HVACR Business September 2018 by HVACR Business

Invest in Your Future By Pete Grasso 5

Be Proactive with Refrigeration Maintenance By Jamie Kitchen 12

The Importance of Employee Retention By James Leichter 14

Empower Your Team to Do More By Angie Snow 17

Assemble a Winning Team By Bob McEwan 20

SEPTEMBER 2018 / VOL.13 / NO.9

DIFFERENTIATE YOUR BUSINESS STRATEGY Page 10

ALSO INSIDE Â» Ruth King: Ensure You Can Make Payroll ....................7 Featured Entrepreneur: Jason Stom CEO at Clear the Air Cooling & Heating ............. 9 20 Questions with Mark Geschke Owner of Bauer & Son One Hour Heating & Air Conditioning ................................................................ 22

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CONTENTS

SEPTEMBER 2018 / VOL.13 / NO.9

F E AT U R E S

10 12

Differentiate Your Business Strategy Determine how to promote your technician’s efforts through proactive business development. By Jim Baston

Editor’s Notebook

Featured Entrepreneur

Be Proactive with Refrigeration Maintenance

Demonstrate the value of a good preventive maintenance program to your customers. By Jamie Kitchen

D E PA R T M E N T S

The Importance of Employee Retention Winners tend to want to work with other winners — here’s how to keep them around. By James Leichter

What worked yesterday and what works today might not always work tomorrow. By Pete Grasso Jason Stom, CEO at Clear the Air Cooling & Heating

20 Questions with Mark Geschke Owner of Bauer & Son One Hour Heating & Air Conditioning

C O LU M N S

7 17

What To Do When You Can’t Make Payroll Almost every business runs into cash flow problems at some point. It rarely happens but it does happen. By Ruth King

Find Relief by Empowering Your Team Many smaller HVACR companies struggle with growth because the owner is wearing too many hats and tries to focus on too many areas in their business. By Angie Snow

Assemble a Winning Team Show me a winning team and I’ll bet they have a dynamic leader. Leadership makes the difference. By Bob McEwan

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M A R K E T WAT C H Stock Index: The HVACR Business Stock Index slid 27.90 points, or 1.81 percent, and closed at 1511.08. However, advancing issues outpaced declining issues at a 17-to-14 count. To read this month’s analysis, visit hvacrbusiness.com/stock-index.

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EDITOR’S NOTEBOOK

BY PETE GRASSO THE HVACR MANAGEMENT MAGAZINE TERRY Tanker Publisher ttanker@hvacrbusiness.com PETE Grasso Editor pgrasso@hvacrbusiness.com MEGAN LaSalla Art Director mlasalla@hvacrbusiness.com BRUCE Sprague Circulation Manager bs200264@sbcglobal.net BARBARA Kerr Executive Assistant bkerr@hvacrbusiness.com

ADVERTISING STAFF EAST COAST/SOUTHEAST JIM Clifford Regional Sales Manager Tel 201-362-5561 Fax 201-334-9186 jclifford@hvacrbusiness.com MIDWEST ERIC Hagerman Regional Sales Manager Tel 216-409-3246 Fax 440-731-8750 ehagerman@hvacrbusiness.com WEST COAST TERRY Tanker Publisher Tel 440-731-8600 Fax 440-731-8750 ttanker@hvacrbusiness.com

HVACR Business, founded January 1981, is a monthly national trade magazine serving contractors, mechanical engineers, manufacturers, manufacturer representatives, wholesalers, distributors, trade associations, and others in the heating, ventilating, air conditioning and refrigeration (HVACR) industry primarily in the U.S. The editorial focus and mission of HVACR Business is to provide business owners and managers with the very best business management concepts available. Critical topics covered include leadership, management, strategy, finance, sales, marketing, training, education, staffing, operations, human resources, legal issues, customer service and more. We are dedicated to helping contractors master these key management skills and provide them with the resources necessary to build strong, profitable companies. Every effort is made to provide accurate information, however, the publisher assumes no responsibility for accuracy of submitted advertising and editorial information. Copyright©2018 by JFT Properties LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, or by recording, or by any information storage or retrieval system, without written permission from the publisher. Subscription Rates: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: U.S. and possessions: 1 year $48; 2 years $75; 3 years $96; Canadian and foreign, 1-year $108 U.S. funds only. Single copies $8. Subscriptions are prepaid, and check or money orders only. Subscriber Services: To order a subscription or change your address, write to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039 or call (440) 731-8600; or visit our Web site at www.hvacrbusiness.com. For questions regarding your subscription, please contact bkerr@hvacrbusiness.com. HVACR Business (ISSN 2153-2877) Published monthly by JFT Properties LLC., 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039. POSTMASTER: Send address changes to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039. Periodicals postage paid at Cleveland, OH and additional mailing offices. (USPS 025-431)

31674 Center Ridge Road, Suite 104 North Ridgeville, OH 44039 Tel: (440) 731-8600 Fax: (440) 731-8750 Web site: www.hvacrbusiness.com (ISSN: 2153-2877)

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Invest in Your Future

visited my dad today. It’s his 83rd birthday. Though he’s been retired many years now, he once owned and operated a service business like you.

Too many businesses try to grow on small profits, which Wade believes is a huge mistake. Instead, he advises owners to focus on growing profits before they ever try to grow sales.

He started Bob Grasso Radio-TV Service in 1956, driving his red and white station wagon around the city to service customer’s broken radios and televisions in their own homes. He was then drafted into the U.S. Army and served two years as a nuclear weapons maintenance specialist.

For any type of growth, planning is key. You can certainly look at past performances and learn from your mistakes, but you should always keep an eye toward the future. What worked yesterday and what works today might not always work tomorrow.

When his time was up, he picked up where he left off with his business, adding a new element — locksmith. After he and my mother were married in 1962, she helped with the business acting as de facto dispatcher via the CB radio for his service calls.

Doing things simply because it’s the way they’ve always been done is a sure fire way to kill your business. Technology is constantly evolving, and so should your business.

What worked yesterday and what works today might not always work tomorrow.

