My recent blog about utilization drew a few emails from other home technology professionals (HTPs) around the country. One in particular caught my attention. Randy Stearns saw we were achieving consistent 60-70 percent utilization week in and week out and let me know his crews hit 87 percent when he ran Engineered Environments. My first thought was that he was delusional. “I’ll share my secret with you sometime,” he said.
I made it my business at CEDIA to track down Randy and buy him a bottle of water and an apple (I’m high roller). We grabbed a table outside the main hall and exchanged pleasantries. I couldn't contain myself any longer. “Well?” I said. “How did you do it?”
“Simple,” he said. “We let our guys take the vans home.” I was floored. I’d written this approach off years ago fearing unauthorized side work and struggling with how to re-supply our crews. But here was an industry icon telling me he’d done it and sharing actual numbers with me. This was different. I allowed the idea to wash over me and started asking questions rapid-fire. “What about re-supplying the crews?” I asked. “Hire a delivery driver,” Randy said.
I started doing the math. On average, our guys clock in at 7 a.m., load up, and head out by 7:30-7:45, and arrive at their first jobs by 8-8:30 a.m. That means on average we’re paying three hours of load/travel time each day per man (factoring in the afternoon trip back as well). That means each crew racks up around six man-hours per day with load/travel time.
With an average labor rate of $20 hourly (very conservatively) per man, that’s $120 daily in non-billable compensation per crew and fewer hours able to be billed that day. Multiply that out over one month, and it’s $2,400 per crew. Over one year, that’s $28,800. Multiplied across our entire organization, that’s $345,600 in money that should be hitting our bottom line. Keep in mind that these numbers are extremely conservative. I’d place the actual number closer to $400K.
Under the new method, our installers would clock in when they arrive at the job site and clock out when they leave the job site. Travel time would not be paid unless there’s a trip charge on the work order, in which case we’d pay out $25 per crew for each $100 trip charge (typically added for jobs more than 25 miles outside Richmond).
I continued to pepper Randy with questions. “Didn't your guys balk?” I said, thinking our employees might take a big change like this the wrong way. “We thought they might, but we didn't lose any employees,” Randy said. He stressed the importance of presenting the new program as being great for the installers, with new tools and a new inventory process and emphasizing lead technicians taking their vans home. My fears of side work and unauthorized use were allayed because of the Fleetmatics GPS tracking we’ve been using for the last two years.
When I returned from CEDIA, I set about getting buy-in from our leadership team and starting a pilot program (we named it “Operation Bring It Home”). So far I’m happy to report our two pilot crews have achieved exactly what Randy said they would. Immediate utilization jumps from 60-70 percent to 87 percent.
Our pilot program consists of one new construction crew and another finish-out crew. The new construction crew is easier because they can easily stock up when they come in for team meetings and head back out for another week. If needed, we can send our warehouse associate out on deliveries. The finish-out crews are a different story. We’re working with a local courier service and our warehouse associate to make sure the TVs, racks, and other large electronics are delivered in a seamless fashion to keep the installers moving efficiently.
The way things are going, it appears I owe Randy some fine wine. I love the sharing spirit of our industry leaders and hopefully you’ll try out “Operation Bring It Home” in your own business and share your results. I don’t know about you, but labor utilization has been our biggest struggle for the longest time, and I feel like we’re fixing a big hole in the boat.
Stay frosty and see you in the field.