Beneficial Planning

Michael Fickes

For John Jennings, president and CEO of Longwood, Fla.-based Waste Pro USA Inc., taking care of a community's solid waste needs begins with taking care of his employees. "We try to provide a service that can be recognized by [a] municipality as better than what they were getting before," Jennings says. "To do that, you need drivers and supervisors to provide good service."

And for employees to provide good service, they need to be happy with their jobs, Waste Pro officials believe.

The firm's emphasis on worker satisfaction appears to be paying off. In 2009, employee turnover was just 1.7 percent, the fifth consecutive year that the rate was less than 2 percent. By comparison, the U.S. Department of Labor says the turnover rate for all U.S. industries stood at 23.2 percent in 2005 — before the start of the recession.

With this underpinning of employee satisfaction, Waste Pro has experienced a decade of dramatic growth. In 2001, the firm began with one truck and four employees. Today, it features 900 trucks and 1,600 employees, and provides waste and recycling services to approximately 900,000 residences and 32,000 businesses in Alabama, Florida, Georgia, Mississippi, North Carolina and South Carolina.

Jennings has worked in the waste industry for 37 years. He started his first collection company in 1973. It was a residential collection company based in Orange County, Fla. As he still does, Jennings focused on service and employee satisfaction to build the company, which soon moved into commercial collections and expanded into Seminole, Osceola, Volusia and Flagler counties in Florida.

In 1986, Fred Wood joined the team to head up equipment maintenance and procurement. Wood helped move the company into municipal consulting and sales. In 1992, Jennings brought in David Danford to run the sales and marketing operations.

The 1990s was a decade of consolidation in the waste industry, and Jennings Environmental Services Inc. was bought by USA Waste Inc. in 1996. As a first-tier subsidiary, Jennings' company retained its name and management structure.

Around that time, Bob Hyres, then a 24-year veteran of the waste industry, joined the Jennings team, taking over the management of city and county contracts.

Then in July of 1998, in an acquisition that rocked the entire industry for years, USA Waste acquired Houston-based Waste Management Inc.

The giant Waste Management corporate structure separated the Jennings team of Wood, Danford and Hyres from the part of the business they enjoyed — the day-to-day contact with customers and employees.

All four left Waste Management in January 2000. The team had to agree to stay out of the waste business in central and northern Florida for one year. As soon as the restrictions ended, Jennings, Wood, Danford and Hyres set up shop as Waste Pro.

Taking Care

Good benefits are crucial to Jennings. Waste Pro self-insures its own health care costs, sharing premiums with its employees. While an insurance company manages the Waste Pro program, Jennings insists that all of his employees' healthcare bills be paid when presented. He refuses to accept anything less.

Not long ago, Jennings' wife had to go to the emergency room. She submitted her bill, but it was rejected. "When I complained, the insurance company told me that they always question a percentage of claims to prevent fraud," Jennings says. "I told them not to do that with Waste Pro claims. When our employees or their families go to a doctor, we pay the bill."

Jennings' demand bewildered the health insurance company's administrator, who consulted an attorney. On the advice of counsel, the company required Jennings to sign a waiver saying that he was rejecting the insurance firm's advice about fraud prevention. He signed.

The Waste Pro benefits package includes dental and vision insurance, with shared premiums, and sick-time pay. Vacations are fully paid. So is life insurance — with no paycheck deductions. Waste Pro also contributes the maximum permitted to its employees' 401(k) employee retirement plans, and covers the cost of personal and financial counseling for its employees.

Extra Cash

All of Waste Pro's offices hold weekly meetings in which supervisors go over key safety issues, and the firm pays bonuses to employees that compile excellent safety records. An annual payment of $250 goes to employees that have had no worker's compensation claims, no accidents, and no employee-caused property damage or breakdowns.

Waste Pro drivers who compile a spotless safety record for three consecutive years earn a $10,000 bonus. "We've given out 75 of those checks," Jennings says. "We love doing it. Some drivers think it is too difficult to manage for three years. But it isn't hard. You have to keep your mind on safety."

Because of the firm's emphasis on safety, Waste Pro is able to self-insure its trucks. "Last year, we had $480,000 in losses for the year, which insurance experts tell us is nothing more than the cost of one accident," Jennings says.

The company provides more informal benefits, too, like monthly cookouts. "I enjoy those cookouts," Jennings says. "We have a full-time cook, who drives a tandem trailer with a giant cooker that can serve 250 meals. He goes to each of our offices once a month, arriving two days early to buy the food and get started. We do this to let our folks know how much we appreciate what they do."

According to Jennings, the company's financial advisors often question the liberal benefits. But, "good benefits pay back much more than they cost," Jennings says. "If we paid standard worker's compensation rates, we would be paying almost $4 million more per year. But our employees are safe, and our rates are low."

Jennings says the benefits also pay off by creating a mindset in which employees are willing to do the extra work often required to satisfy customers. In the Neptune Beach section of Jacksonville, Fla., for instance, the streets are narrow and the traffic heavy. Passing vehicles can blow over empty trashcans at the ends of driveways. So Waste Pro's collection crews now walk the cans back up the driveway after emptying them. Furthermore, all Waste Pro crews spray and disinfect the trashcans on their routes once every month.

A Careful Approach

When it comes to compiling debt, Jennings has proceeded conservatively. The company's ratio of debt to EBITDA (earnings before income taxes, depreciation and amortization) is 1.4 to 1, which is considered excellent, especially next to the industry's much higher 3.5-to-1 average, according to Jennings.

What does that mean for operations? "It means that we have $100 million in cash that we can use to acquire other companies," Jennings says. Waste Pro has grown internally in its early years but plans to become more acquisitive now that it has plenty of cash.

"We plan to buy companies that think like we do," Jennings says, pointing to the acquisition of Delta Sanitation in Gautier, Miss., in early January. "Delta has the same service philosophy that we have."

Waste Pro owns just five landfills (three of those are construction and demolition debris facilities), but Jennings says the firm isn't likely to purchase many more disposal sites. "We want to promote alternatives like zero waste," Jennings says. "So we're more interested in recycling."

Whatever the future holds for Waste Pro, a focus on employee satisfaction promises to be a part of it.

At a Glance: Waste Pro

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Michael Fickes is a Westminster, Md.-based contributing writer.