As his business grew and more customers began buying VCRs, my father’s business changed yet again. Bob Grasso TV-Locksmith Service became Bob Grasso Electronics. And while service calls in his signature red van still made up the majority of his work, he opened a small shop where customers could come drop off their equipment to be repaired.

It never really occurred to me growing up just how much my dad had to adapt his business to the times. He was always learning. Always looking ahead. Planning and adapting. I thought about this the other day when I interviewed this month’s Featured Entrepreneur (pg. 9), Jason Stom, CEO of Clear the Air Cooling & Heating. Jason started in this business working for his father and learned a great deal from him. What struck me though is when Jason began talking about some of the obstacles he’s had to overcome, as well as his vision of the future. In an effort to expand, Clear the Air ventured into commercial new construction. Unfortunately, it didn’t work out well. Jason says multiple mistakes were made as they rushed to set up the new division. Clear the Air’s focus for the future now is much more strategic. Jason says the company is adopting more technology to become efficient on operations first, then will integrate the company into the smart home tech arena.

Systems today are more sophisticated than ever, without any signs of slowing down. To invest in the future of your company means investing the time and resources to learn as much as you can and adapt.

Whether it’s branching out into new business areas such as commercial or refrigeration, adding new services such as indoor air quality and smart home technology, or simply offering new technologies such as split systems, it all requires an investment. Just as the cooling of server rooms became a great source of revenue for some contractors, the next big thing could be climate control for medical marijuana growing facilities. How will you be prepared? Study the marketplace. Take some classes, read articles, attend seminars … whatever it is, learn and make a plan for the future. If you’re not thinking about these new opportunities, trust me, your competition is. Don’t let the future get the better of you. Start now for how you’re going to take the next step to keep your business profitable for years to come. Much like my dad transitioned his business from radio and television repair, to locksmithing and, eventually, all electronics service repair, you must also adapt your business to change with what your customers want. u

His story is not unique, either. I’ve spoken to many contractors who’ve experienced similar misfortunes as they’ve grown their companies faster than they could handle. I’ve had many discussions with Wade Mayfield, president of Thermal Services Inc. in Omaha, Neb., about the importance of planning for growth.

HVACR BUSINESS SEPTEMBER 2018

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FINANCE

BY RUTH KING

What To Do When You Can’t Make Payroll

ometimes cash flow issues are due to circumstances beyond your control. A profitable company had three general contractors file bankruptcy within a week of each other. It left him with more than $1 million of uncollectable receivables. He didn’t have the savings to cover it and those bankruptcies put him out of business. Almost every business runs into cash flow problems at some point. It rarely happens but it does happen. What do you do if you can’t make payroll? Will it bankrupt you too? First, you should know about cash

Almost every business runs into cash flow problems at some point. It rarely happens but it does happen. shortages the week before they occur. Your bookkeeper should prepare a weekly cash flow report for you every Friday afternoon. Fig. 1 on the following page shows the weekly cash flow report. The report shows what you started with at the beginning of the week, what money came in, what money was disbursed, and the projections for the following week. If the weekly cash flow report shows that you won’t have enough money for

payroll, at least you are taking action the week before. To generate the needed cash you could: • Call past due customers and get payment. • Review your outstanding proposal and close jobs (get deposits when the sales are won). • Call customers (whether maintenance customers or not) who haven’t had

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maintenance and give them a reason to perform the maintenance. Your technicians will find work on those calls. Since they are COD, then the cash comes in quickly. • Call customers who haven’t renewed their maintenance plans and get them to renew. • Review your tickler files for work the technicians recommended that the customer said, “not now.” • Transfer cash from personal savings or personal credit cards. continued on page 8

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Field people come first. Without them, you can’t generate revenues. Office personnel are paid next. Then managers. You are last. continued from page 7

But, what if you haven’t done a weekly cash flow report and your bookkeeper tells you that you don’t have enough money in the bank to make payroll and payroll is the next day? Think about who you know who could loan you money quickly. You might have it in personal savings. A friend or relative might be able to loan money to you. Say how much you need and when you will repay it.

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If no personal savings, friends or relatives come to mind then, quite frankly, you’re in trouble. You have to decide who to pay and who not to pay. Field people come first. Without them, you can’t generate revenues. Office personnel are paid next. Then managers. You are last. You, as the owner, have the hard decisions and the hard conversations. Let the employees who are not paid know when they will receive their checks. Unfortunately it may start rumors that the Fig. 1

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WEEKLY CASH REPORT Week of ____________ Prepared by _______________ CASH ON HAND AT THE BEGINNING OF THE WEEK:

Petty Cash .................................... $ __________________ Checking account #1 ................ $ __________________ Checking account #2: ............... $ __________________ Payroll account ........................... $ __________________ Money Market ............................ $ __________________ Other savings .............................. $ __________________ TOTAL BEGINNING CASH $ ____________________

Cash Collected ........................... $ __________________ Credit card payments Collected $ __________________ Accounts Receivable Collected . $ __________________ Other Infusions (loans etc.) ........ $ __________________

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Disbursements: Payroll .......................................... $ __________________ Accounts Payable ....................... $ __________________ Loan payments ............................ $ __________________ Other ........................................... $ __________________ Total Disbursements ................ $ __________________

company is in trouble and employees will start looking for employment elsewhere. Get them their payroll as soon as possible. Here are four procedures that will help eliminate the possibility of not making payroll. None of them will generate cash instantly. They all take time to accumulate cash. 1. A bank line of credit. I’ve seen banks change policies or get sold and decide they don’t want construction type loans. They have called contractors’ lines of credit, even when the loan payments are current. It has put contractors out of business. However, if you go this route, then apply for a line of credit when you don’t need it. Apply when cash and profits are plentiful. That’s the best opportunity for the banker to say yes. 2. Have an operations savings account, so that you don’t have to rely on a banker saying yes or no. Put 1 percent of every dollar that comes in the door into the account. If you generate $2 million per year, that is $20,000 in your savings account each year. 3. For residential companies, put as much of your maintenance plan money away as possible. I recommend saving at least 50 percent of it when you get the money in advance. If you are on monthly recurring billing, many companies have the monthly payments go into a savings account rather than their operating checking account. 4. For commercial maintenance, put away your profit percentage. If you’ve estimated a 5 percent net profit on that maintenance plan, put 5 percent of the money you receive into the savings account. Be prepared so that you can always make payroll. Be your own bank. u

ENDING CASH FOR WEEK $ ____________________ ESTIMATED REQUIREMENTS FOR NEXT WEEK:

Accounts receivable to be collected : $ ______________ Payroll .......................................... $ __________________ Accounts payable to be paid .... $ __________________ Loan payments due ..................... $ __________________ Reznor is a registered trademark of Nortek Global HVAC, LLC © Nortek Global HVAC, LLC 2018. All Rights Reserved.

