[State of the Industry Report] Recruitment Relief

Features - PCT News

A key employment concern for pest management professionals today is benefits. It’s clear that across the country, successful PCOs will do whatever they can for their employees.

October 10, 2003

Year after year, many pest management professionals say finding qualified employees is the biggest challenge the industry faces. That’s the feeling held by Dick Whitman, president of Whitman Exterminating Co. in Beckley, W.Va. "The biggest thing we’ve had to deal with is finding people who want to work," he says. "We could expand more if I could find the people to fuel our growth."

That sentiment is common throughout the industry. In PCT’s independent survey, about 10 percent said it is easier to recruit employees today than it was 12 months ago, while one third said it was more difficult. The majority (57 percent) said it’s about the same.

However this year, with unemployment hitting new highs around the country, PCOs may be getting some relief. Jean Seawright, president of the management consulting firm Seawright & Associates Inc., based in Winter Park, Fla., notes that today’s labor market has changed, in favor of employers.

"Unemployment levels continue to hover in the 6 percent range," she says. "More people are available in the market and, in many cases, there are talented people who are available and eager to work. That’s quite a contrast to the ‘labor wars’ of the late ’90s, where employers were desperately seeking even a warm body to fill an open slot."

REAL EXAMPLES. Tim Hulett, president and owner of Hulett Environmental Services, Riviera Beach, Fla., believes he’s had an easier time filling openings at his company. "I think it’s easier now than it was say four years ago," Hulett says. He says the state of the pest control industry is excellent in terms of attracting labor. "We hire someone that wants to stay with us and we are finding those types of people out there," Hulett said. However, he adds that the industry’s No. 1 threat is still finding and retaining quality people. "I think you could probably say that for any service industry and I do not think it’s going to get any easier in the future."

Michael Katz, president of Western Exterminator Company, Anaheim, Calif., agrees it probably is easier to recruit employees now, but, he says, "that doesn’t mean it’s any easier to bring quality individuals into one’s organization." Further, says Katz, "the key is to really plan and recruit and not just wait for ‘the right person’ to walk in the door."

Another sign that recruitment has been easier for pest management professionals is an apparent reduction in employee turnover. Seawright says the industry’s lower turnover rate can be explained in two words: the economy. "People are holding on to their jobs for ‘dear life,’" she says. "They’re reading about mass layoffs, bankruptcies, rising health insurance costs, etc., and don’t want to become a statistic." Further, Seawright says, leaving a company today is risky, because there is no certainty of another job waiting around the corner. "It is taking longer for the unemployed to find work and most people, despite how much they may dislike their job today, are not willing to risk being among the unemployment ranks tomorrow."

WAGE INCREASES DOWN. Meanwhile, wage increases in the pest control industry also appear to have slowed. PCT’s survey shows about 38 percent of PCOs said they increased wages in the past 12 months to attract qualified workers. That’s a sizeable chunk, but it’s also a smaller percentage than those who did so in 2001. Almost half (48 percent) said they increased wages that year. The average amount of the increase, at 10 percent, did not change significantly.

However, the pest control industry may be faring better than others where wage increases are concerned. Seawright says that across the board, wage increases have leveled off or declined, with the 2003 national average wage increase across industry lines being at about 3.5 percent right now. "This percentage marks the first time in 10 years that the median yearly pay increase has moved substantially below the 4 percent level," Seawright said. "Pay increase percentages have leveled off because in many cases, revenues are down, expenses are up and employers are ‘tightening their belts’ in an effort to remain financially healthy," Seawright explained.

TRACKING BENEFITS. Another key employment concern for pest management professionals today is benefits. It’s clear that across the industry, successful PCOs will do whatever they can for their employees. "We love our employees and we pretty much believe we offer top-of-the-line benefits," says Hulett, whose company employs about 185. "I know that I’ve put my employees before I put my customers because my employees, I know, will take care of my customers."

