The Sequel: Masters of the Game II
January 29, 2007
If Hollywood can make sequels, HVAC Learning Solutions can do the same. Just try and stop Michael Moore. We’re not talking about the documentary filmmaker, but rather the Michael Moore who is director of training and business development for HVAC Learning Solutions, which operates under the umbrella of Lennox Industries.
Moore, along with several members of his staff, recently unveiled the Masters of the Game II Conference, the follow-up to the 2005 original. The second conference, held in Oak Brook, Ill., featured many of the same speakers who taught in conference I. Returnees included:
• Gary Oetker, who - once again - provided a ton of business tips with his intensive, nearly day-long “Planning For Profit” session;
• Drew Cameron, head of HVAC Sellutions, who this time, along with Joe Crisara of Contractor Selling.com, covered in a short time span everything you wanted to know - and more - about recruiting, interviewing, hiring, and compensating technicians;
• Joel A. Baker, the futurist and scholar who popularized the concept of paradigm shifts for the corporate world, discussed his favorite topic via a video film; and
• Moore himself, who gave contractor attendees - many repeats from conference I - lessons, quizzes, and exercises in leadership and change management. Helping Moore were marketing program manager Alicia Bradshaw, regional trainer Mike Treas, and Carolyn Dulka, former business coach who became Lennox territory manager at the start of 2007.
So, was conference II as successful as conference I?
The smiles on contractor attendees at the conclusion of the three-day training fest said it all.
“I certainly learned a lot,” said Raymond Grimm, president of The Air Conditioning & Heating Co., Carol Stream, Ill. And he quickly added, with a sly smile, “Sometimes I couldn’t even keep up. There was so much to put in the noggin’!”
TAKING TESTSMoore had a field day with his first-day communications and listening segments, supplying participants with some thought- and discussion-provoking quizzes and exercises. Moore wanted attendees to understand their own communication style and adapt it to communicate effectively with others. He believed it was also important to understand one’s own listening skills and learn effective listening strategies in the process.
One of the two more active and interactive exercises administered by Moore revolved around being stranded in the desert after a plane crash. Conference attendees were grouped into teams. Each group had to answer a series of questions, first individually and then together as a team. The survival simulation was designed to help build group consensus decision-making skills, through an interactive team exercise.
“It’s helpful to learn and find out if one does listen,” said Moore, after tallying up and reviewing the exercise scores with participants. “It appears some of you need to work on that.”
Just as thought-provoking - and possibly even more interactive - was the change management exercise, designed to allow participants to explore achievement, leadership, coaching, and other concepts related to motivating employees and teams. While the assessment was set in a sporting context, the exercise applied to any group, particularly work teams.
Each participant had to imagine they were a successful coach of team sports, with a track record of having coached teams that perform well. In this situation, each participant was asked to become the coach of a well-known team that competes in regional competition and that has a history of success, but has not performed well recently, having lost five of their first six games. Participants were asked a series of 22 questions, which brought about plenty of discussions individually and in respective groups.
“It’s interesting to see how you perceive yourself and how others perceive you,” said Moore. “Better yet, it’s interesting to see how you work with teams regarding facing and dealing with issues.”
BUDGETS AND FINANCES AND ANALYSIS - OH MY!At the conference, Oetker zeroed in on the business planning side of the business equation.
“If you don’t know where you are going, then any road will take you there,” he warned participants, quoting a remark made in Alice in Wonderland. He then quickly added a quote from Eisenhower: “Planning is nothing. The process of planning is everything.”
In Oetker’s estimation, there are several reasons to have a written business plan, including the fact that it defines company direction, requires an owner to define goals clearly, and forces decisions.
“Creating accountability leads to improved performance,” he said. “Growth is controlled and business mix is predetermined.”
In having a plan, one must also create an action plan, implement the action plan, measure results, and adjust the plan as needed, he said.
Oetker kept conference attendees busy with intense and complicated financial issues. Among other topics, he paired down cost of sales, labor considerations, marketing-related costs, allocated fringes, and more. His bottom line: The more detailed the income statement, the better one can plan for financial pluses, as well as financial minuses. “It’s the best way,” he stated.
The financial coach encouraged his crowd to departmentalize their business, as this allows detailed evaluation of each department. “It ensures 100 percent accountability,” he said. “It allows the owner or general manager to evaluate department heads, and allows an owner or general manager to tie compensation to performance.”
It also allows an owner or general manager to be aware of the business mix, aids budgeting and forecasting practices, and “it’s a tremendous aid in setting prices,” he said.
During the course of his day-long session, Oetker walked participants through several specific financial situations and examples. As he conducted each, as he termed them, “needs analysis,” Oetker encouraged his audience to list and assess a company’s strengths and weaknesses, as well as a company’s opportunities and threats - or, SWOT.
“This is the systematic process of objectively evaluating the internal operations and capacities of the organization,” he said, referring to SWOT. “You need it to create a picture of the opportunities and threats facing the company.”
