Chuck Morales has been involved with HVAC since 1979.
He has spent 14 years running his own company and 22 teaching, with his experience as an instructor—first at Nunez (La.) Community College, then at his own HVAC training school, and most recently with the Go Time Success Group—sandwiched around owning his business.
He’s almost casual when talking about the labor shortage companies face when trying to hire trade technicians.
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“We’ve had a labor shortage since 1979,” Morales said matter-of-factly. “In HVAC, we have 368,000 people. We’ll need 15,000 more by 2029.”
That doesn’t take into account the 6,000 or 7,000 technicians retiring every year, or the 7,000 to 10,000 who leave the field to work elsewhere, he said. “People who just drop the trades and go for an office job.”
The situation isn’t any less dire among plumbers, electricians, or in other trades.
ServiceTitan, the cloud-based software for the trades, recognizes the technician shortage as a threat to all home and commercial services businesses, and in response commissioned a survey to deepen understanding of the issue.
In the summer of 2021, ThriveAnalytics surveyed 1,015 business owners or talent manager personnel with companies that have at least five employees.
The goal? Understand recruitment pain points, analyze the effectiveness of recruiting strategies, and discover how the problem presents differently for different sizes of businesses.
Among the key findings:
92% of the businesses have hired new people in the last 12 months.
Three-fourths of those surveyed said there are not enough applicants for open jobs.
Better health and retirement benefits and cash signing bonuses made a significant difference in recruiting.
Reasons for leaving a company are roughly split among going to a bigger/smaller organization (21%), higher wages (20%) and better training (17%).
“There is a large and growing shortage of qualified technicians spanning plumbing, HVAC, electrical and nearly every other skilled trade,” ServiceTitan’s internal report about the survey read. “Research suggests that for every tradesperson who enters the workforce, four tradespeople are retiring.”
Eddie McFarlane, vice president of learning and development at Haller Enterprises in south-central Pennsylvania, said the biggest difference in the labor shortage today from 20 years ago is that everyone knows about it now.
“It’s not bad, it’s not good, it just is,” he said. “We can bemoan the fact that it’s tough, but what separates great organizations is working on the problem.”
Job 1: Change the perception
High on the to-do list is changing the perception of the trades and getting high schools to reopen the career path to their students. In too many schools the trades are treated as an afterthought, while the four-year college is emphasized.
For many, that leaves the perception of work in the trades as lesser-than, dirty, and low-earning, with a male-only workforce still using outdated methods.
In reality, the trades provide an excellent career with well-paying jobs in fields that rely more and more on high-tech approaches and solutions. And, as the pandemic has proved, those jobs are more secure than most.
“The average salary for a plumber with two years’ experience is high $50s. Electrician, about the same thing,” Ron Lutwiller, VP of Operations at Bonitz Inc., said. “You could go to (a community college), come out with virtually no debt and make upper $50s, at least.
“There are HVAC technicians in Charlotte making over $100,000 per year. It’s there. It’s possible.”
Here’s what the survey showed about the struggle and the solutions on recruiting, hiring, training and retention of home and commercial services technicians, with context provided through recent ServiceTitan interviews with contractors:
Go in-depth on field tech hiring demand
On recruiting
Smaller shops have the most trouble finding experienced applicants, while larger companies cite more difficulty finding entry-level applicants.
Job training and subsidized tuition are considered musts for attracting talent.
With larger companies, 75% outsource some portion of the hiring process. Among smaller companies, only 14% do.
Similarly, 75% of larger companies have resources dedicated solely to hiring; only 10% of smaller companies do.
Across all company sizes, referrals are the top technician-applicant channel. For larger companies, industry-specific job boards outperform general job boards; those results are flipped for smaller companies.
Regardless of company size or whether some or all of the process is outsourced, the cost per hire remains roughly the same, averaging $5,375 for entry-level candidates and $6,622 for experienced workers.
The top job perks that have a “huge impact” are medical insurance, retirement benefits, and cash sign-on bonuses. That ranking is consistent regardless of size.
Word of mouth is crucial when it comes to filling job openings, according to Brad Pesek, CFO of Texas-based McWilliams and Son.
“We always tell our employees to be talking to the waitress when they have good service at Chili's, or wherever you take your car and get excellent service,” he said. “Even though we may not have a position now, we're always hiring. We teach our employees to always be recruiting for team members.”
McWilliams & Son pays employees up to $1,000 for referrals who get hired. On top of that, Pesek said, team members get an annual $2,000 bonus for every anniversary of their referral’s hire date, to create connections and build mentorships.
“Employees want to make sure they keep getting that bonus, so they check in with that person and make sure they’re doing all right,” Pesek said. “We’ve seen a lot of success with this.”
Jimmy Giler, co-owner of Charlotte-based Viva Electric, had begun doing panel sessions in high schools, in conjunction with parent company Griffin Brothers, to encourage interest in the trades, but the pandemic shut them down. They are just beginning to restart them.
And he has one caution about word-of-mouth.
“The people that are coming and they just want a job, there's a reason they don't have a job right now,” Giler said.
On hiring
Smaller shops hire/convert applicants at a lower rate than larger shops—for both entry-level and experienced applicants.
The companies with the best hiring conversion rate are more likely to use external recruiters, an applicant tracking system and email/calendar apps.
