Contractor Goes Through A Culture Change

January 23, 2006
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Tracy Parrish (left), service manager, and Rich Krider, president, review the technicians’ YTD revenue production chart. (Feature photography by Skip Rowland.)
ASHLAND, Va. - Three or four years ago, employees of Howell's Heating and Air Conditioning would not have nominated the company in The NEWS "Best Contractor To Work For" contest. At that point, people were leaving. Those who stayed were not happy.

Then something happened: awareness that the company was on a downward slide. "In 2004 we were having a terrible year, both in profitability and turnover," said president Rich Krider. The company, an employee-owned ESOP, brought in an outside consultant who interviewed staff. Before the review was complete, a few people in management left their resignation on Krider's desk.

Krider said he called all the employees together and announced, "We're going to start treating people like adults and owners." Regarding the resigned managers, he commented to The NEWS, "Micromanagement will stifle any creativity."

"Micromanagement squashed us," said Tracy Parrish, service manager, who nominated the company for the award. "It has been a true culture change."

Performance incentive programs were reinstated. Workloads have been steady, thanks to an emphasis on service contracts. Parking lot parties are held a couple of times a year, and lunch is brought into the training room.

Most importantly, though, employees are treated like adults and owners, which in fact they are. They are allowed to make decisions. Techs are dispatched from home, but are not scolded if they come in, as they were in the past.

These reasons, along with many others, allowed Howell's Air Conditioning and Heating to be selected as winner of The NEWS' 2005 "Best Contractor To Work For" contest for the East region.

THE RIGHT PEOPLE

"In order to move forward, we have to improve," Krider said. Part of that includes "making sure we have the right people in place. You don't need such overly defined borders and guidelines." In that kind of environment, he pointed out, a company is more likely to attract and hire people who need a lot of guidance and can't make decisions well.

It's not the type of attitude Howell's wanted to encourage.

Montese Anderson is the company's first female technician. She came from a duct-cleaning background and answered an ad in the local paper. "We get more customer compliments on her," Parrish said; "she averages about one per week. A lot of them come from female customers."

Anderson said that she had been searching for a family atmosphere when she found Howell's. Anderson said she knew she found it when, at a company after-hours function, Krider said, "We'll go about our business after prayer." "Right there, I saw a future," Anderson said. "I feel safe, I feel secure."

Technically, "I know how to clean blower wheels, for example. I didn't know the science behind it." She is now learning, but also feels comfortable asking her co-workers for information. "I'm one of the group. I'm the little sister."

Dennis Banton has been with Howell's for 22 years. One of the first things that made a difference to him a few years back was the company's drug-testing policy, one of the first in the area. "That drug policy created a nice environment to work from," he said.

"There is definitely a family feel here," he added. "I think they are genuinely concerned about us.

"The atmosphere has come back around to what it was before. Being treated like an adult is huge."

Jim Lankford of purchasing and reordering helps all of Howell’s departments coordinate their purchases.
Kenny Herring, commercial construction manager, has been with Howell's for 15-plus years, but they have not been continuous. He is one of the employees who left and came back, but he couldn't do it while the former managers were there. They wouldn't let him. "I still had a lot of friends here," he said. "I wanted to come back."

What does Howell's winning this contest mean to Herring? "I know I made the right decision to come back," he said.

Putting the right people in place is key to the profitability of the team. Jim Lankford, for example, has been with the company since March. His inventory/parts control position was created when management noticed how many individual orders for supplies were going out every day, frequently to the same supplier.

"I do most of the ordering," he said. The company now receives consolidated deliveries for various departments twice daily, morning and afternoon. Lankford also consolidates orders whenever he can for possible pricing breaks.

In other key positions are Cindy Uebele of accounts payable, residential new construction, Ricky Schatzle of service billing, Yvonne Tyler, who focuses on pending-work follow-ups, and Sara Huber, with scheduling/dispatching, PM contracts (residential and commercial), mailers, and various other duties.

There is a huge customer base, said Krider, and many ask for specific technicians. "Dennis is booked well into 2006 for precision tune-ups."

