Why Don't Dealers Grow Technicians? - Foundations
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: Foundations

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Why Don't Dealers Grow Technicians?

Written By: Matt Di Iorio

Article Date: 09-01-2005
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

Sixty-six percent of service managers say they are involved in some type of workforce developement effort.

The AED Foundation 2005 Workforce Needs Survey determined that there are 4,481 unfilled technician jobs, or an average of 7.3 openings per dealer. Yet, according to the same study, dealers are nearly twice as likely to hire from another dealer/competitor than from college programs, military and high school combined. Research also suggests service income is lagging sales, rental and parts revenue. In 2004, only 7.9 percent of the revenue generated by the "typical" AED dealer was attributable to service, according to AED's 2005 Profit Opportunity Report. In June, Foundation President, Chris MacAllister, chartered a Task Force involving service, product support, human resource and senior executives to solve one of the industry's most confounding riddles, "Why don't dealers grow more of their own technicians?"

The group wasted no time getting to the core of the issue, which centers around structural constraints of the service management position. The Task Force found:

• The three-year time frame to turn a new technician into a self-sufficient full-revenue producer takes a lot of the Service Manager's energy, effort and attention. It is much easier to rob a qualified guy from a competitor.
• Service Managers are extremely buys, especially in smaller operations, so they are unwilling to invest the time required to recruit, train and mentor new technicians because the payoff is not immediate.
• Service Managers typically have the largest number of direct and indirect reports, as well as the most customer contact of any operations manager. They often handle OSHA, EPA, MSHA, building maintenance, safety, etc. They tend to put customer contact first, followed by employee-related issues. They have little time left to manage, let alone grow, the service department.

Growing technicians is a short-term drag on profitability because the time a new technician charges to a work order cannot be billed fully, training expenses increase and rework expense can go up.

Service Managers are concerned they will be unable to keep additional mechanics busy given the cyclical nature of the equipment business. They don't want to go through the difficult process of recruiting, training and mentoring a new technician only to have to let that technician go when business slows.

Sound familiar? If so, consider having the Human Resource manager recruit and pre-screen technician candidates. Organize technicians into work teams with a strong Lead Technician.

Train and assign mentors to every new technician and invest in a structured apprenticeship program if you don't have one. Consider assigning facilities management, OSHA, or EPA to another department. Have an aggressive young foreman or technician manage internal sales and rental needs.

Reward the Service Manager for revenue growth, as well as efficiency. Set achievable recovery goals for technicians-in-training so Managers aren't punished for lower efficiency when they hire inexperienced technicians.

Provide training so your Service Manager develops the tools to deal more effectively with customer, employee and operational challenges. Develop a marketing plan and consistent sales support so the Service Manager has plenty of help keeping newly hired technicians busy.

Sixty-six percent of service managers say they are involved in some type of workforce development effort. Dealers are also optimistic about future service sales with 95 percent predicting growth in '05 and 97 percent expecting growth to continue through '06.

The AED Foundation is in the process of digging further into the structural issues confronted by smaller service operations. (Foundation investors will receive a copy of the new 2005 Workforce Needs Report shortly.) If you have success stories or ideas, please send them to Steve Johnson, Director of Workforce, The AED Foundation at sjohnson@aednet.org.


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