The numbers guru also recommended benchmarking, the process of comparing a company’s performance against industry standards, or “key performance indicators” (KPIs), as he termed them. These are critical performance measurements as modeled after successful companies in that particular market segment. He listed the 10 imperatives of benchmarking:
1. Culture based on ethics, excellence, and integrity.
2. All managers and employees know and understand the HVAC Learning Solutions business model.
3. All managers and employees know and understand the numbers and KPIs.
4. Gross margin is equal or greater than 42 percent (for residential service, maintenance and replacement company).
5. Selling, general, and administrative expenses (SG&A) equal to or less than 28 percent (residential service, maintenance, and replacement company).
6. All replacement jobs completed in one day.
7. Minimum $600 to $750 gross margin dollars per man a day.
8. Service and maintenance revenue equal to or greater than 25 percent of total residential service, maintenance, and replacement revenue.
9. Revenue per employee equal to or greater than $120,000 (excluding comfort advisor) to office ratio of 25-to-1 (residential service, maintenance, and replacement company).
10. Maintenance agreements equal to or greater than 1,000 per $1 million of revenue (residential service, maintenance, and replacement company).
At the same time, Oetker provided his list of questions and observations one should answer and/or make in order to complete a productive business review analysis. (See sidebar below for his check list.)
He did mention that goals are important to write down, too. After turning to a case study and work sheet, Oetker closed by stressing the importance of establishing a budget.
“A budget is a prediction of what might happen. You will always be wrong,” he said. “However, it is an effort to plan for the future - a proactive one, rather than a reactive. It gives a financial picture of the future.”
In his estimation, a budget creates a guide and financial roadmap, accountability for the entire company (“This fits nicely into pay for performance compensation plans for department heads,” he said), plus helps an owner focus on alternative strategies to achieve financial goals. Monthly budgets provide milestones during the year, he explained.
Lennox dealers and invited guests can attend Masters of the Game II conferences in 2007. The remaining schedule includes: “Change Management,” April 3-5 in Las Vegas and Nov. 5-8 in Charlotte, N.C.; and “Paradigm Shifts,” April 10-13 in Dallas. There will be a mini-conference for retail salespeople, featuring Drew Cameron and Mike Moore, March 21-23 in Charlotte.
For more information, contact HVAC Learning Solutions at 800-654-3283, option 2.
Sidebar: Listening ExerciseFor each sentence below, select the number (1 through 5) that best describes your listening habits. (1 is “almost never”; 5 is “almost always”.) Rate yourself through the eyes of someone who knows you well (friend, spouse, etc.) would rate you.
1. I like to listen to other people talk. - 1 2 3 4 5
2. I encourage other people to talk. - 1 2 3 4 5
3. I listen even if I do not like the person who is talking. - 1 2 3 4 5
4. I listen equally well whether the person talking is male or female, young or old. - 1 2 3 4 5
5. I listen equally well to friends, acquaintances, and strangers. - 1 2 3 4 5
6. I put what I have been doing out of sight and out of mind when I need to listen. - 1 2 3 4 5
7. I look at the speaker. - 1 2 3 4 5
8. I ignore distractions. - 1 2 3 4 5
9. I smile, nod my head, and otherwise encourage others to talk. - 1 2 3 4 5
10. I think about what the speaker is saying. - 1 2 3 4 5
11. I try to figure out what the speaker means. - 1 2 3 4 5
12. I try to figure out why the speaker is saying this. - 1 2 3 4 5
13. I let the speaker finish talking before I say anything. - 1 2 3 4 5
14. If the speaker hesitates, I offer encouragement to continue. - 1 2 3 4 5
15. I restate what is said and ask for confirmation that I am correct. - 1 2 3 4 5
16. I withhold judgment about the speaker’s idea until I hear it all. - 1 2 3 4 5
17. I listen regardless of the manner of speaking and word choice of others. - 1 2 3 4 5
18. I listen even though I anticipate what is going to be said. - 1 2 3 4 5
19. I ask questions to encourage others to explain their ideas. - 1 2 3 4 5
20. I ask about the meaning of words in the context in which the speaker uses them. - 1 2 3 4 5
TOTAL THE NUMBERS YOU SELECTED
• 75 or above = good listener.
• 50 to 74 = average listener
• Below 50 = You need to listen!
Sidebar: Check ListGary Oetker asked that contractors keep the following points in mind in order to complete a productive business review analysis:
• Are company financial rates within acceptable ranges?
• Does the company accounting system meet recommendations?
• Is one pleased with the image your company presents to the customer?
• Does residential services and maintenance represent 23 percent to 30 percent of total residential service and/or replacement?
• Is total residential service and/or replacement gross margin 42 percent or greater?
• Is company achieving its revenue goals and is owner satisfied with the growth rate?
• Does company generate sufficient sales leads to attain residential replacement revenue costs?
• Is residential replacement material costing 7 percent of sales or less?
• Is residential replacement labor costing 9 percent of sales or less?
• Does company’s residential service revenue exceed $100,000 to $120,000 per vehicle?
• Is residential service gross margin less than 60 percent?
• Does company utilize flat-rate pricing for service?
• Is labor cost greater than 22 percent of residential service sales?
• Is parts cost greater than 13 percent of residential service sales?
• Does company have a minimum of 1,000 service agreements per million of residential replacement and/or service maintenance sales?
• For a residentially focused company, is overhead 28 percent or less of sales?
Publication date: 01/29/2007