Questions & Answers

Last fall, Lawn & Landscape convened our third-annual Power Panel, a candid discussion of the greatest challenges and opportunities facing the landscape industry. I asked a group of smart and vocal contractors to sit down and give me some insight into their biggest challenges and how they’re fixing them. This year, the panel included:

• Nick DePasquale, vice president, Gothic Grounds Management, Los Angeles
• Deb Cole, president, Greater Texas Landscapes, Austin
• Taylor Milliken, president, Milosi, Hendersonville, Tenn.
• Seth Nicholson, chief operating officer, Bruce Company, Middleton, Wis.
• James Reeve, president, Chapel Valley, Woodbine, Md.
• Keith Rotolo, vice president, Rotolo Consultants, New Orleans
   

I moderated the two-hour talk, which covered everything from labor, pricing, customer education and regulations. What follows is an edited version of our conversation. – Chuck Bowen

Chuck Bowen: Are new hires just not clear on what the work is? I mean is it a pay thing? Is it they find something better?

James Reeve: It’s a myriad of reasons. Either they get there and they can’t actually breathe on their own, or the guy says, “It’s too hard.” Half of them say, “It’s just too hard. You actually want me to work all day?”

Debby Cole: Yeah, we had one guy walk off the job. He turned around to the crew, and I thought, “I’d want to deck this guy,” and he just walked away and he said, “You guys are crazy for working this hard.”

Reeve: We’re having good luck with Craigslist now, oddly enough, and what we’ll do is we’ll put three different ads on there, we have them all worded differently, and it’s fun because some guy will respond to one ad but not the other.

They all say Chapel Valley Landscape Company, just different wording. Then of course when they do respond, we perform background checks to assure customer security requirements are met prior to the first contact.

We don’t call anybody in or even respond to their email unless they’re clean on a background check. So, that’s gotten us down to about five to one. We hired five guys to keep one. We’re constantly looking at it. It’s a never-ending process. Even if we don’t need somebody, we’re still hiring in a new guy every week and testing him out.

Cole: I almost look at it like we have to figure out a way to sell ourselves to the workforce just like we sell ourselves to the marketplace, and I haven’t figured that out.

Reeve: Have you thought about the concept of a retention bonus, so you give them a window of time over the next three months and, “We’ll give you this for that amount of work, and then in three months, we’ll give you this for that amount of work,” and position it as a dollar amount that they can have if they stay, but do it in windows that they can see in front of them. You can’t do it for a year. That’s too long.

Taylor Milliken: We’re doing something similar. It’s just in terms of profit sharing. It’s 90-day, 25 percent of a payout for that position. Six months is a 50 percent payout, and 12 months is 100 percent for that position, and then there’s three ways we look at it.

It’s not a ton of money, but even some of the entry-level positions after they’ve been there for a year, if we have a good year they may get $1,500 worth of bonuses. But the core workforce, they’re leaving for the company down the road – it’s crazy lately. I’ve had two people leave because they offered guys without licenses $15, $16 an hour.

Keith Rotolo: We had this group over the course of about three years with local laborers we hired. Out of that group, there were three of them that were just really good, solid workers, young guys. We moved them up quickly to supervisors, and two of them actually are managers now. One is 25. His market is $850,000. That has set a different tone with a lot of the guys, the guys coming in, because they see this guy. “OK, I’m not stuck behind a push mower forever. There is an opportunity here.”

Nick DePasquale: One thing we do is we pay for referrals. If a foreman brings in somebody, or anybody in the company brings in an employee that sticks and makes it past the 90-day probation period, they get a token, as well. That’s been pretty effective.

Cole: How much is attractive to them?

DePasquale: It’s gone up quite a bit. Fifty dollars used to work and now it’s $150.
 

Reeve: We vary that rate based on need. If we get really short, that rate will go up to $300, $400. We probably keep 75 percent of those guys.
 

DePasquale: We found that the on-boarding process is so important, though. If you’ve got a new guy wandering around a yard and he doesn’t know where to go, and there’s cars and trucks and people everywhere and he’s just kind of wandering, it’s a horrible way to start your day, to start your first day. So, you’ve really got to have a mentor assigned to them to walk you through the process. We put new employees in a different color hard hat so we can identify new employees.
 

Bowen: You redshirt them?

DePasquale: For 90 days and everybody knows they are new. We look out for the different colored hard hats and make sure they are safe and we go out of our way to reach out to them, to welcome them aboard.

Bowen: Tell us about some of the details behind that program.

DePasquale: We’re trying to fight the turnover. It’s been insane for us. A lot of it is we hire them and it becomes a self-fulfilling prophecy, “The guy is only going to last a week, who cares?” But if you act like that, you’re going to lose them. So, we’ve found that we want people to be welcomed and embraced to a nice environment, so we assign a mentor for a crew to work with the new guy. It doesn’t necessarily mean he’s the trainer, but just somebody to look out for him and make sure that he knows where to go, he knows what to do.

