As we sit here in 2023, the Mechanical Service industry can look back and say,
“What a wild ride we’ve had the last few years.”
We’ve weathered a pandemic, proven our businesses to be critical to the functioning of society, and from what I am hearing from most clients, they’ve experienced tremendous sales growth that have led to some of our best years in history.
And according to the ACCA, the HVAC industry is set to explode over the next 10 years, so this ride is only just beginning.
That being said, I know most of you guys want to continuously improve, not taking your eye off the ball despite incredible success. That’s just the nature of a great leader with a growth mindset.
You want to make your organization even more impactful, mitigate future risks, and outperform competition.
In terms of growth obstacles, there’s one issue that’s discussed more than any other:
Labor, and the shortage thereof.
Over the next few weeks, I’ll be diving deep on the labor issue and the different ways it can impact growth in a series of articles. Stay tuned for those.
Nearly every service ops leader I’ve spoken with in the last year has named this as their biggest roadblock to service income growth. When asked about their biggest obstacle, I hear:
“Finding and retaining skilled labor…”
“Finding people willing to work…”
“It’s a ‘Culture Change’ (dinosaurs and young generations who don't want to get their hands dirty)...”
“Easy, trained talent or able-to-be-trained-talent…”
“Recruitment of qualified candidates, not just position fillers…”
“Finding quality, highly skilled talent with strong self initiative to succeed…”
Clearly, the shortage of both new and skilled technicians is prevalent in every corner of our industry, but it’s been tolerable given the bountiful years we’ve had. Everyone’s working through it and seeing new heights of business success in the process.
As we move on from the pandemic and our industry growth rate continues to outpace our net gain of new technicians, however, it does have the potential to become an issue that could impede sustainable service income growth (SSIG).
It All Starts With Labor
To put it simply, labor is one of the largest costs your organization sustains, and can be the root of other growth problems.
If the current total service output of your labor force is at or below the sum total service input required by all of your contracts, then you’ll have a harder time growing your contract base because you simply won’t have the labor capacity to meet future demand.
So how can we address the labor capacity challenge within our organizations to drive SSIG and gain a competitive edge as we all vie for the same technicians in a limited pool?
I posed a similar question to my Service Ops colleagues on LinkedIn, and the majority of them echoed a similar sentiment:
You can’t just hire your way out of this.
The most frequently mentioned ideas were about ensuring your techs have the proper tools and intelligence prior to dispatch, and “Training, training, training,” as Miguel Flores, Operations Manager at Complete Thermal Control, put it.
Aaron Spencer, Senior Service Project Manager at U.S. Engineering, even called upon the 8 Wastes of The Lean Way, of which there are several business operating principles that are highly applicable to increasing labor capacity.
These ideas all amount to one goal: Increasing the efficiency of your Service Operations, and therefore increasing your labor capacity to deliver service.
Bruce Phibbs, Senior Vice President of the ABM Franchising Group, brought up “Building Intelligence” as the seed for cultivating Service Ops efficiency:
“It all comes down to using the different technologies for Building Intelligence and then leveraging that data to maximize your Labor Force (assuming quality and capable Tech’s). By capturing the data and the ability to interpret the data you put the right tech on the job with the right parts and solution. Reduces truck rolls, identifies the coming issues in advance (Predictive Maintenance) pinpoints the exact problem before you even roll the Truck.”
Bruce’s thoughts align with our mission at nClarity. A Predictive Service Model is the efficiency-maximizing money shot for Service Ops teams. We’ve built the first-of-its-kind Service Ops Analytics to deliver that Building Intelligence to teams, maximizing the impact of every truck roll (and much, much more).
(P.S. Thank you to everyone who contributed to the conversation. I look forward to continuing it with you as I explore other topics around labor and SSIG in depth in the coming weeks.)
The Efficiency-Maximizing Money Shot
Imagine 2 contractors.
They’re competing for the same contracts in the same market.
And they each have 10 technicians.
They operate on 2 different models. Let's compare.
Contractor A
- Performs PMs on a calendar basis, regardless of maintenance need, with no actual machine performance visibility
- They sometimes waste labor hours on machines that don’t require service, and miss machines that do
- This is simply because they don’t have enough manpower to perform thorough PMs
- This results in degrading equipment performance (with developing issues that fly under the radar) leading to costly emergency truck rolls…and how many of those contracts do you think will be renewed?
Contractor B
- Has switched to a Predictive Service Model by applying cost-effective technology & automation to Service Operations
- They collect machine data 24/7, and Service OPs Analytics alert teams via web and mobile when there are problems
- Continuous data collection means they never have to play the guessing game when diagnosing equipment issues
- They only roll a truck when necessary, focusing only on service equipment that needs it
- They always dispatch with the right diagnosis on the right machine, and the right tools, tech, and spares for the job
- Developing issues on aging equipment are caught early, extending equipment life and reducing the disruption of costly failures
- This resulting increase in productivity drives increased labor capacity (billable hours) with the same 10 techs
- Not only does Contractor B have more capacity, but they will also provide a more valued level of service, leading to customer satisfaction and retention
Are you going to bet on Contractor A or Contractor B to come out ahead on the road to SSIG?
Also worth noting - I’ve already devoted (and will be devoting another) completely separate blog post to the advantages a Predictive Service Model provides in retaining and hiring new technicians, so check that out and stay tuned for the next one.
In conclusion, as it relates to industry labor challenges, a Predictive Service Model:
- Increases your labor pool’s daily efficiency and productivity, which, in turn…
- Unlocks previously unavailable capacity to grow your contract base and, ultimately…
- Drives SSIG
*Assumes 2,000 hour work year (40 hr per week). No overtime. $150/hour billable rate.
The Roadmap For Sustainable Service Income Growth
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Over the next few weeks, we’ll be diving deeper into the strategies for steady SSIG in the long term.
We’ll be covering:
- The 3 key strategies for SSIG
- The most essential component to SSIG success
- The platform to take you there
But first, let's establish a baseline for this journey:
Is your Service Income growing or are you treading water right now?
If you're already growing, fantastic. This roadmap will add fuel to your fire. If your organization is struggling to achieve SSIG, this roadmap lays out the key strategies for removing the roadblocks to your team’s success.
Next time, we’ll start by discussing the first of 3 key strategies for service income growth:
Your relationship with your customer and your ability to retain contracts.
Thanks for reading, and stay tuned!