From Where I Stand

Do you ever feel like you are working harder than you did ciencies aimed at improving productivity. These are companies worth 15 years ago? In spite of technological changes, automation, and effi- billions of dollars with thousands of employees. Those improvements ciencies the work days still drag and the weeks feel longer and longer. are then modified and customized to fit smaller employers and the Society is innovating all around you while you feel stuck in the mud. innovations and productivity that comes with them infiltrates the entire Other industries integrate systems, artificial intelligence, analytics, and market. Construction doesn’t get to enjoy these globalized improvetechnology to either compress or maximize their ments to efficiency because the global leaders aren’t workdays. Yet, here you stand, convinced not much big enough to invest billions into innovation. has changed at all. What if I told you, if you work in So the answer is really simple, just increase the landscape construction, that nagging feeling is true? size of your business to 10,000 employees and the

In May, I attended a seminar by Robert Dietz, rest will take care of itself. Ok, so if that is not posPh.D. who is the chief economist for the National sible, how does a landscape business increase proAssociation of Homebuilders. Dr. Dietz shared his ductivity while maintaining its current size of operaforecast for the housing market and the general tions? After reading more articles and white papers economy based on past and current trends. One on this subject than I can count, increasing productivity of Dr. Dietz’s slides stuck with me. It showed the boils down to four factors: labor productivity for various industries over the past 55 years. The productivity in non-farm busi- 1. Grow without growing nesses during that stretch has increased 150%. It has been interesting watching the larger Construction productivity over the same time companies within the ILCA membership pursue frame has decreased by 10%. That is a 160% business management platforms in the last decade. swing between construction and all other trades. I know at least a dozen companies currently imple-

So, how do economists measure something as menting or coalescing behind a single platform. ambiguous as “productivity?” Productivity is defined as the ratio between the units of work and the hours of Products Most landscape companies have to shoehorn maintenance, construction, and snow management into work of performed. So, in landscape maintenance, it would be the number of square feet of properties main- of our the same system. Some pulled data from existing platforms and others pulled numbers from Excel tained divided by the number of hours it takes to service those properties. In landscape construction, there are Productivity spreadsheets and legal pads. The benefits of these platforms such as Go handful of variables to determine the units of work from LMN, Aspire, SynkedUp, WorkWave, Stack, etc. is the installed material to the size/cost of the job to the that they not only turn the inexact gut-feel of prosquare footage of certain improvements. Every road still leads back to a ductivity into exact numbers, but they allow for benchmarking with ratio and that ratio has barely moved in construction for 50 years. other companies across the country. In short, if you can’t hire 10,000

How is that possible? We now have cell phones and compact employees, make it feel like you have 10,000 employees by sharing utility loaders and computers. We have complex job-costing and internal data with other companies like yours on a level playing field. tracking software, GPS, and robots. The answer to big questions are Many of these systems provide reports on sales, gross margins, usually big answers. job costs, etc. The good news is that all this information is true...it has

Economists agree that the primary reason is the one that birthed to be. Ask anyone about “their year” and numbers tend to get puffed the professional landscape industry — urban sprawl. As cities up. Either the owner does not know or wants to add a nice layer of expanded to the suburbs, construction changed dramatically. No lon- polish before spitting numbers out in public. Business management ger did massive construction companies build massive skyscrapers platforms aren’t using fudged numbers meant to impress colleagues. and apartment buildings. Construction firms spread out far and wide, These platforms use the actual numbers required to make these sysnestled into communities, and worked on single-family homes and tems hum. So if owners don’t know their gross margins, their business landscapes. These were smaller, more nimble companies with no management platforms do. ties to unions or guilds.

