Getting The Bugs Out
Howard Roth, born and reared in the Bronx, had to work late one evening at the cheap North Miami Beach, Fla., steak house where he was, temporarily and not by choice, the night manager. A new exterminator was coming to attack the resident cockroaches. Roth let the crew in, went for a drink, and came back later to see how things were going. He opened the door and couldn't believe what he saw. "It was the middle of the night, and here were these five guys, filthy dirty, crawling under and into everything, just doing a super job. Jesus Christ, I said to myself. After a while one guy got up off the floor and we started talking. I didn't know it at first, but he was the boss."
Roth switched jobs.
He hired himself, says the boss, Alvin Burger (rhymes with merger). "We're talking and Roth says, 'I'm gonna go to work for you. Anybody who can motivate people to do this kind of work, I want to be associated with him.' "
That was 17 years ago. Today, Miami-based "Bugs" Burger Bug Killers Inc. services nearly 12,000 restaurant and hotel accounts spread over 43 states, and the boss doesn't personally supervise every job anymore. No matter. The work gets done just as it would if he were there.
Al Burger has no MBA and little patience for the financial and administrative details of business. But he has overcome the biggest hurdle facing any small, growth-oriented company whose sole competitive advantage is quality of service. The more than 400 service specialists working for "Bugs" Burger (the company) today are just as motivated, and get just as dirty, as the original crew 17 years ago. Al Burger (the man) couldn't do a better job himself.
The competition, to begin with. " 'Bugs' Burger," says Jim Gillis, owner of All Boston Exterminators, "is number one. There is no number two."
And customers. "Let me put it this way," says Bob Crooks, manager of Gallagher's Restaurant, in Garland, Tex. "You have 'Bugs' Burger, and then you have to go waaay down to get to the second best."
And employees. "I left 'Bugs' Burger and worked for another company," says Alan Rosenberg, a service specialist in Boston who was recently promoted to district manager. "It was a step backward. They had no standards. So I came back. This is the only company I ever saw where the owner and the people on the job all think the same way."
With anticipated 1984 sales of $25 million, "Bugs" Burger is not the largest company in the national pest-control market, estimated at close to $2 billion annually. Orkin Exterminating Co. and Terminix International, both corporate subsidiaries with branch operations or franchises in about 40 states, rack up greater sales: $213 million for Orkin and $160 million for Terminix in 1983. Most of the rest of the industry consists of small, local operators. Indianapolis alone has about 75 pest-control companies. The competition is cutthroat, and the service, according to people with years of experience in the industry, is about the same everywhere: minimal. Most customers assume they will get the same results no matter who they hire, so they hire on price. "Bugs" Burger doesn't operate in that market. "It's like he's a Mercedes," says Gillis, "and you've got a whole lot of Chevettes driving around out there."
"Bugs" Burger's marketing hook is its audacious guarantee -- an unconditional promise to eliminate all roach and rodent breeding and nesting areas on the clients' premises, with no payment due until the pests are eliminated. If the company fails, the guarantee says, "Bugs" Burger will refund the customer's last 12 monthly payments and will pay for one year's service by another exterminator of the customer's choice.
The company doesn't promise that a restaurant diner or a hotel guest will never see another roach, but it does promise that if one shows up, it won't be native-born. Should an immigrant bug ride in with the groceries and stroll across a diner's table, "Bugs" Burger pays for the meal and sends the offended gourmet a letter of apology as well as a gift certficate for yet another free meal. "Customers feel like they've hit the state lottery," says the manager of one client restaurant. "They come in the next time and look for the little things." Hotel guests experiencing a similarly close encounter also get their night's lodging free, an apology and an invitation to return -- on the house. To help the company make good on its promises "Bugs" Burger customers agree in writing to prepare their premises for monthly servicing and are fined if they don't.
Although the company says it has only once had to honor its full guarantee to a customer, it does spend about $2,000 a month reimbursing diners and room guests for reported pest sightings.
