At The Summit: Industry Summit

LABOR PAINS. "The real issue we see with any expansion is how do you keep the costs in line with the escalating labor rates," related Scott Brickman, president, The Brickman Group. "We keep hearing that you can’t hire people unless you pay them more, so that means we have to be getting increases for what we do that reflect our increased costs instead of just wringing more out of what we’re doing. We’ve experienced a 10 to 20 percent wage increase annually for the last three years. Those are important numbers to take to our customers at renewal time.

"The H2B program has been a good solution for us, but I think the government has had it out for this industry," he continued.

Dave Tucker, president, Sensible Software, Gaithersburg, Md., said his customers are dealing with the challenge of climbing wages by implementing incentive-based compensation plans. "I’m seeing a real trend moving to a bonus or piecework compensation program to pay employees a certain percent based on the dollars that each job produces," explained Tucker. "Then the best workers make the most money and the worst workers aren’t going to be a problem because they’ll either improve or they won’t stick around. That reduces your management and your valuable employees work as though they are partners in the company."

Different contractors face different labor challenges, however. "Getting good supervisors has been a challenge for us," noted Kurt Kluznik, president, Yardmaster, Painesville, Ohio. "As a result, we’ve started outsourcing some work to three or four companies who operate almost as full-time subcontractors for us in specialized areas like waterfalls and hardscapes. These are people who don’t like sales and are more like technicians, so they struggle in business for themselves. We pay a little more for them but not much more when you factor in what we save in equipment costs and other employee costs."

Richards said the key to compensatoin issues is actually spending more on employees, but viewing such expenses as an investment. "We need to look at what we can do to invest in our employees’ growth and provide a career for them," he asserted. "We have to invest more in training and in the business’ growth to provide opportunities for them. The competition for our employees isn’t other landscape companies - it’s other industries. We have to make work easy. We do things like provide van pool transportation, and that has given us an edge."

This notion of competing against other industries for employees is critical at Groundmasters. "If you’re losing employees to other landscape companies, that should send up a big red flag because then you’re not losing them to a different kind of work or significantly higher wages," he asserted. "So you need to be doing exit interviews with everyone that leaves the company to find out why they’re going."

"We try to create a family atmosphere, more than anything," explained Jeff Oxley, operations manager, Swingle Tree & Landscape Care, Denver, Colo., who added that the company dropped its policy against facial hair and piercings to compete for employees. "We’ve got a diverse workforce, and getting them to gel as one is tough. People who come to work for us from another country often leave because there’s no one they associate with. So we do things like putting up a volleyball court in front of the office for them to use."

Many companies look to their current employees to find new ones. "People like to be around people they like, so referral bonuses work well," noted Ken Taylor, corporate business development manager, Husqvarna, Charlotte, N.C.

"We pay $1,000 for a referral if an employee stays for one year," agreed Oxley. "The referring employee gets $50 when the new employee starts, $200 two months later and the balance at the end of the year."

"You can spend a lot of money on Help Wanted ads, so I would rather give that money to an employee, have a celebration with donuts and put that employee on a pedestal for a few minutes," agreed George Gaumer, vice president, Davey Tree Expert Co., Kent, Ohio.

"After 30 years in the landscape business, now I’m in the Internet world," related Bruce Wilson, vice president of business development, GreenZebras, Boston, Mass. "I feel like a relic at this office place with ping pong tables, foosball tables, free food and drink and no obvious work hours. The employees put in a tremendous amount of time, but they do so on their terms. To the extent that we can figure out how to make that work, our industry can improve. That may not work with our field labor, but we have to at least give the mid-level managers some flexibility."

Unfortunately, the problems don’t end when employees are hired, especially with younger employees.

"A challenge today is that employees quit if you criticize them," commented Rorie. "We benchmarked against some companies who had great employee retention rates, and we found out they were nicer than us to their labor. They let their employees have cookouts, flex time, the volleyball courts and so on. That means we have to do this, which creates a mental adjustment for the managers. These employees just don’t want to work hard because they don’t want our jobs.