HVACR BUSINESS SEPTEMBER 2018

TOTAL ESTIMATED CASH SURPLUS (NEEDS) NEXT WEEK $ __________________________

Ruth King is president of HVAC Channel TV and holds a Class II (unrestricted) contractors license in Georgia. She has more than 25 years of experience in the HVACR industry, working with contractors, distributors and manufacturers to help grow their companies. Contact her at ruthking@hvacchannel.tv.

www.hvacrbusiness.com

Featured

ENTREPRENEUR

Learning from Past Mistakes BY PETE GRASSO

ason Stom’s entry into the HVACR industry wasn’t planned. His father worked for NASA, so Jason was born and raised in Houston. After high school, he went to school for network security, getting a job in the IT industry. When his father retired, he began working weekends helping his friend service air conditioners. “Once he retired from NASA, he decided to start his own HVACR business,” Stom says. “He asked me and my siblings to come work for him in the business.” Stom started by helping out part time, learning as much as he could from his father. He also used those years working in IT for the government to learn as much as he could about managing people. “I packed in as much reading as I could on managing,” he says. “I learned the most from my dad, however, as he spent 35 years leading people in the space industry. “He was an expert at it … his job was to help support the astronauts in the Apollo and Shuttle simulators.” Stom was impressed with his father’s approach — a balance of listening and patience, mixed with understanding and firm guidance. Eventually, he grew tired of the travel involved with his full-time network security job — he had also just married his wife, Dawn, and was ready to start a family — so he made the leap to the HVACR industry, working with his father full time. Since 1990, Clear the Air has been focused on residential service and retrofit. Under Stom’s leadership, the company has also taken a whole home health approach with indoor air quality (IAQ), insulation, thermography and energy solutions. Along the way, Stom admits he’s made mistakes, as any entrepreneur does. But, the key is he’s learned from those missteps and continued to move forward. “Multiple mistakes were made when we set up a new division to enter into commercial new construction,” he says. “We expanded too fast and cash couldn’t catch up to the expansion. This was part of the risk I was willing to take, but it didn’t go as planned.” It was a minor setback and nothing compared to some of the bigger challenges in life.

His parents taught him early on that it’s okay to fail, as long as you don’t quit. “I never give up, no matter what,” Stom says. “There is no finish line. It’s really more about failing and learning.” Today, Stom credits the success of his company to his people. The company slogan is, “Cool Solutions. Warm People,” and Stom believes it truly embodies the spirit of their mission. “We provide the best service possible by employing the most friendly and warm personalities,” he says. “When the customer calls, they’re stressed and upset because something is broken. “We fix the mechanical problem, but we train everyone in the company to help fix the customer by removing the stress.” In fact, it’s serving his people and community that Stom finds most rewarding about his job. He’s extremely proud of his team and enjoys making families comfortable and providing them with healthy environments. Of course, like many contractors and entrepreneurs, Stom knows he needs to work on learning to say “no.” “Not every job or idea is one you want to take on,” he says. “I have to continue to remind myself to double down on our strengths and not get caught up in everything that comes along.”

JASON STOM Title: CEO Company: Clear the Air Cooling & Heating Website: cleartheairac.com Year Founded: 1990 Headquarters: Alvin, Texas. Work Performed: Residential, IAQ, Geothermal No. of Employees: 16 Annual Revenue: $4 million

His current focus is on perfecting the delivery of their service, because it never stops evolving.

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“It’s so much fun to build long-lasting relationships with our customers and create raving fans,” Stom says. I really enjoy working with people who have the same passions.”

Affiliations: Service Roundtable, Comfort Institute, Air Conditioning Contractors of America

As Clear the Air Cooling & Heating continues to adopt more technology and improve operational efficiency, Stom believes they can soon become a dominant player in the south Houston market.

Certifications: Texas Licensed ACR Contractor, ADC, EPA

“I see greater integration in smart home technology with HVACR and our company is poised to adjust with any changes,” Stom says. “But most important, we will continue to build on our company culture and develop training curriculum to grow our own technicians.” u

“The passing of my father was the hardest change in my life to date,” Stom says. Even still, he powers on, fueled by his non-stop obsession with building something from an idea… identifying a need or improving on a need and filling it.

www.hvacrbusiness.com

Pete Grasso is the editor of HVACR Business magazine. Email him at pgrasso@hvacrbusiness.com.

HVACR BUSINESS SEPTEMBER 2018

DIFFERENTIATE YOUR BUSINESS STRATEGY Determine how to promote your technician’s efforts through proactive business development. BY JIM BASTON

hen product and service promotion by technicians is treated as a service, you avoid making recommendations for the sake of “selling” and focus on promoting only those products and services that you think will provide a measurable benefit for the customer. There is tremendous value through this approach and it is consistent with the technicians’ own view of their role.

Write down exactly how your technicians will approach their proactive role and what this will look like to the customer. The challenge for many service providers, however, is articulating this value to their existing and prospective customers. It is this challenge that explains why so few service organizations promote

their technicians’ proactive business development efforts. I recently spoke at a field service event about the promotion of products and services by the field service team. I asked a few questions of the

audience and found that, although the vast majority of the attendees had either a formal or an informal expectation that their technicians would make product or service recommendations to their customers, only one or two said that they actually promoted these activities as a benefit to their customers. This is unfortunate because the proactive efforts of the field service team represents tremendous value for their

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customers and provides the foundation for differentiating their business. If you have engaged your field service technicians in business development as a service, how are you communicating the benefits to your customers? How are you using your technicians’ efforts as a differentiator of your service offering from your competitors? If you feel you could do better, consider the following steps to develop a communication strategy that will resonate with your customers and help you differentiate your business from the masses.