Anyone in landscaping can tell you that working with single- 2. Champion project management family clients is a challenge. Everything is custom. There are hun- Let me state, for the record, there is nothing wrong with managing dreds of competitors in your service area. Budgets ebb and flow. from your gut. Understanding numbers is worthless if management There are delays. Crews are smaller. Time-lines get stretched. Local is indecisive. Gut-feel managers often excel at processing informapermitting and regulations are a handful. tion quickly and making hard and fast decisions on the intelligence

Urban sprawl meant that construction companies became too they are soaking up. Rather than use a software platform, they use the darn small and projects became too darn customized. Only 5% of computer between their ears. builders work for companies that employ over 10,000 people. In With that said, project management is the golden key to increasing landscaping, that number is zero. A “large” landscape business will productivity. Most likely, the person (or persons) involved with project employ 100-400 people. Now, let’s contrast that to manufacturing management should be process-oriented - meaning, if the process flows, and business services. 23% of manufacturing employees work for success will follow. The only alternative is if senior management is companies with 10,000 or more employees. 25% of those in busi- process-oriented. If that is the case, the project manager should be resultsness services work for organizations 10,000+. Bigger is not better, oriented to counterbalance the bean counting at the top. Either way, but bigger does usually mean the investment in systems, automation, someone has to watch the indicators while the other caretakes the process. and people designed to increase productivity. A good Project Manager should be championed and his or her job

Other industries have a trickle-down effect. Amazon, function should be clearly explained to the rest of the organization - this McDonalds, General Motors, WalMart, Apple, etc. implement effi- person is here to increase productivity and lower costs while trying not to

ALL TOGETHER BETTER

WWW .MARIANIPLANTS .COM 866-627-4264

make everyone nuts. Project Managers should review all systems, prioritize changes, and communicate those changes in a way that does not alienate others. If the owner is results-driven, most likely he or she should determine if the changes actually result in P&L improvements and employee retention. The results-driven owner is there to make sure the message of the project managers are received and to stave off a full-scale mutiny.

3. Know your Key Performance Indicators (KPIs)

It used to be that KPIs were sacred and shared across all businesses. Now, every consultant seems to add a new “key” until you are jingling and jangling around like a prison warden. Call me old school, but sales volume, gross margins, net profit, and customer satisfaction/retention are still the leading indicators. Landscaping is incredibly dependent on the individualized job, so a more granular per-job outlook on KPIs is prudent.

The most overlooked KPI in construction is the Crew Labor Ratio. In all construction trades, most notably landscaping, labor is the biggest hit to the balance sheet. With productivity rates holding steady and no technological cavalry on the horizon, understanding how crews earn money is vital.

Crew Labor Ratios are determined by subtracting billable time (time you can attach a margin to) to unbillable time (shop time, training, drive time, etc.). This number is divided by total sales. So, for example, if a company bills 12,000 hours per year and makes $1 million dollars, the Crew Labor Ratio is $83.33. Now, for the second step. Bucket those sales and hours into how the crew spends time onsite. Softscape hours are quite different from hardscape hours. Understanding these specific Crew Labor Ratios should influence the design-sales process. Should a client be talked into a smaller hardscape space and more softscaping based on the Crew Labor Ratio? Absolutely.

4. Retain skilled workers

Lastly, the labor force across all construction trades tends to be transient and under skilled. This is exacerbated in landscaping because the labor force exits for four months. A central reason for a decline in construction productivity are all the new faces a company has to deploy each year. The onboarding and shuffling of crews takes time, costs money, and is completely unbillable. The retention of skilled workers has a direct impact on productivity and profitability. This involves identifying the Alpha Dogs at the crew level who are responsible for creating the job site culture. Often times, these are the older more seasoned crew leaders.

These employees have to be trained, well compensated, and recognized along with their crews when they experience success. It is vital to discipline them privately and applaud them publically. The Alphas are likely responsible for the retention of dozens of employees. They are the keepers of the skills and define how jobs get done. When they leave, they are taking others with them. Identifying and retaining your Alphas is your goal this year and every year moving forward.

In 50 years, other industries have increased productivity by 150%. Landscape professionals are still working as many hours and doing less profitable work. Standing pat for five decades may be enough to keep the lights on, but the negative impact on human capital is tremendous. The simple fact is, landscaping lacks the monolithic industry leaders that will revolutionize productivity - all of the construction industry does. If the construction industry wants to make this year a little more efficient, profitable, and less exhausting than previous, it has to look inward for motivation and outward for tested tools. The entire construction industry may not become more productive over night, but you can.

Sincerely,