However, not all companies are as fortunate as Hulett’s in being able to offer benefits. And with the industry being comprised of more startups and smaller operations, it’s not surprising to see that the typical benefits profile may be changing.

PCT magazine’s survey indicates that while the majority of companies do offer a wide array of benefits, in general fewer companies are offering each benefit. In fact, the number of pest control companies offering paid vacations, medical benefits and 401k matching contributions has declined fairly dramatically in recent years, according to the PCT study. This decline can be attributed to a number of factors, including the slow economy and the escalating cost of health-care coverage, which has reduced the pool of funds available to PCOs for other benefits.

Seawright says smaller companies do tend to offer fewer "defined" benefit plans, such as insurance and 401ks. Why is this the case? "Simply put — because of the cost," she says. For example, in a survey conducted by her firm, Seawright found that fewer than half of pest control companies with revenues less than $500,000 offered dental insurance, vs. about 90 percent of companies with revenues more than $10 million. However, Seawright notes that smaller employers also tend to offer more "fringe" benefits. Things like extra time off, flexible work schedules, additional holidays and Thanksgiving turkeys.

Seawright said she also is aware of several small pest management firms that have actually ceased offering health insurance coverage because of the cost. "In many states, small businesses are required to pay 50 percent of the premium cost for all employee plan participants — without exception," she notes. "This cost is simply too high for many small businesses to bear."

Additionally, she says, even larger companies are reducing some benefit offerings to offset the rising costs of health insurance. "There are reports that fewer employers are offering paid personal days, paid sick leave and paid vacation," she said.

One larger pest control operation that has felt the sting of increased health-care costs is Griffin Pest Control, based in Kalamazoo, Mich. Company President Linden Griffin says these days, companies have to share the enormous increase in health-care costs with employees. "The difficulty is, we absorbed the last increase and didn’t pass that along to the employees," he said. "Then when our health insurer came along with a 30 percent increase, we had to pass it along."

Meanwhile, Truguard Pest Control, based in Las Vegas, is working to offer more benefits to employees. The two-year-old company offers health insurance benefits for managers and plans to expand that to all employees within the next 24 months. But including everyone right now would be cost-prohibitive for the company. "We’re a startup," explains Aaron Allred, co-owner of the company. "We still don’t make any money." Furthermore, Allred says, any profits the company brings in are currently being invested back into the company to pay for its growth in new markets.

A.P.E. Pest Elimination based in San Antonio, Texas, was in that position a few years ago. President and Owner Paul Barr says his company began offering health, dental, vision and a retirement plan during the last year. However, before that, the company wasn’t offering benefits. The company was founded in 1995.

Barr says smaller companies can’t expect to grow and also be able to offer a full range of benefits. Instead they have to make a serious strategic decision about where profits will be spent during the early years. "In my opinion, you have to choose growth and put the money back into the company to grow when you’re small," Barr said. He recalls a time in A.P.E.’s early history when the company needed a lot of funds to be generated back into it. "During that time there really wasn’t an option," he says. PCT

Medical Savings Accounts Offer Affordable Option

One pest management professional who has found a unique health insurance option is Jay Jorns of JNJ Pest Control and Grounds Care based in Katy, Texas. Jorns offers medical savings accounts (MSAs), along with high deductible health insurance, for his three employees.

Jorns points out the cost of this program, at about $600 each month, is considerably less than the $1,000 he was paying for health insurance.

Under the program, Jorns contributes $100 every month into each employee’s tax-exempt MSA. That’s in addition to the $450 he pays monthly for each insurance policy. Employees can then use the funds in their MSAs to pay for any qualifying health-care costs they want, including the health insurance deductible.

Through the IRS-approved program, Jorns can contribute up to two-thirds of the annual deductible each year.

Jorns likes the program because he says it gives employees control over their care. "I can go out and select the doctor I want and pay him with this MSA account," he says. "I feel it gives me control over the cost of my care."

There are rules and requirements with MSAs and they may not be available in all areas. Interested PCOs should talk with their accountant or attorney.