ASSEMBLE INFORMATION Assemble the information you will use to describe the promotion of products and services by your technicians to existing and prospective customers. The purpose of this step is to be able to answer the question, “How and why are the proactive recommendations by your technicians a unique approach?” The goal is to be able to clearly and concisely communicate with existing and prospective customers about what the customer can expect when doing business with you and why it is different from your competitors. Start by recording all of the components of this initiative that contribute value for the customer. For example, your initiative may include components such as: • An initial meeting with the customer to review their objectives and understand their unique challenges so that the field service team has some direction in terms of what is important to the customer. • Annual meetings with the customer to review the progress of the initiative and to determine if the customers’ goals and objectives have changed. • Customer satisfaction surveys that measure the effectiveness of the technicians’ recommendations in helping the customer achieve their goals. Write down exactly how your technicians will approach their proactive role and what this will look like to the customer. What will the technicians do when they find an opportunity? How will the customer be engaged? What options does the customer have in turning these efforts “on” or “off,” and so on. www.hvacrbusiness.com

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Create a list of the benefits created by the proactive efforts of the field service team. Start by brainstorming all the possible benefits that will result from your technicians’ proactive efforts. Specifically, how will this approach contribute to your customers’ success? For example, how can your technicians’ efforts help your customer to save money, reduce operating costs and/or improve equipment availability?

Identify a number of trusted customers that you can approach to share your narrative about the proactive efforts of your field team as a service. Don’t try to “sell” them on the idea, but rather explain to them that you have engaged your field team in this way and you want their feedback on your approach.

Update your marketing efforts and materials to include the new service. After revising your message based on the feedback from Step 5 above, it is now time to update your marketing efforts and materials to include the new service and how it differentiates you from your competitors.

Consider how you can tailor your technicians’ efforts to be focused on the customers’ longer-term goals and objectives and how this approach creates value. Identify specific examples of how your technicians have contributed to the success of other customers.

DIFFERENTIATE Identify why this approach is different. Compare and contrast these benefits in terms of your proactive vs. the more traditional reactive approach to service delivery. Keep in mind that the customer may automatically assume that you are turning your technicians into salespeople.

Describe the service based on the notes that you created in step 3, then listen carefully to what they have to say. It is important that you get feedback from a number of customers so that you get a broad perspective on how your service is perceived and accepted. Once you have the feedback from your customers, you can fine tune your presentation and tailor it so that it is appropriate for the various audiences. For example, the discussion you might have with existing customers to inform them what you are doing and how it will work will be different to the one used by your new contract sales team.

It is also the time to create your Unique Selling Proposition so you and your team can quickly and easily communicate the benefits of your approach. The proactive efforts of your field service team to promote your products and services provides real value for your customers when the intent is to offer a higher level of service. u

Jim Baston is president of BBA Consulting Group Inc., a management consulting and training firm dedicated to helping technical service firms leverage the untapped potential in their business-development efforts. For additional information, visit bbaconsulting.ca.

Although you may have the noblest intentions of improving service levels through these proactive efforts, not everyone will initially recognize this. Consider how you will overcome this perception and help your customers become enthusiastic supporters of your effort.

CREATE THE NARRATIVE Put the output from steps together to create the narrative that you will present to your customers. Once you have defined what you do and why it is of benefit to the customer, you can put this together into a narrative that you can share with your customers. Start by writing down your side of an imaginary conversation that you will have with a prospective customer that will introduce this valuable service.

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Continue to work and refine this narrative until you are satisfied that it clearly and accurately communicates the service and its value and why it is unique.

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BE PROACTIVE WITH REFRIGERATION

MAINTENANCE Demonstrate the value of a good preventive maintenance program to your customers BY JAMIE KITCHEN

retty much any planned maintenance, often referred to as preventive maintenance (PM), is proactive in nature, as it helps ensure more expensive repairs are required far less frequently and keeps a system operating at optimum levels.

The key components of maintenance include how often and when (they are not necessarily the same thing), along with the payback on investment.

WHATâ&#x20AC;&#x2122;S IMPORTANT Before you can understand what is

important in a preventive maintenance program, you must know what is important for a system to operate optimally and what causes things to fail prematurely. To start, letâ&#x20AC;&#x2122;s look at what an AC/R system needs to do its job, which is to take heat from one area and move it to another to dispose of or find a good use for it.

difference (TD) between the refrigerant and the air to reject enough heat. If the air is 90F, the refrigerant must be 90+25 = 115F. For R410A, this equals a pressure of 392 psig. If we were to switch to a larger condenser that only required a 15F TD, the refrigerant would only need

Nobody would pay for a high-efficiency system and accept a low-efficiency system, but that is what they are essentially doing after the first year or two if they do not have a good PM program. A temperature difference must exist between the refrigerant in the heat transfer coils of the unit (evaporator and condenser) and the air or water it is taking heat from or adding to. The compressor supplies the energy to increase the pressure and thus the temperature of the refrigerant in the condenser where the energy absorbed by the evaporator and added by the compressor is expelled from the system. The closer the refrigerant and air/water are in temperature, the less energy is required to move the heat. This is due to the pressure difference between the evaporator and condenser being smaller so the compressor is required to do less work to increase the pressure between the two. Letâ&#x20AC;&#x2122;s take an example of an AC system operating on a hot day. A lower efficiency system may require a 25F temperature

HVACR BUSINESS SEPTEMBER 2018

to be 105F for a pressure of 340 psig. This lowers the pressure difference between the evaporator and condenser so the compressor does not need to lift the pressure as high, which saves work and energy. It also means the compressor will run cooler. Now, consider the same system but with dirt and/or other contaminates on the coil. This acts as insulation and reduces airflow, both of which require the refrigerant to be even hotter to reject the necessary heat. Even the more efficient system will operate hotter and use more energy, possibly a lot more as you are basically taking a high-efficiency system and turning it into a low-efficiency one. Nobody would pay for a high-efficiency system and accept a low-efficiency system, but that is what they are essentially doing after the first year or two if they do not have a good PM program.

www.hvacrbusiness.com

AIRFLOW Aside from temperature difference, but tied intimately to it, is airflow. Good airflow is essential for a system to operate as intended, not only from a heat transfer standpoint but also an air delivery perspective. If you spend the money to operate the system but can’t effectively deliver the treated air to where it is needed, what is the point? Concerning heat transfer, if there is reduced airflow through the evaporator, the TD of the refrigerant and air must increase to accommodate for it. The result is more energy being used by the compressor to lift the pressure to the necessary level so that heat can be rejected from the condenser. There will also be less cooling to reward for the increase in energy usage, resulting in longer run times, poor dehumidification and lousy occupant comfort.