The professors and consultants would say that Al Burger has segmented the market and claimed the upscale commercial customers, those who will pay a premium price for superior service, as his niche. His company's monthly fees run four to six times those of its nominal competitors, sometimes more, and an initial "clean-out" charge alone can run four times the regular monthly fee. But Al Burger has not only created a new price structure, he has also taken a business with about as much prestige as, say, garbage collection, and given it respectability among both customers -- ". . . 'Bugs' Burger, one of my favorite subjects," responded Boston restaurateur Roger Berkowitz when he was asked about Burger -- and employees. "In this company, the serviceman is number one," says Roger Gillen, a "Bugs" Burger employee in the Ft. Lauderdale office.
Al Burger's dad ran a not-very-profitable pest control business in Albany, N.Y. His older brother bought another marginal operation in Miami. In 1954, after high school, two years in the Army, and a spell of selling vacuum cleaners door-to-door, Al Burger moved south to work for his sibling. He lasted five and a half ("miserable") years, quit, went to work for a competitor, and resigned. Immediately, he and Sandee, his wife of two years, formed their own partnership. Al was the marketing and service department; Sandee was the administration. They had, at first, no customers. "Most guys," says Al, "stole them. They planned their moves [to their own companies] so they could take a percentage of their accounts with them. I started from ground zero. I had to live with myself."
Al Burger has always been hobbled by a conscience. Owning his own company had never been a dream, but six years of working for other people had frustrated him. Employers in the pest-control industry, by and large, paid poor wages, provided no training, and were inured to high annual employee turnover rates. Further, in his experience, the service most companies provided their customers was unforgivably poor. The industry, he says, had convinced its customers that the best they could do was keep the critters -- roaches and rodents -- under control. Burger knew that with a little more time and effort they could be eliminated.
That conviction became the underpinning not just of "Bugs" Burger's exterminating techniques, but of the company's marketing and personnel management philosophies as well. Unlike the rest of the industry, which talks about "controlling" pests and holding them to an "acceptable" level, Al Burger sets a standard for his people that is unambiguous and requires no interpretation. While an employee might be uncertain about how many roaches is some roaches, no roaches is pretty easy to understand.
Moreover, it is an unvarying standard. To guarantee "customer satisfaction," as many companies do, is only to say, "We'll do as little as you let us get by with and only as much as you demand." The customer may be happy, but the serviceman on the route is confronted with working to a standard that varies from one customer to another, which is no standard at all. There is nothing to hold him accountable to, except the whim of client complaints.
Companies frequently answer this dilemma by avoiding the issue of quality standards altogether, instructing employees instead to follow a prescribed routine. In the case of pest extermination, that could mean applying the indicated type and quantity of chemicals to a list of likely breeding areas. Follow the routine, the employee is told, and you can't be criticized -- whether the rats and roaches are killed or not. After all, the company has promised to do only the best it can and who is to say what that is?
"Bugs" Burger's quality-control system an integral part of the company's operations, is extraordinary in itself. But the system exists only to ensure compliance with the unambiguous standard. Take away the standard, or fuzz it up, and the organization, like a basketball team with no hoop to shoot for, loses its purpose.
"I started my business," Al Burger says, "because I thought it was unethical to take money for poor-quality performance. I thought there should be standards and ethics in the industry." When he said so before a meeting of the Florida Pest Control Association in 1960, suggesting to his colleagues and competitors that they could upgrade their service by paying more attention, and more money, to the people they hired, he was hooted off the stage. "I almost cried. I went to the door," Burger says, "and I told 'em I quit."
To this day, Al Burger and the industry he is nominally a part of maintain an unusual relationship. Burger is unforgiving in his criticism. Most owners in the industry, he says, "are former routemen who are thieves and lazy to boot. That's what you've got -- a lack of scruples. And why should their routemen care? They've probably got their own businesses on the side."
