Even in this ultra-automated high-tech age, you'll find them. On the factory floor, in the bowels of hotels, hospitals, and office buildings, manual laborers put in long shifts at dreary, dirty, and oftentimes dead-end jobs. Finding, training, and keeping such workers has always been difficult. But in today's tight labor market, the challenge is greater than ever.
Just ask C. William Pollard, chairman and chief executive of ServiceMaster Co. (SVM) The $6 billion company specializes in providing the sorts of low-skill, low-pay services that few people are willing to perform: spraying pesticides, stripping hotel beds, shampooing carpets, and scrubbing airplane toilets. Increasingly, the 62-year-old Pollard is forced to tap America's pool of immigrant, unskilled, and illiterate workers. Currently, 10% of the company's 250,000-person workforce is Spanish-speaking and many thousands of these are Mexican guest workers who, under federal visa rules, are allowed in the country for only up to nine months.
ServiceMaster's TruGreen lawn-services, Terminix pest-control, and Merry Maids housekeeping workers reach into one out of seven U.S. homes--about 10 million in total--in addition to thousands of small businesses. Its workers also serve large clients such as Delta Air Lines Inc. and Four Season Hotels Inc. How does Pollard make sure his employees are adequately prepared to do these jobs? By a broad-based program of training, he says, in everything from instruction in "social graces" to remedial reading.
The payoff: ServiceMaster's turnover rate is enviably low. Analyst Matthew A. Litfin of William Blair & Co. estimates the company's annual churn at no more than 30%, versus turnover rates of around 40% at its competitors. Litfin credits ServiceMaster's attention to training as well as a corporate credo that values individuals. "ServiceMaster has written the book on imbuing a sense of self-worth in those jobs," he says.
Still, ServiceMaster is struggling to fill positions at all levels. But Pollard, who has run the Downers Grove (Ill.) company on and off since 1983, believes that expanded immigration would solve the problem. This plan meshes well with his personal beliefs. An evangelical Christian, he says the U.S. has a moral obligation to help the less fortunate. Pollard recently sat down with BusinessWeek correspondent Michael Arndt to talk about these issues. The following is an edited transcript:
Q: Let's start off by talking about the labor market. What does it look like to you?
A: We still see a tight labor market, and it's not only the service worker who is our biggest [concern]. It's really all levels.
Q: You pay entry-level workers about $8 an hour today. In terms of attracting and retaining workers, have you found you've had to bump up pay?
A: Our pay raises on average have not been that much higher than the inflation rate. As for health-care benefits, they are important to a certain group of employees, middle-management I would say. We do provide medical benefits to our service workers, but it is not that important to them. They typically have had the experience of working in this mass uninsured category. They've developed a pattern of either not getting care or using public-assistance vehicles to get care. They also aren't as interested in getting retirement benefits because, frankly, they never think about retiring.
Q: Given that many of these jobs are so tough, are you finding that turnover is increasing?
A: We don't see a significant increase. I think where we're seeing the tight labor market is that it's costing us more money to recruit people at all levels. We're having fewer applicants for the job. [Within our own offices] we were just talking about recruiting a key person in the accounting staff. We used to get a significant portion of our accounting people from Arthur Andersen, our auditors. Today, at Arthur Andersen, they're having a hard time recruiting people. This is something we all should have known would happen. If you look back 20 years ago, our schools were shutting down. At some point, it should have been clear we were not going to produce enough workers. I wish we were able to address this in our immigration policy, because the shortage of labor is not just this year.
Q: What would you like to see done?
A: It's time for us to open the doors. That's something we've done historically in our country. This is not only an issue with respect to south of the border. This is an issue with respect to Eastern Europe, to some extent Russia, Far Eastern countries, maybe even migration from Africa. That's how my grandfather came to America. Many of us can tell stories like that, or how we had the privilege of growing up in America because at one point our immigration laws were open. But right now we've got a protective mind-set, a trade-barrier mind-set with respect to our immigration policy.
Q: But that raises all sorts of political problems. On the right, you've got people opposed to immigration for cultural reasons. But on the left, they say immigrants would take jobs away from Americans and push down wages. How do you counter those arguments?
A: It's already occurring whether we like it or not. I think there already is a larger illegal element in our economy today. We already have a mix of cultures and languages. One of the areas we serve is the school system in Atlanta. I was amazed to learn that there are over 80 different language groups represented in the Atlanta system. That's pretty broad diversity. It's all part of globalization.
Q: Have you had to change your training programs because so many of your workers cannot speak English?
A: Yes. A number of them today not only speak Spanish as their only language, but they do not know how to read Spanish. They're illiterate. That's a whole additional challenge for us. It's not just a matter of taking our training materials and translating them into Spanish. We do that. Our challenge, as part of our training and development, is we are limited in the written materials we can use.
Q: But how do you make sure they're getting the right training? What if, for example, they're dealing with chemicals in your lawn-care business?
A: More of our training has to be on an oral basis and on an example basis, rather than through manuals. We are beginning some programs, teaching them how to read in their native language, but we can't accomplish much in a short period of time because of turnover. It also requires us to have supervisors and managers who know how to communicate in Spanish.
In some cases, if the workforce is a mix and there isn't a fundamental level of communication, it can create some tensions. One of the answers would be if we as a country [did a better job] teaching Spanish. I think we ought to be teaching Spanish as a second language starting in grade one across this country.
Q: Are there other kinds of tensions that you see in the workplace, stemming from diversity?
A: There's an experience I had several years ago [that is revealing]. Seeking to understand better what's happening at the service-worker level, I spent the better part of a week incognito, doing service work in a big manufacturing plant in California where we had maintenance and cleaning responsibilities. The workforce was basically African American, Hispanic, and Asian. Obviously, I stuck out like a sore thumb. During the work period, they all worked together, but when it came to the lunch time, they all went to tables reflecting their ethnic origins. Nobody asked them to do this. That's where they felt most comfortable. And I think that's O.K. We have to recognize this: We benefit from learning from each other. But there are times when people want to congregate by identity.
Q: How have training issues changed over the past decade?
A: In the labor force we're hiring, there's a whole element of training that we didn't do 10 years ago. I'd put it in the category of social graces. Training people to be civil to each other. So when you meet somebody, you look him in the eye, smile, and say hello. Some of these things, which most of us learned in our home environment, are sufficiently absent in the workforce today that you have to supplement it. It's not that the person doesn't like you if they're not looking at you and not talking to you. They just never learned this.