POWER QUALITY Another area of focus in a good PM program is power quality. Poor voltage and/or power factor will result in hot motors with low life expectancy and high electrical bills. In fact, utilities are penalizing customers with poor power factor by adding surcharges onto their already high bills. While the solution to some electrical issues can be more involved to correct, ascertaining electrical quality is relatively straightforward if you have the right skills and tools.

REMEMBER THE LITTLE THINGS Finally, it is important to remember little things can add up to big headaches down the road. Loose terminal connections on power supplies or motors can result in hot connections, melted insulation and failed components. Also remember rubbing tubing, excessive vibrations, plastic bags blowing onto a coil surface, or just about any crazy thing you can dream up. It is amazing what you can find in electrical boxes, too — I have seen snakes, lizards and mice, all very toasty and all very unwelcome.

COMMUNICATE Now that we have established the “science” behind PM, how do you convince customers of its value? Especially since they may view it in the same manner as insurance policies for washer and driers that www.hvacrbusiness.com

may have been foisted on them at some time? Or, even worse, they paid almost more for some insurance over time than the original price of what they were trying to protect in the first place? The easy answer is that insurance policies only kick in if something fails and do nothing to prevent it, or make something work more efficiently and longer. While it can be said a good PM program is insurance against problems, it is not an insurance policy per se. Since we have already established energy is required to move heat from one area to another and we have discussed the key processes required, it only makes sense to focus a PM program on ensuring these key elements occur using as little energy as possible and letting the system operate as cool as possible. It is safe to say any system operating for 20 years with the same compressor almost certainly never operated hotter than required, had poor voltage supplied to it and had good airflow and tight electrical connections. It is possible to have a simple PM program that is also very effective. It’s also easier to explain the benefits if the program is uncomplicated and its value directly relatable to a key operating point. Here are some points to emphasize: • Check the pressure and temperature of both the air and high- and low-side refrigerant. Also check the airflow to make sure it is correct, and compare with the manufacturer’s specifications. Additionally, show the customer the manufacturer requires these values so they know there is a legitimate reason for you doing it. • Replace and/or clean air filters. This will ensure good airflow, resulting in more effective treatment of the air and lower operating costs. Stress that good airflow is the key to a properly operating system and, without it, they will pay for energy that is not doing anything useful. • Inspection and, if necessary, cleaning of both the evaporator and condenser coils. Doing so will result in better movement of heat from the inside to outside and cost less to do so. It will also keep the compressor operating cooler, which extends motor life and greatly reduces the chance of the refrigerant damaging the compressor.

• Check electrical quality. Measuring the voltage, current and power factor values will make sure electrical motors in the system are not using more power and operating hotter than necessary. This is very important in the summer months when the load on utilities is high and voltage can suffer. Customers can also relate to this, as it is often in the news. Power factor can be explained as essentially gas mileage as it relates to how efficiently the system uses supplied electricity. • General inspection and maintenance of the system components and surrounding area. This covers the “usual stuff,” such as fan belts and electrical connections. Stress that these can result in failure down the road if they are not corrected. Point out that electrical connections need to be tight to avoid overheating or interrupting power. Vibrations or slipping belts are not only a noise nuisance, but also cause other components to fail prematurely. SPEAKERS Service World Expo offers a variety of speakers and breakout options from within the HVAC, Plumbing, and Electrical Industries, as well as keynotes and speakers from “the outside” to keep our information fresh, relevant, and focused on hot topics. NETWORKING Between the trade show, meals, and parties that are open access to all attendees and exhibitors, there are plenty of ways to network with like-minded professionals, consultants, and thought leaders! EXHIBITORS Find cutting edge products and services that will help you innovate, automate, and compete in an everchanging world in our exhibit hall. Want to Exhibit? Exhibit@ ServiceWorldExpo.com 877.350.2348

In the end, good communication and patience pay off. Training for “soft skills,” such as appearance, mannerisms and building a trusting relationship goes a long way. These are all key, along with a good track record of doing the job right the first time so you build trust with your customer. Just about everyone can understand the points above if they are explained correctly. Believe it or not, one of the best times to offer this service is after service is completed due to component failure or some other preventable reason. The customer may not be ready right then, but they will remember the pain and be more open to preventing it going forward if you can show the failure could have been avoided altogether with a good PM program. u

Jamie Kitchen is an account manager for Danfoss. He previously was the training manager for Danfoss in North America. Jamie has worked in several positions around the world to develop his expertise. For additional information, visit danfoss.us.

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HVACR BUSINESS SEPTEMBER 2018

THE IMPORTANCE OF EMPLOYEE RETENTION

Winners tend to want to work with other winners — here’s how to keep them around. BY JAMES LEICHTER

ontractors frequently ask where they can find good technicians. Sorry to disappoint, but this article is not about how to find great technicians. The general unemployment rate is 4 percent and the unemployment rate among technicians is close to zero. There is no easy way to acquire skilled technicians. In addition to this super tight labor market, it may be harder than ever to keep the employees you have. According to a new survey by staffing firm Robert Half, 64 percent of employees favor job-hopping. That’s up 22 percent from a similar survey four years ago. Not surprisingly, Millennial workers felt the most favorably about changing jobs frequently, with 75 percent of employees under 34 stating that job-hopping could benefit their careers. You may not be able to readily acquire skilled technicians, but you can do something about keeping the ones you have. The purpose of this article is to help you keep quality employees through improved employee retention techniques.