Companies are right to be discriminating in hiring despite the labor shortage, according to Josh Bigelow, founding owner of Great Dane Heating and Air Conditioning in Greater Detroit.
Owners and managers should create a list of what they want in an ideal service technician, he said. At that point, they can design their apprenticeship program based on those needs and skills.
One trait, Bigelow said, is non-negotiable: The right personality for the company culture.
“Every company’s personality is different, so the skill set that's required will be different,” he said. “I hire people based on personality.
“I can teach you to do this job, but I can't teach people to like you.”
On initial and ongoing training
Among all companies, 31% have an in-house training program, with larger companies more likely to have one.
43% of respondents use an external training program, many through a trade association or local trade school.
Of companies with in-house training programs, 54% expect new hires to go through them before they start work.
Of companies without an in-house program, 43 percent expect employees to go through an external program before starting work.
In an industry where the services provided are fairly uniform from company to company, A.J. Brown, CEO of Apex Service Partners, said focusing on team development can make all the difference.
“We have an intense focus on people,” he said. “That’s what makes you special. If you’re playing the long game, that’s the right investment.”
With quality, experienced technicians almost impossible to find, Chris Landgrebe, general manager of Air Comfort Heating and Cooling in Fremont, Neb., is making that investment.
He’s expanding his warehouse to make room for a training school, and will work with the Veterans Administration, high schools and trade schools to grow technicians in-house.
“It’s not uncommon for (other companies’) castoffs to be castoffs for a reason,” he said. “We’ll bring people in green and send them through our own training process, and have technicians come out ready to roll, hopefully.”
That’s not to say Landgrebe won’t hire an experienced tech from another company, he said.
“We are constantly recruiting, constantly running recruiting ads,” he said. “We have attacked the recruiting side of things, and we're just not seeing the results we need in order to keep growing at the pace we want.”
The investment doesn’t have to include a stand-alone school, however. Smaller companies can accomplish the same goal by focusing on development.
That’s what has happened at Viva Electric in Charlotte.
“One thing we do provide is we actively help our guys get their license,” co-owner Jimmy Giler said. “We help foot the bill for that. We have some conditions, like they have to pass in a certain number of attempts. We started with one guy, then another guy in the company is like, ‘I want to do it.’
“Now we have three, four individuals all actively trying to obtain their license and go to the next step.”
On retention
Technician retention rates are roughly the same, no matter the size of the company surveyed.
The top reasons technicians cited for leaving a business are: going to a larger/smaller organization (21%), higher wages (20%), and better training (17%).
To run a people business, you need the right people, Chad Peterman, who runs Peterman Peterman Heating, Cooling & Plumbing, alongside his father, Pete, and brother, Tyler, said.
“We made a commitment to never stop recruiting,” he said. “We’re always interviewing people. We always have our proverbial pole in the water when it comes to finding great talent.”
But, Peterman said, it’s easier to retain great talent than to replace it, and if there’s a labor shortage at your company, it’s a company problem.
”There are plenty of great people out there,” he said. “There are plenty of people in the trades to staff your company that live in your city. It’s just that you haven't created a place where they want to come and work.”
That includes caring for your people, paying close attention to company culture, and offering the support and benefits employees need.
Griffin Brothers’ shared services have helped Viva Electric hire and retain good talent, Jimmy Giler said. In four years, only two electricians have left the company.
The employment benefits he is able to offer through Griffin Brothers are one reason.
“Right now, you cannot hire a good electrician if you don't offer him good benefits,” he said. “We're able to access great benefits to them, just because we're under that umbrella.
“Seeing that we're getting backed up by a bigger company that is safer through a huge recession, they feel more comfortable coming on board with us.”
The company culture—the Gilers describe it as “a good vibe”—helps too.
“It's very stable and organized, and it's just reassuring to employees,” Maegan Giler said. “Even our employees see that there are these long-term employees that've been with Griffin Brothers for decades and decades. It's just reassuring to have that.”
For Mary Jean Anderson, owner of San Diego-based At Anderson Plumbing Heating & Air, fairness is an important factor. Her $37 million company has more than a dozen female techs. And the policy is equal pay for an equal job.
“Everything is the same for everybody,” she said. “And do you know what giving women equal pay can do? It lets them buy and own a home. It gives them a sense of being able to take care of themselves. It gives them choices they might not have had.”
McFarlane cites a McKinsey study that shows organizations that are more diverse and inclusive outperform other companies by 35%.
“Diversity is the answer to the skilled trade gap—I’m planting a flag on this,” McFarlane said. “We need to get comfortable with it, and not have an emotional reaction to words like diversity and inclusion.”
The bottom line
The labor shortage in the trades is not going away, exacerbated by an aging workforce and image problems limiting the numbers of young people needed to replace them.
There are ways to combat the shortage, but they will require focus, a long view, and hard work by contractors.
If the problem can’t be overcome, the impact could fall heavily on consumers, Lutwiller said. And the solution starts with creative ways to educate a new generation of tradespeople.
“When I was in school, they had cabinetmaking, they had auto shop, they had bricklaying,” he said. “They took all of that away.
“We’re in trouble. At some point in time, if something doesn’t change, plumbers are going to go away and you’re going to wonder why the ones that exist are charging $300 to $400 an hour.
“Well, they are because they can.”
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