Spokesmen for the industry he reviles don't refute him. "So long as the larger firms demand that their routemen service 18 to 20 accounts a day," says Lee Truman of Indianapolis, a former president of the National Pest Control Association and an industry consultant, "there's no way you can do a professional job. They get by, the customers accept it, and that's pretty much the industry standard. . . . Burger doesn't do anything but use the same techniques all of us could use, and he gets rid of the roaches. . . . We talk professionalism a lot, but we don't practice it."
"In this company," as Roger Gillen, a routeman for 10 1/2 years, says, "the serviceman is number one." Scott Hebenton and Philip Hargrove in Boston, each with less than one year's experience on a route, say much the same. Michelle Kolodny, manager of the company's central office in Miami, says, without prompting, "It's the service specialists that pay my salary." "Nobody is a big shot in this company," says Frank Perez, now the vice-president in charge of service but 17 years ago one of the four employees Howard Roth saw working with Al Burger in that greasy steak house. (Roth himself is now executive vice-president.) "Our service people," Perez adds, "are the privileged class."
And so it goes. No matter who you talk to in the company, before long he or she pays homage to the men and women (about 7% of the service specialists are female) in the field. It could be just lip service, but it isn't.
On paper, the "Bugs" Burger service organization looks unremarkable. It separates the country into four divisions, each division into regions, and regions into districts headed by managers supervising a dozen or so service specialists each. But superimposed on this ordinary structure is a quality-control system of thoroughly frightening proportions.
Service specialists work unsupervised, at night, on schedules they set for themselves. After each routine monthly service call on every account, however, the routeman files a report in which, if he wants to remain a routeman with "Bugs" Burger, he spills everything. Were there any problems with the customer's sanitation practices? Did the routeman have access to all the premises? Did the customer do the necessary preparation? Did the routeman see a roach or a rodent, or evidence of roaches or rodents? Did he kill any roaches or rodents? Does he need any help with the account? As the routeman is told from the time he first interviews for a job with the company, honesty pays. At "Bugs" Burger, mistakes are forgiven; liars are not.
The information filed by the routeman is checked, not once but several times, by managers at various levels. District managers call each customer a day or two after every monthly service. District managers, regional directors, and divisional vice-presidents spend much of their time visiting customers' premises, armed when they arrive with a computer printout of the routeman's reports. The computer printout also includes customer complaints received in Miami. (When customers call "Bugs" Burger from any city in the country except Honolulu, using either the local or toll-free number listed in the phone book, the telephone rings at the Miami corporate headquarters, not at the routeman's home or the local office.) And just to keep all of those managers honest, a full-time, two-person quality-control team headed by Al Burger's daughter Susan hopscotches the country calling on customers and filing their own reports. Routemen don't know when, or how frequently, their clients will be called on by someone from management. The only certainty is that they will be called on, and that if there are complaints, Miami will hear about them first.
Naturally, company managers insist that all this checking up is really done for the routeman's benefit. "Our job," says Tom Schafer, vice-president of technical services, which includes quality control, "is to support the service department." Routemen "appreciate" the help these reports and visits give them, assures Perez.
That is exactly the sort of thing you would expect to hear from management. What is surprising, however, is that you get the same story from the field.
"Yeah, it's pressure," says Scott Hebenton in Boston, "but it helps you keep up your standards."
"It gives us that little extra motivation," says Alan Rosenberg. "It would be easy to slack off one night, make it up the next month. But then you think, well, they might call this account this month."
Don't they resent it?
"I don't," says Hebenton. "Without it I guess we'd be just like any other company."
An employee-turnover rate of less than 3% last year suggests that most people at "Bugs" Burger feel much the way Hebenton does. Something about this system of management and quality control builds pride instead of resentment among the people whose performance is constantly monitored.