GIVE THEM A PURPOSE As Peter Senge said in his book The

HVACR BUSINESS SEPTEMBER 2018

Fifth Discipline, people do not comply with a purpose, they enroll in it. Enrollment means that the person actively chooses to align their own vision for their life with the higher organizational purpose. Long-term employees need to know they are working towards a common goal. Millennials (born between 1981 and 1996) are especially purpose driven. Your company should have a clear purpose statement and all of your coworkers should understand that purpose statement and where they fit in to making it happen. Notice there is no mention of a mission statement. The terms are often used interchangeably. A company’s purpose is more than a mission statement or a vision. At its core, a company’s purpose is a bold affirmation of its reason for being in business. What’s your reason for being in business? When you ask your employees, their response is “I don’t know. To make the boss richer.” YOU can’t blame them for feeling that way. If they are not told differently, shouldn’t they just assume it’s all about you and the money? Need a purpose statement? Search the Internet for examples and come up with a truly inspiring, yet simple purpose www.hvacrbusiness.com

statement. Here are three good ones: • Walmart: “We save people money, so they can live better.” • Southwest Airlines: “Connect People to what’s important in their lives through friendly, reliable, and low-cost air travel.” • Zappos.com: “Delivering happiness to customers, employees, and vendors.”

STUDENT LOANS According to a recent study, 86 percent of Millennials would commit to a company for five years if they offered student loan assistance. Student debt is one of the largest financial burdens they face. You could offer your coworkers a program of student loan relief if they offered your company a commitment in return. You might offer the program after a certain “probation period” when you are reasonably certain you want them to stay.

PAY FOR PERFORMANCE Highly productive employees are disproportionally compensated compared to low performing employees. That is to say, top performers might produce 40 percent more than low performers but make just 20 percent more money. Even though you try to keep your payroll a secret, most of your employees know what each other makes; at least they think they do. Everyone knows who the low producing employees are and they bring the rest of the group down. When low producers are paid nearly as much as the top producers, overall productivity and morale will suffer. Consider compensating your technicians through a combination of guaranteed income and a set of performance-based incentives (PBI). PBIs should make up at least 35 percent of their income. PBIs are harder to incorporate with nonbillable employees but it is still very much possible. PBIs should make up at least 20 percent of their overall income.

EMPLOYEE RECOGNITION This might be the absolute number one reason people stay or leave. Most contractors have a difficult time offering genuine heartfelt praise. Be sure to find something to praise them for and offer that praise every day or two. www.hvacrbusiness.com

When low producers are paid nearly as much as the top producers, overall productivity and morale will suffer. NEGLIGENT RETENTION Negligent retention happens when an employer realizes, or should have realized, that an employee should be terminated, and the employer still retains that employee. Winners tend to want to hang around other winners. The same is true for your employees. If you have employees that don’t pull their weight, there will be resentment among your best employees. Few employees will tell you to your face that they resent someone. You must identify these people and let them go. This is often easier said than done. Remember, when you have a position filled with a toxic and/ or low performing employee, you are ruining the opportunity to fill that position with someone much better.

important to identify and remove employees that are detrimental to your company’s purpose statement. Since job-hopping is more common, you might have a chance at getting someone really excellent. Until you eliminate bad employees, you will never have the opportunity to replace them with better ones. u

James Leichter is president and CEO of software company Aptora Corp., owner of Mr. HVAC LLC and majority partner at RA Tax and Accounting Inc. James is also a faculty member of EGIA Contractor University (egia.org/ university). To learn more about staffing, hiring, employee retention and other leadership principles and strategies crucial to contracting companies, visit EGIA.org/HVACR-Leadership and download a free packet of training resources including videos, templates, industry research and more.

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Create a set of guidelines on how to identify bad employees and establish a timeline on when to deal with them. By decreasing negligent retention, you will increase employee satisfaction, reduce turnover, and increase productivity.

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MANAGEMENT

BY ANGIE SNOW

Find Relief by Empowering Your Team

oly Cow! It’s Time to Get Your AC Tuned Up!

I thought it was a great headline. Smeared across the front of 20,000 postcards with a huge picture of a cow’s face, we sent them out in a last-ditch effort to get the phone to ring. We had been having an extremely slow spring in 2011 with very little work coming in the door. My husband, Ryan, who is the co-owner of our company, had invested what was left of our checking account into this mailing, with the hope that this postcard would produce thousands. It didn’t. It flopped.

focus on too many areas in their business. At this time in our business, Ryan had been in the HVACR industry longer than I had, so he naturally headed up the marketing and advertising for the business. He knew technical terms, proper pricing and many other things that I did not know.

consultant, and with Ryan’s technical input, we began to make a big difference with our marketing. Our company was

getting recognized locally and nationally through our various marketing tactics. continued on page 18

But I had something that Ryan did not. I had different creative experiences from my time as a teacher, an art consultant, and as a woman. I mean, let’s face it, men and women think differently.

MY NEW PASSION After the cow postcard failed miserably, Ryan asked if I would like to take a shot at

Many smaller HVACR companies struggle with growth because the owner is wearing too many hats and tries to focus on too many areas in their business. We had very few calls from the postcard. We weren’t sure what happened. Was it the message? The offer? The timing? The aftermath from the recession of 2008? In hindsight, we determined it was probably a combination of all of those things.

TOO MANY HATS My husband had been fearlessly wearing the hat of “Marketing Specialist” in our HVACR company. He wore that hat along with the Comfort Advisor hat, the Service Manager hat, the Install Manager hat, as well as the overall General Manager hat. He was stretched thin and feeling the effects of wearing too many hats. This is a very common scenario in our industry. Many smaller HVACR companies struggle with growth because the owner is wearing too many hats and tries to www.hvacrbusiness.com

marketing. He knew I had a creative side that I loved to use, and I also had the similar viewpoint of a customer … someone that didn’t know or understand technical HVACR terms or language. I knew that to be effective in marketing, I would have to relate to my customers on their level, address their needs, and speak their language in an appealing and creative way. I accepted his challenge. I can’t say that I have mastered the Marketing World, but I took classes, studied and observed other successful companies, and started building a solid brand. With Ryan’s input and his total support, he encouraged me and guided me in my marketing endeavors. As we began to experience success, marketing became my passion. I began working with a marketing HVACR BUSINESS SEPTEMBER 2018

continued from page 17

WEARING THE RIGHT HATS One of the reasons I love having a business partner is that my business really

benefits from having two owners, with two different sets of skills and talents. As we continue to identify and recognize each other’s strengths and weaknesses, we refine our roles to align for the

betterment of our business. When I work with business owners to help them delegate the hats that are not the best fit, or need to be passed on, I suggest these four simple steps:

1. Make a list of your “hats” or responsibilities in your company. Rank your hats according to: • Your expertise and education • What you are passionate about • What you spend the most time on Once you have the big picture of all of your hats, you can evaluate your situation and determine the hats you want to keep as well as the ones that may be best to delegate.

