Wednesday, April 16, 2014

Home Magazine Numbers game

Numbers game

Features - Lawn Care

Lawn America rewards employees in dollars, as long as their results show it makes sense.

Lee Chilcote | January 18, 2013

Brad Johnson, owner of Lawn America in Tulsa, Okla., admits that he’s a bit of a fanatic about measuring results. Employing a color-coded spreadsheet, Johnson, who runs a “good old-fashioned spray and fertilization company” with more than $5 million in annual sales, tracks everything from production goals to cancellation rates.

The results and rewards system is at the heart of Lawn America’s successful operation. The company, which serves 11,000 customers throughout northeast Oklahoma, has grown every year since it was founded in 1999, even during the last recession. This year, Lawn America is on track to grow 18 percent compared to sales in 2011.

“Our basic tenet is that what gets measured gets done,” he says. “Lawn America has developed a great track record, brand and reputation, and that’s part of our strength.”

When it comes to measuring results, there’s a method to his madness. Lawn America is not only growing, but it also has a 92 percent employee retention rate in the past three years. And that, Johnson says, is the key to providing good service to his customers.

“When you have a two- to five-year employee servicing a property versus a different guy every six months, that makes a huge difference in the level of service a customer receives,” he says. Whereas most companies measure outputs like production and profits, tracking such general data won’t tell the story of how to improve and grow as a company, he says. Instead, more companies should focus on measuring “the things that get us there.”

Here’s how Lawn America does it.


Reap the benefits.
By rewarding employees based on outcomes, the company ensures that they are producing the results needed to be successful. With bonuses accounting for as much as 40 percent of employees’ salaries and strong performance adding tens of thousands in extra pay, workers take it seriously.

The local advantage

Brad Johnson gives 3 percent of Lawn America’s gross sales to the community.

The ethos of Brad Johnson of Lawn America in Tulsa, Okla., is that of a small business owner committed to serving his community.

“People just trust us, and a lot of it is because we have really great people that service our customers really well,” he says. “We push the local ownership aspect of our company a lot. That’s a big selling point versus corporate lawn care.” In Johnson’s view, locally-owned companies have a natural competitive advantage over national franchises if they provide attentive service and market themselves effectively.

“In our industry, people like to do business with local guys,” he says. “We give 3 percent of our gross sales back to the community, and we’ve begun to market that.”

Community service is a big part of Lawn America’s overall strategy for embedding itself in the local community. Although Johnson’s motivations are genuine – he wants to help strengthen his community – there is an added benefit in company branding, he says.

“We do a lot of free applications for nonprofits, churches, schools and municipalities,” he says. “People tell us they do business with us because of our strong community involvement. That’s not the reason we do it, but hey, we’ll take it.”

“Even if they don’t do their job properly, route managers could get $13,000 in incentive pay – but I tell them they probably won’t be working here too long,” Johnson says. Route managers who perform exceptionally well earn up to $26,000 in bonuses.

Johnson’s system is very elaborate. There are 15 performance categories for the route managers alone, and each position has a customized performance spreadsheet. Although it might appear that such a finely tuned system would become cumbersome to manage, Johnson says that the opposite is actually true. Office staff members are trained to record data, and employees see it as part of the company’s culture.

With annual pay for team members topping out well above other lawn care companies in the Tulsa metropolitan area – about 30 percent higher – you can bet that Lawn America’s employees pay close attention to its carefully developed metric system.

Lawn America only recently hired its first full-time salesperson, yet typically closes about 75 percent of its estimates. “Most of our growth comes from referrals,” Johnson says.

The company’s incentive system delves much deeper into rewarding performance than simply examining an employee’s production rate. For route managers, Lawn America also measures such factors as customer net gain, evaluations, team production goals, cancellation rates, Net Promoter Score, optional service sales and average overtime.

“Every year we find new parameters, new things that we can track and reward for great performance,” Johnson says. “Most lawn care companies measure hours and how long someone works there. Some bigger companies have even taken away incentive pay.”

To Johnson, one of the most important factors is Net Promoter Score (NPS). Used by companies across the world, the simple metric measures how likely a customer is to recommend a company. Lawn America’s NPS score is in the 70s, which is high.

Once an employee gets a customer into the pipeline, they are rewarded not just for the initial sale, but for keeping that customer happy and retaining them throughout the year.

“The route managers are at the core of our company, and they are responsible for a certain geographic area and selling, servicing and retaining customers there,” Johnson says. “It’s like they have their own little business. They don’t own a single share of stock, but feel like they have ownership because they’re measured and rewarded.”


Other bonuses.
Although peer pressure is a significant positive force within the company’s culture, Lawn America also emphasizes teamwork by setting team goals and rewarding performance. “Every biweekly pay period, there are team goals that are set,” Johnson says. “If a team hits their goals, then each person on that team gets $45 in addition to their paycheck.”

Lawn America also measures response times by using the software system Real Green.

For instance, if an employee hits his goal of re-spraying a property within a certain time frame, he earns $80 on top of his base pay. It’s not so easy, however – as Johnson puts it, “You gotta get out there quick.”

Johnson has learned from experience not to provide every incentive up front, but to hold some of them in a “pot” until the end of the season. For instance, client cancellation rates aren’t measured until the season is over, since attrition occurs in summer.

Lawn America has a profit sharing system, too. At the end of a given year, 25 percent of total profits are placed into a pool and shared with employees based on their yearly pay. Employees that earn bonus pay are also more heavily rewarded with profit sharing.

In other words, the effect is cumulative – the better your performance, the more you stand to gain. Johnson’s carefully-designed system is devised to incentivize strong performance at every level, and that’s why Lawn America is growing in a tight market, he says.

“The good news is that the system does help drive attitudes, culture and performance in a positive way,” he says. “Our guys know their job and what needs to be done. They just go out and do it as if they’re the owner, and they’re rewarded for it.”

 

You can read more Growing Green newsletters at www.lawnandlandscape.com/newletters.