Jack Kaplan, the company's vice-president for human resources, thinks it is a "mentality . . . that says, 'You are critical to the success of this company, and I'm going to make you feel that way from day one.' Most people coming here from different backgrounds aren't used to hearing words like that."
Employees first encounter this attitude during the hiring process, which involves two rounds of interviews, elaborate personality and aptitude testing, a polygraph examination, and thorough explanations of the job and the company -- all conducted by officials from Miami headquarters, who eventually turn over the names of qualified applicants (2% or 3% of those who answer the ads) to local service managers for the final decision. The people hired already feel part of an elite group just from having survived what they know is an exhaustive selection process. Further, it is a process that doesn't automatically select the young. "I appreciate it," says Hebenton, hired last year at age 37, "because an older guy has just as good a chance." Kaplan recalls interviewing a 45-year-old woman in Roanoke, Va., who asked, he says, "Would you hire an old broad like me?" They did. "Her district manager says she's fantastic," he adds.
New hires undergo a five-month training program. "It's like boot camp in the Army," says Kaplan, "only it's three times as long and twice as tough." Recently hired service specialists confirm Kaplan's analogy. During the program, they are not assistants, helping someone else. They do real work under the full-time instruction of a field manager. After about three months, new recruits attend a two-week school in Miami, where, one says, "there is no fooling around. You go to class from eight o'clock until six or seven o'clock, then you do your homework and show up again the next morning. It's pretty intense." (Letting no opportunity to exercise a little quality control slip by, company officials test the recruits in Miami, not just to see what they have learned, but also to check the techniques they have been taught by field managers against the company's standards. What public school administrators can't get away with, "Bugs" Burger can.)
Finally, in the sixth month, the new service specialist gets a route. In one sense he is on his own, because the responsibility of keeping customers' premises clear of nesting and breeding pests is ultimately his. Says serviceman Phil Hargrove, "It's like your own little business."
Not quite, but neither are Hargrove and his peers just employees hired to do a high-quality job.
Burger's routemen occupy a unique middle ground. They control the up-side of their working lives -- their own schedules, their incomes, and, to a large extent, their career paths within the company. What they don't have, in contrast to most workers and all independent business owners, is any downside risk. They can't lose, and that is why they will accept whatever performance standard the company wants them to meet. Once hired and trained at "Bugs" Burger, the only way you can fail is to lie. Cover up a mistake, slack off and don't report it, or ignore a problem, and you are in trouble. But ask for help, and you have it.
Routemen can talk to their district managers on the telephone or ask them to come to the job site, anytime. Regional directors and divisional vice-presidents always travel with a working uniform in their bags. "They never look at it as a negative," says Scott Hebenton, "if you ask for help." Recently, the company flew eight out-of-state service specialists to Boston to get their Massachusetts licenses so that they would be available to augment the local forces if a job suddenly demanded a larger army. "They spare no expense," says Hargrove, slightly amazed. "Any serviceman knows," says Jack Kaplan, "that if he wants to talk to Mr. Burger, all he has to do is pick up the phone."
Nor does a "Bugs" Burger service specialist worry about losses from conditions beyond his control:
* If a major customer decides to drop the service at the end of his contract, the company subsidizes the routeman's compensation until a replacement is signed on.
* When a salesman badly underestimates the hours required to service a new account, the company subsidizes the routeman for the time he puts in, because it won't allow him to shortcut the service.
* Customers that won't cooperate with a routeman by maintaining sanitary conditions or by preparing the premises for treatment are dropped. The serviceman, again, is subsidized until a new client is found to fill out his route.
* Promotions from service specialist to district manager -- and all other promotions within the company -- are made on a three-month, or longer, trial basis, with the salary differential held in escrow during the trial. If a supervisor or, as is more frequently the case, the former routeman decides the promotion isn't working, he gets either his old route back, or a better one. Roger Gillen, an 11-year "Bugs" Burger veteran, tried a management job and left it. "I'm not a management type of person, and you just can't replace a good serviceman." There is no shame at "Bugs" Burger in staying with the job you do well -- and for which you are paid well. Servicemen receive $1,200 a month in salary plus 20% of all the monthly gross billings on their routes in excess of $5,100. The average routeman makes $24,000, but $32,000 or more isn't unheard of, according to company sources.