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2. Search for and recognize the good qualities in your partner or your team members. “Anyone can find the dirt in someone. Be the one who finds the gold.” — Proverbs 7:11 Intentionally seek for the amazing potential in your partner and in your team. Everyone has gifts, talents and skills that go unrecognized and unused.

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3. When you find those strengths, acknowledge them! Verbal compliments, texts, email and notes can make a big impact on an individual. Often, people just want someone to believe in them. As you nurture that team member, you can unlock their potential and accelerate their growth! Don’t be afraid to assign them additional roles that you, or others, are currently doing. 4. Train with systems and processes. Communicate with clear expectations and instructions so that you can set them up for success. Meet regularly to track their progress and give additional guidance. Success can accelerate when business owners have the right people wearing the right hats. Seek to improve your own strengths and identify and nurture the strengths of others. Most importantly, when you find someone with the potential to do the job better than you do it, then it’s time to give up the hat, pass it on, and never look back! u Angie Snow is the co-owner and vice president of Western Heating & Air Conditioning in Orem, Utah. She and her husband, Ryan, purchased Western in 2007. At that time the company had 4 technicians and was ran out of their home. Today Western has 26 employees and they are looking forward to continued growth. Visit timeforcomfort.com for additional information.

HVACR BUSINESS SEPTEMBER 2018

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LEADERSHIP

BY BOB MCEWAN

Assemble a Winning Team

reat teams in any organization functions in many ways like a family; both are comprised of people who are connected to a common relationship, goal and vision. A team that truly respects each other and wants to succeed together will operate similar to a family in the sense that both share a deep trust with each other-even if they don’t always agree. Do you remember being on a winning team? What it felt like to have success with others. What role did you play? Attributes of winning teams:

Show me a winning team and I’ll bet they have a dynamic leader. Leadership makes the difference. • Everyone is focused on the goal.

• Positive atmosphere … can do.

• Strong sense of ownership by each team member.

• Open and transparent culture.

• Know your role and help others. • Know your marketplace and your competition. • Will to win … success breeds success. • Be prepared as a individual and a group.

Show me a winning team and I’ll bet they have a dynamic leader. Leadership makes the difference. They know how to inspire, engage and rally the troops. We have all watched and observed companies, sport teams, organizations change the leader or coach and things start to happen. Performance improves; morale is high and there is positive energy in the air with the same team members as before.

ENGAGE I believe engaging your workforce is the single biggest factor in building a winning team. Gallup released a report a few years ago on “The State of the American Workplace” the survey was based on millions of employees responses across the United States. It was discovered that 30 percent of American workers were engaged and inspired by a great boss. 20 percent had awful experiences and 50 percent were somewhat engaged and not inspired and kind of present, going through the motions. Over my 34-year career in GE Aviation manufacturing I worked with many union shops especially the United Auto Workers (UAW), International Association of Aerospace Machinists (IAM) and International Union of Electrical Workers (IUE) at the local and national level. As a front line supervisor I resolved step one grievances and as a senior executive helped negotiate new contracts including wages, job classifications, work practices and many more items. I had developed a good working relationship with the unions, I was always visible, available, willing to listen and usually could negotiate a win-win solution. There

HVACR BUSINESS SEPTEMBER 2018

were many times, however, I still had to support local grievance proceedings. After a few years it occurred to me that we spent over 80 percent of our time talking about people in the bottom 10 percent and hardly any time about the people that come to work, do their job and help the business be successful. This was frustrating knowing that we had so much more to discuss, the manufacturing sector was seeing new types of competition, at first from globalization (low cost wages) and later automation, digitization and robotics. I was determined to spend more time working issues that helped us win in this new environment. Over the next several years I spent time working issues such as offering multi-skills training, improved Environmental, Health and Safety practices, more employee engagement teams and enhanced work practices. I was not afraid to share and explain my strategy and listen to their concerns; while keeping the goal insight. The results proved it; many of our traditional US plants became model shops for our company. Productivity, product cost and innovation soared, the teams rose to the challenge. Our CEO Jack Welch had strong views on people and teams. He had the 20-70-10 principles. Top 20 percent were your high performers; 70 percent are the steady performers, consistently meet expectations and 10 percent are under-achievers, negative attitudes constantly pulling the team down. He said deal with the bottom folks swiftly and help lift the 70 percent up to high performers. This is how you build a winning team.

SHARE YOUR VISION In 2010 I put this theory into practice, I was asked to lead the manufacturing www.hvacrbusiness.com

engineering department who was underperforming and lacking execution. I certainly was up for the challenge but knew that timing was critical. We were developing new engine products and introducing new complex materials and new manufacturing technologies. We needed this group to support the industrialization of these components into our supply chain.

Work as one to win: team trumps individual every time. Know and grow your people for real engagement. Let the team make the cake & tweak the recipe. Your people make the difference. u

Bob McEwan, who retired as the general manager of GE Aviation’s global supply chain, continues to consult with GE Aviation, its partners and other aerospace companies in engineering and supply chain management. He also conducts leadership seminars for executives and corporate staffs. For additional information, visit mcewanleadership.com.

I spent the next 90 days meeting everyone approximately 450 folks across the globe in small groups. I spent time understanding their skills and talents. Talked to them about their careers and what kind of role did they want to play. Supported their movement around the organization. At the same time I was sharing my strategy and vision for the team. Told them the kind of people I needed to be on our team

Work as one to win: team trumps individual every time. Know and grow your people for real engagement.

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I worked even closer with the leadership team, spent numerous hours with them doing the same thing. I told everyone at the end of 90 days I would make some changes to leaders, positions and how we worked. I told everyone they were valued and important but the business needed us to act.

