crew!
New Wage Standards Breaking down the New Exempt (Salary) Rules for Minimum Pay: The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative, Professional workers to be exempt. Specifically, the Final Rule: 1. Sets the standard salary level at $913 per week or $47,476 annually for a full-year worker; 2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent $134,004; and 3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption. Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. The Final Rule makes no changes to the duties tests. (“Duties Test refers to the internal test required to place an employee in an exempt position vs non-exempt)
Effective Date The effective date of the Final Rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) will be effective on that date. Inclusion of Nondiscretionary Bonuses and Incentive Payments Employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level. Such payments may include, for example, nondiscretionary incentive bonuses tied to productivity and profitability. For employers to credit nondiscretionary bonuses and incentive payments toward a portion of the standard salary level test, the Final Rule requires such payments to be paid on a quarterly or more frequent basis and permits the employer to make a “catch-up” payment. The Department recognizes that some businesses pay significantly larger
bonuses; where larger bonuses are paid, however, the amount attributable toward the standard salary level is capped at 10 percent of the required salary amount. There is also an Overtime Cost Estimator tool available to everyone on the IFA Labor Website. www.labor.franchise.org At the top of the page there is a link to the cost calculator. This will let you calculate if it is more efficient to pay an employee the increased salary amount or OT. For additional information, visit the Wage and Hour Division Website: www.wagehour.dol.gov and/or call, 8 a.m. to 5 p.m., 1-866-487-9243
Marketing Corner Tagging on to our last marketing call from July “Marketing is Everyone’s Responsibilities” here is another article on knowing your customer and training to meet your customers’ needs with your team. Enjoy! Jason Kaber
STUDY YOUR CUSTOMERS Make your growth in 2016 a true team effort and concentrate on providing your customers what they want: Superior customer service. Psychology, according to the Oxford Advanced Learner’s Dictionary, is this: “The scientific study of the human mind and its functions, especially those affecting behavior in a given context.” Wouldn’t it be nice if you, as an owner of a cleaning and/or restoration company, could understand the psychology of your customers’ minds? It might be easier to make the sale. I’ve never met a business owner admit he didn’t understand his target demographic, although more than a few were a bit frustrated with their technicians who weren’t experts on how to greet, speak with and handle their clientele. As you plan to grow your cleaning and/or restoration company in 2016, one way to do it effectively would be to ensure that your staff has a clear grasp on how your customers decide on a company (like yours) to use and how they purchase services. Selling your services and getting more jobs isn’t just about marketing and advertising and the quality of work your company provides. It’s about how your
customers are treated. Of course, out of necessity that is under the absolute control of your technicians and office staff who answers the telephone. Unless you are an owner/operator and you are the one interacting with your customers. When a customer calls your company, you have a hot lead. If you land the job, you are handing over the future of that customer to your technicians. And if they are not up to the task of convincing the customer he has made the best decision, you know what happens. So as you investigate, analyze and understand the psychology of the minds of your customers, be sure to share that information with your staff. Team meetings are a great opportunity to get everyone together and share ideas on how to treat your customers. Discussing issues one-on-one with your techs is another good way, but when your team can share ideas, banter and help each other, you have real buy-in on the goals of your company.
Make your growth in 2016 a true team effort and concentrate on providing your customers what they want: Superior customer service. If you do that, much of your marketing will be taken care of by them. Happy, satisfied customers make the best spokespeople for your company. Jeff Cross is the executive editor of Cleanfax and is an industry trainer and consultant. He can be reached via email at JCross@Cleanfax.com.
Delta Makes the List Two of our Delta Disaster Services offices made the CCC top 5 list last month. We are so happy to see their names on the list with the best of the best.
Labor, Wages, Finances. How does it all fit together? Managing our Labor and Wages is one of the Keys to having a successful business. In today’s labor market good employees that will work for what we can afford to pay is becoming more and more challenging. Current unemployment rate for Colorado and Utah is very low. It becomes very easy to think the only solution to finding people is to raise wages. This is something you MAY need to consider; but there may also be some other solutions. If you do raise wages, you have to make sure you have productive labor and make the increased costs count. Unlike many businesses, it is unlikely you can raise income based on your increased labor costs. Some things to keep in mind: • •
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Schedule properly. Watch overtime and try to keep it to a minimum. Minimize or eliminate wasted travel time. Stay Organized! Don’t make trips to Home Depot for trash bags when you have them in the shop. Don’t come back to the shop for something you can buy at Home Depot a block away. It doesn’t take three people to buy a roll of tape or a box of trash bags. Breakfast at McDonalds is not part of the trip to the job. On mitigation jobs, try to keep all payroll and labor costs (labor, benefits, taxes, day labor, etc) to less than 20% of income. Ideally, your percentage will be around 15%. Any fluctuation should be minimal. Remember happy employees are productive employees!
