Hot Stock Tip!
July 16, 2007
By Ron Newman, PHCC Board Member
Ok, I lied to get your attention, but only with the top line. Yes, I know I’ve done it before. Getting the most out of your company requires investment in buildings, trucks, inventory, tools and office equipment. We all have these investments and, hopefully, will realize a return on investment equal to or exceeding the return we could get on a safe CD. Also, we eventually end up with an investment in Accounts Receivables and operating capital to fuel the ships we call our businesses.
While we want to receive that ROI on the above investments, there isn’t a lot we can do to maximize that return in managing those assets. We can look at rent allocation, volume $’s per truck and turns on inventory. Even with the best effort, a marginal effect is all we can expect. We can, however, receive a major ROI on the asset we haven’t yet mentioned. That investment is our people. If you look at your income statement, I’d bet the single largest item is your payroll. Yet, many of us spend little time or money on training and education aimed at maximizing their effectiveness and service levels.
We might get some technical training when the local distributor offers a class on some new product. Our techs are more likely to attend golf or fishing outings, unless food or beer is involved. It’s even less likely that a session on customer relations or service selling will be offered or well attended.
Ask yourself a question. “How would a 10% increase in sales, at a 10% higher price, using the same number of employees affect your bottom line?” The math I took in school said that this example would add $120,000 to the bottom line of a $1 million company. I’d take that in a heartbeat. All that is profit with no additional customers or employees. Experts tell us that a well trained service person with customer skills can sell up to 25% more services at a higher price.
Now back to the investment discussion. Let’s suppose you take the time and expense, not to mention the personal effort, to put together a monthly training schedule. Let’s mix it up with technical and business subjects, such as customer relations. I would suggest that you hold it during the day on a schedule that includes lunch. We have a program in our company that brings in factory trainers or customer relations educators at 11:00AM for a 2-hour session including lunch. This allows 1-½ hours for presentation with a question and answer period during lunch. Back to work at 1:00.
Not only does this allow you to have people come to train during their normal business hours, it tells your people how important you view the matter of training. We pay for an hour and a half and buy lunch. This is all held in our training center, which can comfortably seat 20, complete with audio/visual capability. We also have a lab with furnaces, a/c condensers and a heat pump to work on and demonstrate operation. The majority of the furnaces are hooked up to run. Manufacturer reps love to come and donate their time and knowledge in that environment, free and regularly. It sure beats sending the crew to a distributor’s location two hours away and it saves time away from the job and family.
Not only will you have a technically better workforce but customers will be treated better, become more loyal and be less likely to shop around. Most good customers recognize the value of good, professional service and are willing to pay for it. When we get discouraged about losing a customer to price competition, I think we need to recognize that, in most cases, we didn’t do a good enough job demonstrating the value of our company. Only our people can do that, and then, only if we give them the tools and expectations.
In addition, surveys indicate that employees that are trained appreciate the value of the training and, more importantly, the value you, the boss, place in them. Training and education gives them the confidence to go before your customer and represent your company in the best light. Remember that nothing happens until somebody sells something and your best sale person is in the customer’s home and on the phone when they call in. Put your best foot forward and reap the benefits of having the best-trained and motivated people possible in front of your customer.
The most successful companies seem to train, motivate and reward their staff. They aren’t the cheapest, the biggest or even the flashiest in most cases. They are, however, probably the most fun to run, longest operating, and most profitable in the neighborhood. They are less dependent on the boss and operate within a system that allows them opportunity, responsibility and the satisfaction knowing the customers appreciate them as much as the boss does.
So try making a significant investment and the commitment to helping your people make your company a success. Everyone will benefit.
Source: PHCC of Iowa Pipeline Newsletter, May/June 2007
Ron Newman, Zone III Director
PHCC Educational Foundation.
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