ACHRNEWS

Speaker: Profits come by pricing, not volume

July 18, 2000
INCLINE VILLAGE, NV — “When this session is over, go to the phone, call your office, and tell them to raise your hourly rate by $5.”

That was one of the calls to action of Ron Collier of Collier Consulting Group during a seminar here at the annual MSCA conference.

It was part of his “Successful Strategies to Increase Profits” — or, as he said, “To get to second base in baseball, you have to take your foot off first base. Some of you are still on first base.”

Collier told the audience that a $5/hr rate increase would probably be accepted by good customers. “If someone complains, he is a ‘mild acquaintance,’ not a customer.”

Collier suggested that profits should come in pricing, not in volume of business. “We are a price-sensitive industry. We need prices, we don’t need volume.”

Along the way, Collier ticked off a number of tips, such as:

  • Police your personnel and yourself. “Pull together as a team. If you have 25 people, you have 25 salespeople and 25 marketing reps.”

  • Control your field personnel. “Ninety percent of the time on the job has nothing to do with technician competency. It has to do with dispatching.

    “Don’t give a technician a stack of workorders. Don’t force a tech to do repairs in a certain time frame. Have them check in at the jobsite and check out when done.”

  • Teach technicians, installers, and office personnel to be consultants. “Look for new business from your existing customer base. There are times when a tech must not repair a unit because in the end it will make the customer angry. Teach techs how to offer options.”

  • Flat-rate price all residential work, and establish flat-rate or time-rate fees for commercial work. “Flat rates should range from $80 to $160 an hour.

    “Consider the guy who does oil changes. Consider the highly technical skills and equipment he must have. He gets $120 an hour (figuring $20 per 10-minute oil change).”

    Collier said flat rate is becoming more and more common in work on systems up to 50 tons. He said he expects the trend to move to the servicing of even larger systems.

Along the way, Collier jumped into the fray over finding qualified technicians with the statement, “I know where to get potential and experienced techs and how to get them. Do you?”

His game plan called for contractors to go into high schools and community colleges to promote the pluses of a career in hvacr.

“We are not doing anything to foster anyone to get into this industry. What do you spend on marketing your company to your customers? What do you spend to recruit technicians?”

Sidebar: hard-line negotiations may need a softer side

INCLINE VILLAGE, NV — Typical negotiations involve taking a hard line for a long time, before there is a last-minute scramble to come to a compromise.

But such tactics may be a bit too tough, labor expert Richard Giacolone told an audience of union shop service contractors at the annual MSCA meeting here.

Giacolone, special assistant to the director for the Federal Mediation and Conciliation Service, said negotiations often involve “digging into your position, conceding stubbornly, and making threats when presented ultimatums.”

Instead, employer negotiators need “to focus on the interests, not the positions” of the employees. What is their underlying interest? What does the side really want?

Mutual interests

He called this approach “mutual gains bargaining.” It involves “looking behind positions for underlying interests” and “putting yourself in the other person’s shoes.”

He gave an example of a salesperson that comes to the boss and asks for a company car. He wants one of the most expensive cars available; the company offers one of the cheapest.

A different approach, he said, focuses on finding out what aspects of a car are important to the employee — such issues as comfort (to be fresh for the sales call), safety (to avoid injuries), reliability (so appointments can be met on time), and four doors (for entertaining guests). Chances are, he said, the mutually agreed upon car will be somewhere between the most expensive and least costly.

When the issue is more money, “Get away from who is on each side. Get involved in problem solving. Open up. Talk about it.”

He suggested that if the reason given for a raise is because of kids needing money for college, the company could work with an area college in setting up a fund for the children of workers in that company.

“Invent many options; be creative,” the speaker said.

Mutual gains bargaining does away with short face-to-face negotiations and long caucuses, he said, and focuses on listening to each position and finding common ground.

The goal is consensus. “All involved agree upon a single alternative, and each group member can honestly say, ‘Whether or not I prefer this decision, I support it. It was reached fairly and openly, and it is the best solution for us at this time.’”