20 Questions with Theo Etzel, Conditioned Air president
Originally published: 04.01.07 by Terry Tanker
Conditioned Air president Theo Etzel met with HVACR Business publisher Terry Tanker in Etzel’s Naples office after the 39th Annual ACCA meeting held in Orlando, March 6 to 8. They discussed how a different management philosophy, dedication to training, and empowering employees turned his company into a powerhouse.
1. Did your family start Conditioned Air here in Naples?
My in-laws purchased it in 1993. They were in the large mechanical contracting business. They were doing high-rises on the west coast but did not have the service arm here. Conditioned Air had a good reputation for service, and it became available. In 1995, after a rough transition, they asked me if I would consider taking over the reins of the company because of my strong business background.
2. What was that background?
I was an economics and finance major and a developer in the hospitality business.
3. What specifically did you do?
I was vice president of Development at Days Inn. My job was to create the sites where we would build our hotels. I would conduct market research, decide what land to buy and where, and bring it to the design stage.
4. What is the best idea you’ve implemented in the last 12 months?
My COO Keith Walker came up with the idea of Safety Bucks. Everyone in the company can earn five Safety Bucks for each month they remain injury or accident free. They can then redeem them for products out of a customized catalog or reduce any tool purchases financed by the company.
5. What is the sales history and business mix at Conditioned Air?
When I joined in 1995 we had 27 employees and $2.7 million in revenue. We now have 120 people and over $18 million in sales: 60% new construction, 40% retail. We saw the new-construction slowdown coming 20 months ago and began to change our mix. We do a lot of custom new construction. It’s a good niche for us.
6. What are the keys that enabled you to achieve this growth?
Having a strong commitment to people, earning people’s trust, focusing our efforts in the residential market, having a strong CFO, and having the right people in the right roles.
7. What was holding them back before you arrived?
The company was very small and didn’t have a new-construction side. It was primarily residential with a small service department. Frankly, the trucks and infrastructure were dilapidated. Everything including morale was petty run down. But despite this, you could see we had some really good people here.
8. What changes did you focus on first?
I wanted to make changes in direction and philosophy and needed time to win trust. It took five years to replace the management people who had existing contracts. Roughly seven years ago I was able to engage the philosophy.
9. Did everyone adopt your philosophy?
You know the expression “get the right people on the bus?” Well first I had to get the wrong people off the bus. It’s better for them, as they were not happy with where we were going.
10. Do you have a different set of parameters for working with builders?
We have a highly efficient method, and the No. 1 thing is integrity. If we can’t deliver what our customers are asking for and don’t believe it will yield a good product, we say no and walk away. In our business, we own the customer regardless of who told use what to put where.
11. What have you learned about the new-construction business?
If you miss one, it’s O.K. There are other projects out there.
12. Why are there so many service trucks in the lot this morning?
We employ a full-time NATE educator. We have a class being conducted right now.
13. What convinced you to hire a full-time trainer?
In order to get more qualified people for the customer and for Conditioned Air, we felt it was a necessary step to train full time. We wanted to be able to assess people to find out what they know and don’t know. Depending on their need, we’re able to train basics or at advanced levels.
14. What is the company’s management philosophy?
You lead people, and you manage things. We have a full-team concept here — everything is team based. We don’t split overhead by department, and we share rewards together based on the net profit of the whole company and not by any one individual department.
15. Is management training available?
We are committed in the education process not only to technical, but also to business management. The team is enrolled in a speaker series handled off-site, where they listen to speakers and facilitators and learn about business
16. Do you also participate in training?
Yes, I’m involved with a MIX Group through ACCA. I’m also involved with an organization called The Executive Committee (TEC), an international organization of executives who meet to share ideas. I also meet monthly with a business coach.
17. Who is involved with the financial goals of the company?
We practice open-book management, which is critical to the success of this company. The management team all see the numbers. They know what we are spending in each category, and how much money their departments made. They have all taken financial classes.
18. With all the training you provide, are you concerned you’ve prepared someone well only to leave?
You always face the risk that someone will leave. But you can minimize this risk by proper remuneration. Let your employees know they have a stake in the performance of the company. Bonuses for exceeding our goals come from the net profits and are rewarded as such.
19. Are bonuses the largest workforce motivators?
That’s only part of the equation. I believe in the management theory of servant leadership. It taught me to want to see other people succeed in their personal goals, in what they aspire to do for themselves and for their departments. We carry it throughout the organization.
20. What is your most important job?
My job is to make my managers better people and help them rise up, and to provide them the opportunity for a better life. All employees are internal customers of the management team. Our job is to set up departments, lead the departments, and make procedures as efficient as possible.
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