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fat and happy with labor?


The proper blend of labor, also referred to as crew mix, can make or break a service business. There is a misconception that crew mix is really only about retrofits, projects, and construction teams of workers, certainly not the case.  If the business is not carefully examining the type of work being sold, the contracts being signed, and the general mix of labor (specifically with regards to burden rates) than you will see a disconnect between the cost of your labor and requirements of the service obligation. For purpose of this conversation we will use union terms; apprentice – or those at a lower skill and cost rate, journeyman – higher skills and higher costs.



So you have built a fantastic business over the years, you have very loyal employees and a service crew of let's say 15 people. All of that is great news and congratulations. You may notice that the makeup of your crew over this period of time (x number of years) has moved into a heavily weighted journeymen-based labor crew. Now certainly if your workload justifies that type of labor fantastic, then you are one of the few which have been communicating your labor mix to your salespeople and assisting them in defining what they are hunting. Or… this may not describe you at all; instead you have a loyal group of field workers and your salespeople are shooting anything they can find. So what do you do? Well you certainly don't want to get rid of your loyal and experienced labor, Lord knows that over time these resources are and will become increasingly more precious. You really have a few choices;

  1. review your contracts, working through them systematically X amount per month, and assess your labor mix and potentially raise your contract rates
  2. focus your sales force on selling premium work which can leverage the expertise, and the high labor rate, of your workforce
  3. blend your labor with internal and extra workers allowing the "filter changing" to be done by a third-party subcontractor
  4. do not ever stop recruiting young guns into your workforce to keep your apprentice to journeyman balance



Often times we get mired down in the details and it makes it very difficult for us to manage our businesses. Improper crew mix is essential for the long-term financial growth of any organization and it ripples through contract management, sales leadership, understanding the skill sets of your field workers, and making sure that your workers are working on things they enjoy. We have been blessed in the service business to make good margins which have covered up many of our inefficient behaviors. The future for our business, a labor business running out of skilled and qualified work resources, will need to be very deliberate on the decisions we make for our organizations and employees.



What are your thoughts?



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Next post:  is maintenance unimportant and mundane?

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