There are many ways to gauge success and high performance in corporate America. Financial statistics come to mind, such as quick ratio, debt/equity ratio, operating profit percentage, and others. These numbers are easily determined with a good income statement and balance sheet. But while they give insight into the financial health of a company, they're only fleeting glimpses of overall, long term company health. They tell you how the company has done in the past and is presently doing, but not how it will do in the future.

As a consultant focused on the commercial HVAC industry, I'm charged with assessing companies' overall “health,” and spotting areas that need improvement. I'm also involved in a lot of acquisition work, and constantly need to quickly evaluate companies based on limited information.

As mentioned earlier, financial statistics are certainly useful, but they don't give the whole picture. More ammunition is needed. I decided that one of the best places to start would be to examine some of the best contractors in the U.S., to find any common threads in those well-run companies. But where to start? With an industry as big and fragmented as ours, how could I determine which companies are “the best?”

In my 20+ years in this industry, as an owner of a large commercial contractor, and an employee of a larger public contractor, I've seen, and come to know many companies. In fact, my last job for a very large industry company was to lead their effort in growing their commercial service division through acquisition. I evaluated more than 100 companies across the U.S., and brought several on board. Through this effort, I felt I had a good idea of what it took to be successful in our industry, but I had to be sure.

To validate my knowledge, I decided to do some research on the best companies in the country. But how do I know which companies in America are the best ones? Who am I to judge? Well, it's already figured out for me, every year. ContractingBusiness.com, arguably our industry's leading trade journal, annually names one company as the Commercial Contractor of the Year. The awards committee evaluates a large number of companies and looks at many aspects of the company to determine the winner. These award winners were an excellent place to start with my benchmarking study.

The Survey

Based on my experience in evaluating HVAC companies, and with the help of some industry “gurus”, I created a comprehensive survey that examined 14 different attributes of a business. These attributes include: financials, client diversification, community connection, culture, human resource management, innovation, leadership, marketing, product line diversity, productivity, safety, sales, strategic planning, and training. Granted, each of these business attributes could comprise a complete multipage survey on their own, but I needed a high level approach that looked at overall common trends.

Once I settled on these particular attributes, it was time to dive in deeper with some specific questions that got to the heart of the matter. I spent a lot of time thinking about specific questions in each of these areas. I went through a lot of revisions before I settled on the final questions. These questions needed to be straightforward and unambiguous. They mostly needed to be “yes” or “no” closed-end questions or numerical ones, so that averaging could be done to determine some benchmarks. Most importantly, they needed to be simple and easily answered. They were designed so that the owner, president, or leader of a company could, within an hour or so, complete the survey without having to pass it off to others to fill out. If an owner, president, or leader of an HVAC company can't answer the questions in the survey on his own (or with minimal help from others in his company), I believe he or she doesn't have a very good handle on what's happening in the company, and should re-evaluate how they're spending their time.

Attributes Any Company Can Develop

The survey also tries to uncover common trends of leading companies that aren't dependent on size of the company, such as leadership. A successful company needs great leadership, regardless of its size. The contractors surveyed (the last 25 Contractor of the Year Award winners, as determined by ContractingBusiness.com magazine) ranged in size considerably — from approximately $5 million in sales to nearly $300 million in sales, and everything in between. This benchmarking group was a great cross-section of industry players in size, geography covered, and markets pursued. As the data was tabulated into a master scoring matrix, the common trends were very apparent.

These companies have stood the test of time (with the exception of perhaps two) and have remained successful even in the toughest of times. The average length of time these companies have been in business is 48 years, with the range being from 25 to 73 years. That's a long time to be in business in any industry. And, as each of these contractors has emerged from a recession, they've come out stronger, which is another testament to their success.