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Fast forward I made some changes at the end of those 90 days. I removed a few leaders, promoted others and kept the goal in site. I over communicated our metrics and measured them weekly. I supported my new team up and down the organization. I expected us to win and be successful. Morale improved, it was fun to come to work again, and we were making a major impact to the business. A year later we were recognized as one of the best departments in the company. I didn’t make it happen the people did. www.hvacrbusiness.com

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HVACR BUSINESS SEPTEMBER 2018

20QUESTIONS

>> with MARK GESCHKE

We sat down with Mark Geschke, owner of Bauer & Son One Hour Heating & Air Conditioning in Medina, Ohio. Geschke discussed purchasing a business, joining a franchise group and the importance of giving back to the community. 1. Can you tell us a little about your background? I was a certified wielder in the Navy. When I got out of the Navy back in the mid 70s, things were not that great around here, so I’d work for a while then get laid off. So, I moved to Texas and got a job out there for a while before coming back to Ohio. 2. How did you get started in this industry? I used my VA benefits to go to computer repair school, because that was the up and coming thing. I was hired by a company that did electronics, they said. It turns out, they were an energy management company that did heating and air conditioning. 3. How long did you work there? I worked with them for about 10 years, working my way up to Service Manager. Then, in 1992, they ran out of business and closed. That’s when I decided to start my own company. 4. What was it like when you first started? I figured I couldn’t do any worse than the company I worked for that closed. I did a program with First Energy Ohio Edison installing hot water tanks for a little over a year. While I was in customers’ homes, I put stickers on their furnaces and that’s how I built my customer base. 5. Was it just you those first few years? It was me and another guy who worked for me. At the time, it didn’t seem that bad … we’d get up and start at 7 a.m. and work until 7 p.m. Then I’d come home and work on blueprints in the basement for new houses we were going to be doing. It was a lot of hours. I was the service manager, the installer, the service guy and the CEO. Barbara, my wife, also worked with us in the beginning as office support. 6. How long before you really started to grow? Probably in the second year. In this business, it’s easy to start doing new construction work, so we got into that and started talking to builders. At that point, we hired two more people … my brother, who just graduated high school and was going to college, and another guy who had industry experience. 7. So it really started to work out for you? Yes. By 2000, we’d had steady growth and were in a position to purchase another company here in town. Bauer & Son had been around since 1932. The owner was in his late 60s and ready to retire. 8. How was that purchase a good fit? We did mostly new construction, which are typically six-month jobs. It strings the money out and you don’t make a whole lot of profit in new construction. Bauer & Son did strictly residential service and replacement. It was a great opportunity to diversify our business and break into the replacement and service world.

HVACR BUSINESS SEPTEMBER 2018

9. How did you decide to join up with One Hour? At the time, we were involved with a company called Air Time 500, which was a precursor to the One Hour franchise. We worked with them for a couple of years when they started talking about the franchise model. A lot of companies were joining up as an exit strategy. 10. What do you mean by that? Originally, everybody got into the franchise as a way to get out. It was easier to sell your company as a franchise in the future if you wanted to get out. That’s changed over the years, obviously, as the franchise company isn’t really into buying companies. 11. But you’ve stuck with One Hour, even though you’re not looking to get out? Yes, it’s been a great support system for us and we get a lot of value out of it. We were franchise number eight for One Hour and have been with them for 15 years now, after renewing again just a few years ago. 12. So, what’s your exit strategy? I’ve got a five-year plan. My brother is general manager now, so we’ll work something out as he starts to take control of the company and, eventually, I’ll just own a small percentage and retire on my way out the door. 13. What is your management style? I like to consider myself an open book type of manager, a walk around manager. I don’t like to sit in the office. I’ll go and see how people are doing. We’re definitely open door. We share everything with our employees. I treat our employees like I would want to be treated. I love my job. I think all our people like their jobs. 14. How do you motivate your people? By not sitting up in a closed office … I’m open to people and talk to them. We send out birthday and anniversary cards to all our employees and their families. We keep our family together. Right now, we have an awesome crew of people and we spend more time together, probably, than we do with our real families on a regular basis. We have a great benefit package and we take care of our people with retirement and disabilities and hospitalization. We’re paying for the entire family.

15. What’s recruitment like in your area? That’s probably one of the toughest things that we deal with on a daily basis, if you will. We are fortunate enough to have an actual recruiter on staff in our office. This gentleman has been doing recruiting for a number of years. He’s also one of our dispatchers, but he’s recruiting for us and for a few locations throughout the country. 16. How did you get started helping out with Children’s Miracle Network? About five years ago, One Hour was looking for a charity of choice to get behind and promote. They had chosen Children’s Miracle Network, which coincided with what I had been doing for a number of years volunteering with different groups that assisted disabled children. 17. So it was a charity that hit home for you? Yes. My wife and I had a granddaughter born back in December of 1997; she was only one pound, 10 ounces. And she was up at the Cleveland Children’s Hospital in the NICU for five months. Unfortunately, she didn’t make it. But, just going up there on a daily basis and seeing what those NICU nurses and people had to deal with to make a NICU operate really touched me. 18. How did you get involved with Akron Children’s Hospital? We shut the company down one day and took everybody down to Akron Children’s Hospital to show them what we were going to get involved with. At that point, I was still in a position where I didn’t have a whole lot of day-to-day duties, so I could really take whatever days I wanted. Mondays were normally my day off, so I figured I’d go down there personally and volunteer every week. And I’ve been there ever since. 19. And now the whole company is involved? We’re actually one of the first organizations in Children’s Miracle Network to have asked for donations in-house, in the homes of customers. A lot of bigger companies, like Wal-Mart, ask for donations in their retail locations. Over the years, with different campaigns, we’ve probably raised two to three thousand dollars at a time just by asking our customers for help. 20. How do your employees feel about doing so much charity work? They’re excited about it. They love to participate. That’s one of the reasons I wanted to take everybody to the hospital. I didn’t want to simply say, ‘We’re going to start raising money for Akron Children’s Hospital.’ We actually showed them … here are the different departments, here’s what this money’s going to do. That kind of thing.

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