Benefits are impressive, too: full health insurance; disability insurance that pays full salary for three months and 60% thereafter; a pension plan; profit sharing; cost of living adjustments; performance bonuses; and, coming soon, employee equity in an affiliated company selling janitorial supplies.
"An old lady," Al Burger recalls, "told me that if you give without thinking about what you might get back, eventually you'll get back 100 times what you gave. That was Mrs. Lummus. When I was 21, working for my brother, she called. She had a terrible roach problem in Miami Beach, but no money. So I got rid of her roaches, and she made me tea and cookies. I remember what she told me. It's a good thing to carry with you."
High-minded thoughts, of course, do not by themselves ensure business success. While they can inform and influence a management organization, they can't take its place, and Al Burger, he will admit today, is no organizer. In 1978, sales were nearly $6 million, but the business was foundering. Burger realized, with a little help from Howard Roth, that he had reached the limits of his managerial capabilities. "I was panicking, beginning to make mistakes. I was disoriented. I actually had heart palpitations. Too many things were happening that I couldn't cope with. . . . Howard Roth -- a guy with a ninth-grade education who really understands people -- he sat me down and said, 'Here's a guy that you're going to hire.' " The guy was Art Graham, who, as president of Pizza Hut Canada Ltd., had just turned the company around. He had worked for "Bugs" Burger briefly in the early '70s, but hadn't appreciated the growth opportunities in the business. In 1978, while Graham was in Miami for the Super Bowl game, Roth persuaded him to come back. Graham built a management structure where none had existed before and pulled the profit margin to 12% of sales within six months, up from 1%. He wrote the company's first business plan and constructed its first annual operating budget.
Al Burger, meanwhile, concentrates on what he does best: marketing and firing up the troops. "Basically," says district director Scott Hebenton, "what Al Burger is, is a service specialist . . . and when he talks to you it's like he's right inside your head. He knows exactly what you're thinking out there on the route. 'Oh, I'm tired. Why not just cut this short and go home.' He's a good motivator."
Both management and motivation remain important. On the marketing front, for example, some of the competition is beginning to catch on to Burger's gimmick -- the elimination guarantee -- and while they have raised their prices accordingly, "Bugs" Burger is still the premium-price service. The company loses $2 million or more annually in unrenewed contracts as existing customers switch to lower-cost exterminators.
"Bugs" Burger's response to the competition has been to develop some productivity-enhancing equipment for routemen to use, and to map out some innovative, but still confidential, pricing options. The one thing Burger won't allow is cuts in service. "The minute we start doing that," he says, "our standard falls apart. You can't tell a service specialist not to do a good job on one account and then expect him not to do a bad job on the others. People will strive for that elusive level of perfection. All they need is the right attitude, and that all depends on the goals and standards you set for them."
Al Burger, in short, is still a man with a mission. He won't rejoin the national trade association until it changes its name from pest control to pest elimination. "He was a voice in the wilderness," says Lee Truman of Indianapolis, "but now an awful lot of people think he's been right all along."
And despite the competition, he remains cool and self-confident. The owner of one of Honolulu's most expensive restaurants didn't hide his condescending skepticism when Burger first stopped by on a sales call. But Burger had already toured the dining rooms, kitchens, and work areas. He had seen the thumb-size roaches scampering over the glassware, gone unerringly to where the egg cases were hidden, noted that rats had walked across the floured surface of the pie-crust machine leaving paw prints and their distinctive calling cards.
Condescending or not, here was a man, Al Burger knew, who needed and eventually would pay for "Bugs" Burger's kind of service.