This article Reprinted from Western Roofing magazine, January/February 2007, Volume 30, number 1

 

 

Key People

Paying Important Positions: The Field Manager

by Chris Margarites, technical director, EternaBond

 

(Editor’s Note: Chris Margarites has been climbing on roofs since 1975. He started as a repair technician, was named service manager, and then became a partner of a contracting firm. He later sold that company and started Eternabond with an idea to create a product that would make a roofing technician’s job easier, the customer’s repair more permanent, and the company profitable. Margarites may be reached at (888) 336-2663.)

 

 

A real turning point in my contracting business was when I realized that in order to be as successful as I thought we could be, I had to reassess my role in the company. That didn’t mean I had to be present more or work harder in the day-to-day business activities. It meant that I had to work less within the business, and more on growing the business. Once I realized this truth, I needed a replacement, someone to make most of the decisions that previously only I made, without asking my permission. These decisions could have potentially cost money and swing power from me to that person. The idea was frightening, but the decision resulted in one of the best and most profitable outcomes - by creating the field manager position as referenced in my last two articles (July/August and September/October 2006, Western Roofing). In this article, I will address paying and keeping the field manager.

                  Let’s start by addressing the obvious: whether salaried or hourly, the field manager’s base income should be no less than your best mechanic. I prefer putting the field manager on salary because a lot of his/her income is going to be performance based, and it is highly likely that your field manager will start early and finish later than the people he/she manages.

                  I believe that the field manager must have some control over the potential performance-based bonus he/she may earn. A method that my company created was called the “split.” The “split” was the excess profit earned by a well-managed job. The field manager received a portion of the split (excess profit) on every job he/she over saw. We tracked the excess earned profit by assigning a job number to every project and creating a job folder. Every minute of labor, every item used, and every contractor paid was charged against that job.

                  When the job was complete, our accounting department would cost the job out, including overhead, burden, a percentage for miscellaneous materials (up to 3% of the job based on complexity), a small percentage for warranty reserve, permits, salesman’s commission and our expected profit, which was 10% net. This true “cost” of delivering the job was deducted from the sale price. All excess profit was expressed as a positive number that would be put into a special “splits” account. In the event we made less profit than the expected 10%, the result would be a “loss” and be expressed as a negative number and put into the same account. Naturally, true losses (jobs which ended up costing more than they were sold for) were also counted negatively. At the end of every quarter, we justified the account. The money in the account was split three ways: one-third to the company, one-third to the commissioned sales person, and one-third to the field manager. We never lost a field manager or a sales person to a better offer.

                  A few details: Only experienced, commissioned sales professionals were allowed to participate in the “split” program. The field manager always had the option of reviewing the sales person’s estimate and inspecting the potential job before it was sold. Because the sales person and the field manager were economically linked together, strong bonds were forged and the synergy of working as a team was realized more often than not. Quite often the field manager and sales person worked late estimating jobs together. We had one manager who shared up to 40% of his bonus with his team who consistently made the company money.

                  How did we handle “call-backs”? We determined that a call-back was a repair call that took place within one year of a job’s completion. Call-backs were deducted right off the top by being expressed as a negative number in the splits account. After one year, the warranty reserve paid for all warranties.

                  By utilizing this method, you are on your way to running your company rather than your company running you. •••