BY JAMES CALI & JASON NEW
Every week we hear the same issue from our clients: “We can’t find team members.” Some questions come to mind when we hear this comment. Why can’t you find them? How can you be competitive if you can’t find them? How much time have you spent looking, or haven’t you? Where are you looking? Is this your top issue at the office?
When it comes to recruiting and human resources in general, we find second- and third-level management personnel at landscape industry firms are tasked with leading the charge. When things aren’t going the way we think they should, we ask questions, provide advice—and we do nothing else. If the lawns were not being mowed or the pools were not being dug, we guarantee you would respond differently.
"THE BEST FIRMS WITH NET PROFITS OVER 10 PERCENT AVERAGE A 14 PERCENT TEAM MEMBER TURNOVER RATE."
So where do you begin? The first step is acknowledging that a stable team is one of the most important goals to drive competitiveness, client satisfaction and your firm’s success. A stable team has low turnover, prioritizes training and allows friendships among teammates and with clients to flourish. You likely already measure hours, sales and profitability. Do you measure your team’s stability? Few companies do. If a stable team is key to your relationship-driven firm’s success, then you must measure it.
To cultivate stable teams, we recommend our clients measure the following areas.
TEAM MEMBER TURNOVER RATE
The first indicator, team member turnover rate, is easy to measure and manage. To measure the rate, you need to know the following numbers monthly: how many team members (you included) you have at the beginning of the month, how many you have at the end of the month and how many have been dismissed during the month. “Dismissed” includes anyone who has left the company, whether he or she was fired, quit, moved, retired, etc. Take the number of team members dismissed and divide it by the month’s average number of team members (beginning of month team members plus end of month team members divided by two). That number multiplied by 100 will equal your monthly turnover rate.
Once you have your turnover rate, what do you compare it to? In the professional green industry, we’ve seen this rate as high as 65 percent and as low as 5 percent. In our experience,
the best firms with net profits over 10 percent average a 14 percent team member turnover rate. The average firms with net profits of 4 percent average a 35 percent team member turnover rate.
TEAM MEMBER REFERRAL RATE
Your team member referral rate reveals the percentage of current team members who are employed by your firm because another team member recommended them. Simply divide the count of referred employees by the average number of team members for that month. Multiply it by 100 to get your referral rate.
Once you have your referral rate, what do you compare it to? We have seen this rate as high as 50 percent and as low as 5 percent. The best professional green industry firms with net profits over 10 percent average an 18 percent referral rate. Firms with net profits of 4 percent average a 6 percent referral rate. Your goal should be 50 percent or more.
In our experience, referred team members are ones who are happy to be there and learn what to do. Also, we know that team members refer family and friends they like and not people who may cause us problems, so a natural selection process has already taken place.
Consider referral reward programs for your team members and base it on the longevity of stay. Once a team member is on board for six months, the likelihood of him or her remaining a team member is high, and it gets even higher at one year. Consider a referral bonus at the point of hire, another at six months and another at a year if the employee remains at those milestones. Don’t make it complicated. Do make it lucrative. One option to consider is $100 at the point of hire, $200 at six months and $300 and a year—all net of tax.
Finally, we recommend our clients measure longevity. Add everyone who has been with your firm longer than a year to a marker board or spreadsheet displayed on a TV screen.
Remember, no one is going to celebrate a company anniversary but you. Birthdays are great, but you’re not the only one to have that covered. That’s why we practice and ask our clients to measure company anniversaries. Call attention to the anniversary dates for your team members by posting pictures in the break room or publishing them in the company newsletter. Provide rewards for certain milestones like five, 10, 15 years and so on—and make it a big deal. As we mentioned earlier, we are in the relationship business. Making sure you retain your team members is important, and recognizing anniversaries will result in increased longevity for your team.
Suggestions for longevity rewards include an extra day off that year, the milestone year times $100, a watch or a new work vehicle. Whatever you choose, be consistent with this recognition, and it will build your culture and ultimately pay dividends.
To sum it up, we encourage you to start measuring your team’s stability and use the measurements we described as a starting point. These three indicators are a direct reflection of your team’s stability, your culture and you. If you make it a priority to improve your turnover rate, referrals and longevity, you will create the momentum needed to take your firm to the next level and be competitive. Add these metrics your management dashboard today. Remember, you can’t manage what you don’t measure.
Cali and New, former landscape company executives, are the principals of McFarlin Stanford, a coaching firm based in Dallas. Reach them at email@example.com and firstname.lastname@example.org.
This article first appeared in LANDSCAPEMANAGEMENT.NET | OCTOBER 2018.