A lot of our best foremen are not suited to training anybody. They’re production guys. They want to move. They don’t want a new guy to slow them down, so they’re not always the best guy on the crew to say, “Hey, you have to train that guy.”

Reeve: Interesting. Do you have enough of those to be able to cover …?
 

DePasquale: No. That’s the challenge. You’ve got to train the trainer, and it’s a ground-floor process. It’s hard work, and if we don’t have guys that are happy to be at work, we lose them, so we’re trying to create a warmer, friendlier environment for the new staff.
 

Nicholson: Not only with the starting process and the more opportunity to get them to stay, but the long-term advantages of getting them up to speed that much faster. I haven’t thought about it in the matter of retention, which is an interesting concept.
 

Bowen: What’s changed in your markets?

Cole: We have felt like growth has been baby steps. We haven’t seen a nice, big chunk of growth. So, we’ve just decided to go the acquisition route.

DePasquale: A lot of companies got very desperate and, before they went out of business, they started doing things at silly numbers. Just to give perspective, in our Las Vegas market, which has been hit hard by the Great Recession, there were several $100 million specialty contractors – you know, the drywall guys, the landscape construction – that we compare ourselves to that just flat out went out of business. R

Reeve: Are you starting to see that customer, though, come back around and realize the difference in value?

Rotolo: That’s one thing that we’ve seen with the economic downturn. A lot of the companies were just throwing stupid numbers on both maintenance and construction. Maintenance rode it out and they’ve kind of gone away now. But, on the construction side, we’re seeing that the big contractors now that were always at our core business, they’re not looking so much at just the lowest price anymore, they’re looking more at value. It’s getting more back to value, so the best value and not just the cheapest price.

Bowen: How do you educate customers to understand what it is you provide as a company so you can get past that price question?

Milliken: This is brand new for us so it’s to be determined, the exact results, because we just started this year. But, we’re starting to do kind of a quality walkthrough with our customer on new commercial properties and basically scoring the property with them, and then trying to determine what their motivation for change is.

We’re finding more, like you guys are, it’s slow but it’s happening that people are finally turning around to going with a company for service and quality again and not just price point.

Bowen: They want the old quality with the new price.

Milliken: Yeah, it may have in five years dropped 30 percent and they have this new – in their mind, this is the price now, this is the going rate, but it’s not the going rate.

DePasquale: It’s re-education, and it’s tough difficult if you do not have a good relationship and strong communication with your client base. We actually have had several customers that have come back and said, “Hey, we see the value. We see why you’re slightly more,” so we’ve been able to do that still retain work and close new business. Milliken: What we try to give them is we say, “If you want to be at this price point, here’s the scope that you provided us, these are the things the current vendor is not providing within the scope, which is obvious because this, this, this, or this. We can get to the price point but we’ve got to take out these items,” and that’s how they’re doing it. There’s some blatant disregard that’s going on in our market.

Cole: I think most of our customers, the thing they understand most is price. They understand that from morning until night.

They don’t understand what we do, they don’t understand what it takes to determine price, and they don’t understand anything to do with the technical side of it. They don’t understand any of it. They also have a need to appear to be smart.

So, everything we can do to make them smart and knowledgeable, and that’s not giving them a master’s degree in horticulture, but it’s figuring out what it is that they need to know and then delivering it to them.

Bowen: They’re receptive to that education?

Cole: Oh, yeah, because if they can be the expert on why to hire the Bruce Company or why hire Greater Texas Landscape, maybe their pricing is a little higher, but in their gut, if they understand it and can explain it to somebody else, they can sell it. Now for GCs with construction, that’s a little different. The kind of resource we provide is, “Let us help you with your budgeting way up front.” We’re their support team.

Rotolo: We’ll actually go through the process of putting the bid together, but we’ll take pictures of the property and we’ll show them, “OK, here’s the price for what you’re getting,” and just put the basic what you see that they’re getting, or we’ll actually break out the pricing.

Bowen: Are they receptive to that?

Rotolo: It depends on the client. Some of them, they just want it as cheap as they can get it. But if it’s a client that’s conscious of their landscaping, conscious of that, it’s a very good tool and they’re pretty receptive.

Reeve: Then they see the progress over three or four years that you’ve made on the property. We’ve also started raising prices pretty aggressively this year. That’s a new thing we’re doing, and we’ve had some pushback from some of our customers, but our market prices are generally starting to rise again. We gave one an option the other day to get 3 percent and roll it over, but if they bid it out they’re going to hit them for 5 percent. They took the three.