This article will focus on the skilled labor shortage and strategies to address it that apply to internal hiring as well as subcontracting.

Daunting statistics show HVAC COVID impacts

In the U.S., more than 23 states have over 1,000 open HVAC positions right now, and almost 70,000 positions are open nationwide.

The Associated General Contractors of America (AGCA) reported in September 2021 that 89% of contractors overall are having difficulty hiring skilled craft workers post-COVID.

This is not a new trend. In 2018, AGCA reported this same statistic at 80%. So, the situation is getting worse. Like many industries, HVAC contractors are struggling to find and keep great talent.

The causes, from recession to pandemic

The construction business overall declined significantly with the recession of 2006-2010 and had almost recovered when COVID struck. But skilled trades employment lagged for a number of reasons:

• Some skilled craft workers left the workforce during the recession to take other jobs.
• Baby Boomers began to retire.
• Younger workers entered the workforce but lacked training and experience in trades.
• Language barriers blocked the entry of immigrant workers into trades.

HVAC COVID impacts brought a drop in HVAC business levels early on, with a 19% decrease in sales between April 2019 and April 2020. Safety protocols slowed processes on site and raised costs.

A surprisingly rapid economic recovery caused business to boom, but the deepening skilled labor shortage is stressing HVAC contractors, as are rising costs for construction inputs.

The effects

The labor scarcity creates several major risks to HVAC contractors:

• Inability to execute projects on schedule.
• Higher unit labor costs.
• Increasing customer service issues that eat up time and resources.

As a result, profitability and reputations suffer.

Contractors accustomed to turning to subcontractors find that they are experiencing the same problems due to HVAC COVID impacts.

Mitigate the risks – become an employer of choice

Use performance-driven compensation

The high demand for skilled craft workers gives them choices about where to work. As a result, HVAC contractors and subcontractors need to make their companies attractive to potential employees.

You may need to raise labor rates to meet the local market but make it a win-win situation by incentivizing performance excellence.

Doing so demands that you define performance excellence for your crews. Accordingly, it is crucial that you develop realistic, clear key performance indicators (KPIs) and metrics to measure them. Some simple ones might be:

• Percentage of on-time job completions.
• Percentage of maximum customer satisfaction scores.
• Percentage of on-budget completions.

Armed with KPIs and success metrics, you can reward high performance with monetary compensation in the form of one-time or regular bonuses. It does not have to be a huge amount; recognition is the point. Do not wait too long — timely rewards carry more impact than delayed ones.

Employees today value their time, so PTO (paid time off) can also be used as a performance bonus. But given labor shortages, you must plan ahead and around schedules. For example, illness, HVAC servicing needs and the desire for time off all have peaks in the winter, so it may take some effort to minimize HVAC COVID impacts during that time of the year.

Openly recognize excellence

Annual rewards like “Team Member of the Year” or "Team of the Year" for consistently outstanding contributors can be impactful. Make sure the award is properly vetted by a group of appropriate nominators. A moderate, meaningful financial award should be included, along with a well-produced framed certificate or quality trophy.

Train and promote achievers

Build a culture of excellence. As your business grows, you will need more leadership. Promote top performers into open slots, and make sure everyone knows why you promoted them.

One glaring issue among younger newcomers to HVAC is a lack of training. To address this need and create more high performers, consider training your own technicians. Organize your own classroom sessions followed by on-the-job apprentice programs in the field. Use your most skilled leaders as trainers. Pay them an incentive to do the training.

In-house training programs let you teach your company culture so that new employees pick it up quickly and consistently while you grow your own talent and leadership. If your company is ABC Inc., everyone who works there should understand what the “ABC Way” means, such as "quality, integrity, and professionalism." Promote those who embody those values. Walk the talk. Tradesmen are quick to smell phony behavior.

Recruit, recruit, recruit

Stay alert for new talent. Assigned responsibility for this in your company to a person familiar with construction recruiting. Be clear about skills requirements and licensing. Most importantly, be clear about expectations and about your company’s culture.

Besides the recruiter, have your own techs be on the lookout for new talent in the field. Reward good internal referrals with a finder’s fee. A constant stream of new HVAC technician candidates can minimize HVAC COVID impacts.

Leverage technology

With scarce labor and escalating wages, you need to use technology to reduce labor. HVAC contractors need to focus on the basics, like leveraging the use of mobile devices to transmit drawings and specs and communicate in real-time with workers in the field. Appointment booking and billing can be automated and done online to simplify things for both customers and contractors and minimize HVAC COVID impacts in your company. Technicians coming into the business are tech-savvy, and customers increasingly expect it.

How does all this apply to the use of subcontractors?

Even if you do develop your in-house capabilities, you may need to hire subcontractors. Still, you can use these strategies to hire and manage them effectively.

By deploying them along with the Raiven Contractor Management Platform, you can make that task simpler than you ever anticipated.

Raiven helps you achieve and sustain excellence in subcontracting

Raiven Contractor Management is a user-friendly, cloud-based software solution that automates the process of vetting, selecting and contracting with subcontractors. Further, all of the data associated with this process is stored in one place for easy reference.

All of the strategies above can be converted to selection criteria to pick subcontractors. For example, you can ask:

• How do you evaluate and reward excellent performance?
• What is your record for on-time completion?
• What is your record for on-budget completion?
• What technology enablers do you use?
• How do your train your personnel?
• How many qualified techs do you employ?
• What kind of technology do you use to reduce labor costs?
• What methods do you use to ensure a steady supply of trained, skilled craft workers?
• Describe your company’s culture.
• How do you achieve diversity in your workforce?

The Raiven platform provides the structure to build and use these focused selection criteria consistently in one place. The result is that you can find subcontractors who align with your culture and are a good fit.

And, most importantly, Raiven enables you to incorporate KPIs and metrics you developed into the subcontractor’s contract documents. From there, Raiven uses AI to evaluate subcontractor performance over time with its exclusive QCI Index. It perpetually calculates a performance score between 0 and 1000 for your subcontractors so you always have a clear view of their performance.

Raiven makes managing subcontractor licensing and insurance requirements easy as well. Contractors enter their licensing, insurance, and other time-sensitive information into the Raiven template, and Raiven tracks compliance from there, with automatic pre-expiry notices.

All of these features mitigate labor risks by finding high-quality subcontractors and saves you tremendous time and effort that you can devote to delighting your customers.

Although the industry is still dealing with HVAC COVID impacts on everything from labor to supplies, you can work through this challenge and improve your business by investing in your employees and subcontractors.

For more information about how to Raiven can help you overcome HVAC COVID impacts and prosper, contact Raiven today!