Montese Anderson, technician, shows what it takes to win the “Clean Truck” award.

EMPLOYEE APPRECIATION

"Every effort is made to create and maintain a culture where each employee is treated as an owner and knows how important they are to the success of the company," said Parrish. "We work as a team within our individual departments, but each department is always willing to help another department when needed.

"It's OK to have fun while doing your job," he said. "As a whole, folks around here enjoy spending the day with one another."

During busy times, "We try to stagger the techs who are catching after-hours calls so that every tech isn't working late every day," Parrish said. "I also try to avoid customer service rep/dispatcher burnout by bringing them ice cream or buying lunch."

To help keep up the workload during off seasons, "We stress the importance of [service agreements] and how they are the life blood of not only the service department but our company, that they provide a year-round work load," said Parrish. "The techs and dispatchers are paid incentives for selling agreements." Replacement and new residential sales proposals include service plans.

Business has been good. The market is strong and keeping everyone busy has not been a problem. However, Krider explained, if hours ever do need to be cut, they will be cut across the board for everyone in the company, from 40 hours/week to 30. This was agreed to by the company's stockholders - its employees.

In order to facilitate truck restocking, field employees have been given fax machines for home use so they can fax in a list of parts used each day. These items are placed in restocking bins; there is one for each tech. Bar coding increases stocking accuracy all around.

Sometimes the support is more subtle. For instance, the company's Website (www.howellsac.com) includes 13 SEER legislation information right on the main page. Krider said it has also been emphasized in the company's quarterly customer newsletter. Customers have called in asking questions, he said. Builders have been moved to 13 SEER products this year.

"The communication lets folks know [the efficiency increase] is not being driven by us at Howell's," said Parrish. Techs and salespeople are given backup materials and handouts on 13 SEER. The company also has readily available heat pump FAQs, comfort accessory sheets, and comment cards. If a technician needs to get to the next call, they have information to leave behind. The query can then be handed-off to the salesperson. There are spiffs for the tech when these result in sales.

Dustin McCauley operates the refrigerant recovery unit.

SPIFFS AND BENEFITS

ESOP ownership and 401K retirement plans are different, Parrish said. In the company's ESOP, "100 percent is contributed by the company at the end of the year, based on a percentage of the employee's salary, then invested. Once it's been contributed, the company can't get its hands on it. To date, there is $1.8 million total in the ESOP."

Employees own 33.3 percent of the company's stock, he said.

"We did great this year," Krider said. "The stock price went up, the market did well."

The company's benefits also include vision care and paid vacations (one week after the first year, two weeks after three years, three weeks after five years, and four weeks after 20 years).

In addition, "We are an ESOP company, employee owned," Parrish said. "All employees share in the profits. Through ESOP each employee has a life insurance policy." Employees also can enroll in AFLAC.

Employee goals are posted on a board in the training room. The highest-production tech (based on a gross revenue/gross margin figure) gets the incentive.

Less-experienced and junior techs get a handicap in the competition; their quotas aren't as high as those of more-experienced techs. "You've gotta keep it level," commented Parrish.

Technicians are encouraged to be consultants for their customers. They are taught to recognize sales opportunities. However, if they're not comfortable with selling, they can hand it over to a salesperson and still get a spiff.

"Every person has the ability to sell and make more money," said Krider. There are spiffs for accessories, maintenance contracts, and getting jobs in on time and under budget. He said that one senior tech generated $80,000 in leads in 2005.

The firm's apprenticeship program spells out increases in pay as employees move through each phase of the program. In other areas of the company, pay increases are based on performance and goal achievement which comes from annual reviews, Parrish explained.

Rich Krider, president of Howell’s, had to rebuild morale when he took the reigns of the company. Here he looks over some HVAC design blueprints.

TRAINING TECHS

When it comes to bringing new technicians into the company, "We grow our own," said Parrish. "We have our own state-accredited apprenticeship program. We also have a strong involvement with the local high school technical center in which we offer employment and provide a $1,000 scholarship to their top student.

