Productivity Issues - Part II by Ruth King Make sure that your employees understand what cost really is.  It is important that they understand profit, loss, and overhead. There are many pros and cons of opening up your financial statement to your employees. Most contractors don't. The major reason is that you don't want employees to see your compensation. However, you can lump all of the office salaries in one line. If employees don't really understand profit, overhead, and margins, then they really can't help you create more profit for the company and income for themselves. The other major reason is that you don't want the company to see how much profit or loss you are making. Once your employees really understand that profit is necessary for growth, increased wages, and to fund increases in receivables, inventory, etc., they won't mind making a profit. If the company is losing money, getting and implementing their suggestions for decreasing that loss may turn those losses into profits. One of the best things to do is to show everyone the true cost per hour of productive work. This means showing the technicians that they aren't really just making $X per hour. There are hourly costs for payroll taxes, worker's compensation, holidays, vacations, truck expenses, etc. Office personnel have the same costs with the exception of truck costs and uniforms. After you go through the direct costs, break the rent, utility bill, etc. into cost per hour. This is usually an eye opening exercise for your employees. Once they see this, it is unlikely that they will complain about hourly rates again. Second, show them productivity costs. It is explained very simply. If the service technicians spend an extra 30 minutes in the shop each day, on a daily basis this doesn't seem like a lot. Add up the costs for a year assuming 5 technicians and $50 per hour service rate. In one day the technicians waste 2.5 hours. That is $125 per day (not including the parts you could sell).   In one week that is a $625 loss and in one year $32,500 (again, not including parts you could sell). This $32,500 goes directly to your bottom line. Installation crews have a similar exercise. The key is that everyone can help the revenue generating employees be more productive. Dispatch can get the first calls of the day to the technicians the evening before so they don't have to come into the shop. Installation crews can have their jobs ready for them when they arrive so they don't have to waste time in the shop. The materials can be delivered to the job. Once your employees understand these two areas, they will come up with ways to increase productivity, which increases profits for them and for you. So, explain where you are financially, get a consensus on growth and profit goals, teach employees about productivity and let them help you reach the goals. Once your employees understand profit and loss, they understand the  consequences of the lack of productivity. Then it is time to get their input into the goals of the company and their rewards for reaching the goals. They'll be less tolerant of employees who are unproductive and may "rat" on them simply because that employee's behavior is hurting their reward.   You'll likely get a great team environment; both in the office and in the field. To contact Ruth King call 800-511-6844 or send an email to ruthking@hvacchannel.tv This article is reprinted with permission from the Feb. 26, 2006 issue of Contractor Cents.