ACHRNEWS

How Does Your Salary Stack Up?

November 27, 2002
Editor’s Note: This is the first installment of a four-part series on The News’ 2002 survey of contractor readers concerning their companies’ salary and service rates. This installment examines salary rates, benefits, and the hiring and firing of employees.

How does your salary or benefit package compare to that of your peers in the HVACR industry? How often does your company conduct performance reviews?

These are some of the questions that The News asked readers in its “2002 Salary and Service Rates Editorial Study.”

The purpose of the study was to examine and evaluate employee salaries at the company level, within the entire HVACR industry. The study also sought to determine contractors’ attitudes and opinions about service rates. A questionnaire was sent to a random sample of 1,500 active News subscribers. The response rate was 36%. The survey was conducted anonymously, but The News also contacted several contractors who were not involved in the survey to provide their perspective on the questions and the results.

ENTRY-LEVEL SALARIES

The survey asked, “Are entry-level salaries at your company high enough to attract quality applicants, compared with salaries in other companies and industries?”

Far and away, most respondents (69%) felt that entry-level salaries in the HVACR trade were high enough to attract quality applicants, while 12% said they were not high enough, and 19% responded, “Don’t know.”

These results mirror those of previous studies. In 2000, 68% thought that entry levels were high enough, while 15% said they weren’t, with 17% saying, “Don’t know.”

When asked about the results, Kevin Rowe, service manager for the Dowling Corp., Portsmouth, NH, said, “I believe very few people are salary driven, although it may attract them at first. But to keep an employee you must keep them interested and challenged in their daily work; and show them you care about their well-being and their families.”

On the other hand, Brett Hoschler of the C&C Group, Lenexa, KS, emphasized the importance of an adequate salary. “Regardless of what a tech says, if he feels he is underpaid, then money becomes the most important issue,” he said. “Once the income is stable, then the respect, training, and other more intangible issues lead the list. While most surveys rank income lower on the list, it would be a mistake to overlook it.”

Figure 1. Benefits offered to employees (517 total respondents).

BENEFITS

The questionnaire gave respondents the opportunity to list the benefits they offered to employees in addition to their salaries. The majority of business owners said they offer medical insurance (88%), education/tuition reimbursement (62%), tools/tool allowance (61%), 401(k)/SEP (59%), and personal use of company vehicle (51%).

Other benefits listed by respondents included life insurance (49%) and dental insurance (44%). (See Figure 1.)

Tiziano Sartori, service manager for Donnelly Mechanical Corp., College Point, NY, noted that his company offers several additional benefits to its employees. “We give our employees a profit-sharing plan, company outings to sporting events, and a formal Christmas party.”

Hoschler said his company puts a great deal of emphasis on training as an employee benefit. “We try to get every tech to one formal training program annually and we conduct in-house technical training during winter months — approximately 25 hours per winter.”

Figure 2. Reasons for firing an employee (477 total respondents).

PERFORMANCE APPRAISALS

When asked how often their companies conduct formal performance appraisals of their employees, a majority (55%) said they conduct one appraisal each year, while 25% said they perform appraisals less than once a year.

“Our raises are given after reviews and issued on a merit basis,” said Rowe. “The reviews are sometimes given four times per year to new techs to give them an idea of what this company expects from them and the quality of work they should produce.

“A favorable review is given when the tech does all paperwork, keeping customer complaints to a minimum, is showing a profit to the company, taking care of the company vehicle, and maintaining a good attendance record.”

Jim Bartollota of The Unified Group, Broadview, IL, emphasized the importance of performance appraisals. “We perform annual reviews that measure training, communication, productivity, safety, written communication, teamwork, callbacks, appearance (uniform, truck, customers’ premises), etc. The reviews do have a direct impact on profit sharing and a smaller one on raises. (We are bound by the union agreement.)”

SALARY INCREASES

The survey asked, “Which one of the following best describes the reason why you provide salary increases to your company’s employees?” More than half of the respondents (55%) answered that they provide salary increases “to reward them for performance,” while 32% checked “to retain employees.” Another 8% said salary increases were made to match inflation.

Jim Berg, operations manager for Rouse Mechanical, Minneapolis, MN, said, “We have a yearly review, which is a two-way conversation,” he said. “Their salary is indirectly tied to this evaluation, and they are graded as to their abilities and positive and negative attributes.”

Berg uses the review process to determine “what the employee is doing and what their managers are doing, what they see from their standpoint that we could improve on, what they hear in the industry, what other contractors are doing, and what they would like us to do.”

Sartori said “Raises are given annually as per the technicians union contract, and some factors which contribute to a favorable review are: performance, attendance, education, and personal growth.”

ANNUAL SALARIES

The News’ asked respondents to list the salaries of each employee at the company. Salaries for most service technicians (73%) and installers (79%) fell between $25,000 and $50,000 annually. More technicians (22%) than installers (13%) earned over $50,000 a year. Thirty-five percent of the installers listed had salaries in the $25,000 to $35,000 range, compared to 25% of technicians.

The salaries for technicians broke down this way, according to the survey: 5% of technicians made under $25,000 per year; 25% were in the $25,000 to $35,000 range; 22% were in the $35,000 to $40,000 range; and 26% were in the $40,000-to-$50,000 range, (up from 18% in the 2000 survey).

The contractors responding to The News’ story broke down their pay rates into hourly figures. The rates ranged from $18.00/hour to $39.45/hour. Some of the contractors were union, while others were open shop.

“We pay our field staff a salary rather than hourly,” said Hoschler. “They are also paid overtime for billable hours exceeding 40 weekly. The average salary is $40,000 to $70,000 depending on experience, skill level, etc.”

REASONS FOR FIRING

Respondents were asked, “Within the past five years, for which of the following reasons have you had to fire an employee?”

The top three reasons cited were incompetence (57%), poor attendance (52%), and productivity problems (46%). (See Figure 2.) Berg feels that an open dialogue between employers and employees can often fend off conflicts and minimize the number of dismissals.

“[Our] Operations [department] does all the evaluations, with input from the employee’s foreman or manager,” he said. “This way, if there is a conflict between the employee and their immediate supervisor, they feel open to talk without fear of reprisal.”

Next Week: The News looks at pricing structures and service rates.

For information on obtaining a complete copy of the “2002 Salary and Service Rates Editorial Study,” go to The News home page and click on “Market Research.”

Publication date: 12/02/2002