"Twenty-five of our employees are currently enrolled in long-term classes at evening tech center courses, RSES classes, etc. Tune-ups are a great way for junior techs to develop technical and customer service skills."

The tech center also brings out students to visit the contractor for field trips, and donates old equipment for use in the classroom. "We donated equipment over there from an apartment job," Parrish said. "The students just fell all over it."

Virginia has state requirements for going from ductwork apprentice to journeyman, he continued. "At the end of the program, they are qualified to be an HVAC journeyman according to the state."

Over the last two years there have been eight to 12 high school kids working at Howell's. It offers them a shot at non-college secondary education. They can say, "I didn't go to college mom, but I'm in an apprentice program." Pay deductions help them buy their own tools. The high school apprentice gets a starter toolbox that is returned at the end of the year. If anything is missing, the apprentice has to pay the company for it.

Over the last 12 months, employees have spent an average of 50 to 75 hours in training.

"Techs get 100 to 150 hours," Parrish said. Dennis, for instance, recently attended a three-day CO testing/evaluation program. He, in turn, will teach other people at Howell's.

"We're buying the diagnostic tool for combustion analysis," Parrish said.

Community college classes can be taken on company time, Krider pointed out. Online computer training also is available to them. "People don't always have time to take a night class," he said.

"We tell people to do one class you need for your job, and one for personal development," Parrish said. "A couple of folks have earned their associates degree, funded through Howell's."

Sidebar: No Howell On Payroll

"My parents bought the company in 1969," said Rich Krider, president of Howell's Heating and Air Conditioning. "My mother came back two years ago as chief financial officer, controller, and ESOP administrator. My father retired in 2000, but he's still chairman of the board."

"The company was bought from Mr. Howell in 1969 for $7,500," said service manager Tracy Parrish. The new owners got the name, an old van, tools, and $3,500 on the books of work to do.

The company has worked in the healthcare community, including St. Francis Medical Center and 15 new dental centers in 2005 alone. It's not really a niche, Krider said, but the general contractor used Howell's once for this type of job and he keeps calling back.

Howell's also does plenty of work in the historical area around James River. Tax credits for historical work are determined by what can be seen and what can't be seen. "A lot of jobs use exposed ductwork and DuctSox," Parrish said. "Wal-Mart is using it now; by lowering the duct to 11 feet over the floor, they reduced their tonnage by 60 tons."

"We do a lot of design-build. Working with the historical society involves a lot of red tape," Krider said.

- B. Checket-Hanks

Sidebar: Just The Facts

CONTRACTOR: Howell's Heating and Air Conditioning

PRESIDENT: Rich Krider

LOCATION: Ashland, Va.

YEARS IN BUSINESS: 36

BULK OF MARKET: Residential/commercial

TOTAL EMPLOYEES: 73

TOTAL SERVICE TECHNICIANS AND INSTALLERS: 45

AVERAGE HOURS EMPLOYEES SPEND IN TRAINING: 50 to 75 hours per year

BENEFITS OFFERED BEYOND MEDICAL/DENTAL INCLUDE: Vision care, paid vacations (one week after first year, two weeks after three years, three weeks after five years, four weeks after 20 years). Howell's is an ESOP company; employee owned. All employees share in the profits. Through ESOP each employee has a life insurance policy. Employees can participate in AFLAC. Tuition reimbursment for all training. Tool program.

INDUSTRY ASSOCIATIONS & CONTRACTOR GROUPS: Air Conditioning Contractors of America (ACCA), Associated Builders and Contractors (ABC), Excellance Alliance International (EAI), and the Better Business Bureau (BBB).

THE NEWS SELECTED THIS CONTRACTOR BECAUSE: Howell's Heating and Air Conditioning went through a lot of soul searching to improve itself and the way its employees were treated. They were honest about what had been going on and corrected the situation. They got employees back who had left. They do not believe they are done; improvement is a constant challenge for all companies. They also communicate regularly with customers about the shift to 13 SEER minimum equipment. That's why The NEWS chose Howell's as the "Best Contractor To Work For" for the Eastern United States.

Publication date: 01/23/2006

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