Pipe Dreams

Faced with a crashing market, and inspired by lessons from his courses at Harvard's Owner/President Management Program, Tom Warner invented a way to turn his plumbers into businesspeople -- and they turned his company around

Ron Inscoe's yellow van trundles along the leafy streets of suburban Bethesda, Md., and pulls up at Cornelia Hyatt's house at 5 o'clock on a Friday afternoon in late April. Inscoe, Hyatt's heating and cooling mechanic, is here for the springtime inspection. Half an hour later he packs up his tools and pronounces Hyatt's air-conditioning system fit for action. That's good news -- summer in the Washington, D.C., area is a time of laming heat and humidity. Still, Inscoe lingers for another 30 minutes, patiently answering Hyatt's questions about her humidifier and the "funny sounds" her furnace makes. Inscoe is unfailingly polite, giving no impression that he's pressed for time, although it's late in the day and he has another job before he heads home. She is, after all, "his" customer.

Inscoe is a heating, ventilation, and air-conditioning technician -- an HVAC guy, in trade lingo. But he's also an "area technical director" (ATD) for his employer, Warner Corp. Instead of making service calls all over Maryland's huge Montgomery County, seldom seeing the same customer twice, he now focuses strictly on Bethesda zip codes 20814 and 20817.

"Ron told me to call him if I have any problems, because this is his territory," Hyatt says. "I think it's a great idea. I have somebody to relate to -- not just some corporation."

The ATD program is the brainchild of company president Tom Warner, who credits it with revitalizing his 260-person business. He has about 80 such directors now, with many more to come. They are plumbers, electricians, and HVAC technicians -- the company's operational triad. Each has his own zip code or two, covering roughly 10,000 households.

In essence, Warner has given each of them a business to manage -- within Warner Corp. Under the corporate umbrella, they enjoy the benefits of self-employment without the hassles or the overhead. The idea is to field a corps of technically superb, friendly, and ambitious mechanics who operate like small-town tradesmen despite the big-city reality. Warner prepares the ATDs with training in the fundamentals -- sales and marketing, budgeting, negotiating, cost estimating, and customer service. Then he cuts them loose to build business in their assigned locations.

By turning his technicians into businesspeople who make decisions and think responsibly about profits and losses, Warner has engendered in them a new sense of pride and ownership. "In the Washington area," he says, "there's a social stigma to working with your hands. This program is a real ego booster. Running their own businesses, these guys really feel good about themselves."

The upside is more than improvement in self-esteem. Before Ron Inscoe, a 34-year-old with a high school education, joined the Warner team, the most he'd earned in a year was $60,000. But last year, as he began to develop his area, he made $103,000. This year he's on track for $126,000. And when Inscoe does well, so does Tom Warner.

A central feature of Warner's ATD program is a generous incentive system that ensures that Inscoe and others like him will go the extra mile to please customers. "If someone needs an appointment at 6 a.m. before work, no problem," he says. "I even give out my pager number to my customers. One of them, a surgeon, paged me at 11 o'clock one night. His basement was flooded -- there was a bad valve on his boiler. I hopped into my truck and drove over."

Before starting his ATD duties, Inscoe spent several two-hour sessions with Bill Harrison, a consultant Warner had enlisted to help redesign his company. In part, the training dealt with "bedside manner," as Inscoe puts it -- how to be professional and responsive with customers. "Then when I started here, I generated customers by going through old job tickets," he says. "I called anybody who needed refrigerant last year and asked if I could make sure the unit was safe. I think of their safety first and their comfort second. If it's a question of dollars, I give as many options as I can, from a Band-Aid to a replacement. I never nail a customer down to one option."

That mix of initiative and thoughtfulness is one key to Inscoe's success. He works hard, too. "The guys who gravitate to the ATD program want to make more money, with more effort," he explains. "If you want a 9-to-5 job, it's not for you. Last year I averaged 63 hours a week. I've got two kids and twins on the way, and life's expensive. It's not The Donna Reed Show anymore."

The ATD system is considered revolutionary in Warner's business. His is one of the most oldfangled of industries, the mundane world of stopped-up sinks and balky furnaces. Warner might be the first who's ventured to professionalize his workforce in this laggard industry.

Chief executives who give autonomy to highly educated employees no longer excite curiosity, but it is still exceptional to empower blue-collar folks. Warner, however, didn't have much choice. With brutal market shifts buffeting his business, he felt the need to move boldly.

Founded in the 1940s, Warner Corp. is the largest plumbing contractor in the Washington area. It's also the second-largest HVAC operation. For decades the nonunion, family-owned business thrived as Washington's premier contractor for big plumbing projects -- office high-rises and apartment buildings. In 1988, a boom year, sales neared $20 million in plumbing repairs and new construction. Some 85% of that work was commercial.

In late 1989, however, just as Tom Warner gained control of 100% of the company's equity, Washington's red-hot commercial real estate industry began to flicker, a victim of overbuilding and tax-law changes. Facing cash-flow crises, many property managers hired handymen to handle plumbing work in-house. "Everything ground to a halt. I had all these great technicians but little work," says Warner, a fourth-generation plumber who succeeded his father as president.