"Then, if you have a star, you have to show him the path and walk him right past everyone who doesn’t want to do anything," he continued. "Don’t penalize these great employees for a lack of seniority."

Moving employees into senior positions creates additional challenges, however, and contractors want help from manufacturers. "The best business partners we’ve got are the people who are interested in our business and help us train our employees," Rorie emphasized. "As far as brand loyalty, that goes to whoever is helping me solve problems. I don’t care what color the mower is any more because if you develop something superior everyone will catch up soon. I want support. I want my truck supplier to help me troubleshoot an engine and get commercial drivers’ licenses for my employees. Whoever jumps in the ring with us will win loyalty if they’ve got the best product or not."

PEOPLE POWER. Despite the many frustrations associated with employees, roundtable participants acknowledged their dependence on labor and the importance of being able to develop them into more skilled personnel.

"The employees need to build their own competency to stay employable, and then companies need to build competency in their own organization in order to grow," remarked Wilson. "Environmental Care has a four-level gardener program that lays out the specific skill levels employees have to achieve in order to progress and advance. If the first one isn’ completed in 90 days then an individual isn’t employable. That teaches them that to be eligible to remain with the company they have to become competent."

"The challenge we have with a similar system is that some people are very good at checking off different criteria, but they may not be very good at doing their job," commented Brickman.

Richards, however, noted other benefits to such a clearly defined hierarchical system. "Once we assigned competency requirements to job descriptions, we eliminated the compensation headaches of ‘it’s time for a raise,’ and we were able to get back to the value that employees deliver to the company instead of having them just expect a raise," he explained. "That also challenges the managers because employees want to get ahead, so now you have to tell them what to do to succeed."

IS MORE LESS? In the last decade, more companies have been exploring ways to become full service. Participants noted that while expanding service offerings seems like a logical method of generating more revenue, danger can also lurk in such a strategy.

"I believe very strongly in trying to penetrate wide and deeper into our customers’ businesses," noted Kujawa, adding that commercial property managers in particular appreciate contractors’ extensive service offerings. "The more valuable you are to him, the more headaches you relieve him of."

A key determinant for contractors should be the market they serve, however. "Customer expectations should drive what you offer," Reeve noted. "But you have to have the resources to be able to respond to customers’ expectations."

"Customers are expecting us to deliver more, but equally important is delivering the product appropriately," Richards countered. "Oftentimes, the answer is to form an alliance with good companies so you don’t have to offer the services yourself."

"We try to be the best we can be at whatever work we do," agreed Reeve. "That gets harder and harder as you grow and expand your services, so sometimes you need to know what you do best."

"I’m of the believe that if you can do the snow removal and total grounds care, which our industry has been asked to do, then you have the leg up on the company that can’t do that work," observed Rorie. "I bet 10 to 12 percent of our corporate overhead goes into being the ‘Snow King’ in our area, and I know our snow work doesn’t contribute that much back to the company, but we need to do that work to get on the property for some more profitable opportunities."

TECH WONDERS. Contractors who want to grow their businesses profitably in coming years should expect to integrate technology into their operations.

Kujawa said the landscape industry has to examine other industries that better utilize technology to find new solutions. "For example, we need to think about ways to use a Palm Pilot with our crews in the field instead of just using it ourselves," he noted, wondering how much better and more efficient data collection efforts could be with these machines. "We’ll look at any new technology because labor is also a problem among the office personnel. I want to get to the point where there is less paperwork and more automation."

Tucker expects to see new technological tools in contractors’ hands before long, and he doesn’t expect this to just be executive tools. "In a year or two, we should see wireless e-mail that could let foremen use hand-held units to hit ‘done’ as soon as they complete a job and automatically begin processing that paperwork back in the office," he predicted.

"The numbers that we can track and understand about the work we do is where the real payoff will be," commented Fogarty.

Brickman agreed, noting that unless contractors boost their prices in order to cover climbing labor costs, they have to look for ways to reduce other costs.

"Technology will benefit us as we streamline the job costing part of the business," he noted. "The manual work we’re doing now is what we want to automate."