Below is some great information found on the PayChex website: “Why Labor Costs Matter According to the Bureau of Labor Statistics, labor costs posted the sharpest increase in over five years in the second quarter of last year. In addition, states are revisiting their minimum wage regulations and health care reform is taking effect for many businesses. Companies need to be more cognizant of their resources and expenditures. In laborintensive industries, labor is often the single largest line item on the budget sheet. As a result, keeping close controls on labor expenses can be one of the best ways to increase profits over time. Labor Cost Management is Complex Managing staff scheduling is an important part of both maximizing productivity and reducing unnecessary expenses. The ability to achieve this requires two levels of visibility. The first is the ability to review labor schedules to ensure that they’re functioning optimally — individually and at the department or unit level. The second is the ability to evaluate labor schedules historically to find opportunities for increased efficiency. Many costs associated with labor are due to scheduling complications, rather than to actual work completed. For example, companies that deal with ongoing understaffing can see increased staff costs. As employees cover hours in understaffed departments, they’re pushed into overtime hours. Without visibility into the scheduling process, it’s easy for companies to avoid making hires that could help save them money in the long-term. Similarly, monitoring individuals and departments for hours worked and overtime triggers is a key component to managing your budget. It’s also an important part of staying in compliance with federal healthcare regulations, where hours worked can impact which employees are eligible for benefits and whether an employer is subject to Employer Shared Responsibility provisions.
It's worthwhile taking the time to understand what bad leaders do so we can learn what to avoid. It's great to read books and articles about what the great leaders do so that we can model ourselves on the best, and I highly recommend that. However, it's also worthwhile taking the time to understand what bad leaders do so that we can learn what to avoid which can be just as helpful. Over my 25 years in leadership, here are some of the habits of unsuccessful and ineffectual leaders that I have seen, and in some cases, their justification for having them. These are habits best avoided, if possible!
1. Believe they have all the answers They know that the reason that they have been put in charge is that they are smarter and better than everyone else. So when it comes to deciding strategy, solving problems, or resolving issues, there is no need, or point in involving anyone else.
2. React, don't respond Driven by their emotions, they react quickly to situations without worrying about facts or the repercussions of their actions. They can always show good emotional intelligence by apologizing later. Bad leaders like to gamble and take big risks.
3. Take big risks, the bigger the better They like to gamble and take big risks. Believing in the adage "Nothing Ventured Nothing Gained" and that Smart Risk taking is for wimps. When I questioned a decision that one boss was taking his response was, "That's not your concern, I get paid big bucks to take the big risks and make the tough calls." Personally, I thought he got paid the big bucks to take the right risks and to be successful, but what did I know.
4. Believe that talking about it and doing it are the same thing I always remember the first boss I worked for, when the CEO asked him how it was going, he said: "It's going great, we have been discussing the problem for two days now." The only problem was, that was two days that the business couldn't operate, and we were no closer to finding a solution.
5. Focus on blame not solutions It's better to know whose fault it is so that we can fire them and make sure this doesn't happen again. There is a big difference between confidence and arrogance.
6. Believe their own PR There is a big difference between confidence and arrogance; the former helps build trust in the leader, the latter destroys it. As soon as you start to believe your own PR, then you are leaning more towards arrogance and starting down a path that is going to end in tears.
7. Don't waste valuable time on planning and preparation Sometimes you just have to dive and get it done. Don't worry about what's involved, or whether you're focused on the symptom or root cause, just do it. My favorite comment
was, "we can afford to spend time and money on planning; we just need to get started." Which was interesting because we found the time and money to do it again correctly, after that first attempt failed badly.
8. Hire people beneath them As a leader, it is critical that you are the most skillful and knowledgeable member of the team, that way everyone can focus on their job rather than working out how they could replace you. I worked at one company where the boss told me that he liked to recruit from the bottom quartile because it kept the costs down. He then added, "the only problem with that was the results sucked." Ineffective leaders believe that a lot of short-term success will lead to long-term success.
9. Focusing on instant success It's all about results, and if we find that they are not coming, then we need to move quickly on to another topic. They believe that a lot of short-term success will lead to long-term success.
10. Focus on the big picture, not the details Don't worry about the details, focus on the big picture, as that will keep you motivated. We all know the devil is in the details, but that could lead to concerns, a lack of belief and even worse, demotivation.
11. Focus on weaknesses not strengths As leaders we cannot have or show any weaknesses, so we need to work on eliminating them, or failing that, hiding them. Stubbornness and determination are not the same.
12. Confuse stubbornness with determination "Winners never quit, and quitters never win" is a great approach to achieving results. However you're bordering on stubbornness if your approach is failing but you refuse to change it.
13. Don't play well with others It's hard to play well with others when you adapt a command and control approach to leadership. People like to be led not managed.
14. Think praise is for wimps It's ok to praise people once we have achieved success, but praising people just to keep them happy is not a good approach to building a strong, resilient team. We've got to be mean to keep them keen, and praising people too often makes a team soft.
15. Take, don't give The more we take, the more we have, that's how winners are made. It's a dog eat dog world, and we have to fight for our share.
16. Quick to criticize If you want people to improve, you need to point out their mistakes quickly and clearly. It's also best to do this publicly so that others can learn too.
17. Easily distracted Never content with their current goals, they are constantly looking for the next big thing that the get involved in. I think the reason for this is that it's much easier to start something new than to finish something important.
18. Make excuses There are a million and one reasons why things don't work out as planned, so it's not always our fault, and we need to remember that so don't become too de-motivated. One boss told me never ever accept responsibility, as it could be career limiting, and to always have someone ready to blame or a good excuse handy.
19. Love to micro manage It's hard to trust everyone, so by micro-managing your staff, you can keep a close eye on things, and look to offer advice or step in if things start to go wrong.
20. Practice inconsistently It's great to be inconsistent because it keeps your team guessing, which in turn keeps them on their toes. Predictability, on the other hand, can lead to complacency.
And we will leave you with this…