Executive Q&A: Tim Thoman, Performance Services

In this latest edition of NAESCO’s ongoing Member Spotlight series Tim Thoman, President and CEO of NAESCO member company Performance Services, sheds light on some of what he prides himself most, including Performance Services’ uncompromising commitment to customer satisfaction, employee wellbeing and corporate social responsibility.

1. In your view, what have been some of the more significant shifts in the energy service industry since founding Performance Services in 1998? How have these changes impacted your business for the better?

There have been dozens of changes in the industry, but there are three developments that stick-out most in my mind. In the Municipal, University, School and Hospital (MUSH) markets, most projects have evolved from “energy payback focused” projects to “comprehensive energy solutions” that solve customer needs in a more complete manner. They still include guaranteed energy savings but solve other needs such as failing infrastructure and poor learning or working environments. We now focus on delivering high-performing buildings, including optimal environments, updated infrastructure, and guaranteed energy savings with ENERGY STAR certified performance. We have found that customers are much happier with this outcome in the long-term, and it has dramatically improved the reputation of performance contracts in the markets we serve.

We’ve also seen that energy service performance contracting (ESPC) has evolved into a mature market and, as a result, the quality delivered through ESPCs has improved across the industry. Now, only companies that provide quality solutions at competitive market prices have endured and flourished.

ESPC has become a proven, trusted approach for solving our customer’s energy-related facility issues. Early on, ESPC had a spotty reputation because it was mostly unknown, unproven, viewed as risky due to a few bad actors and ineffective approaches. But the industry has come a long way thanks to NAESCO’s advocacy efforts and market development.

2. How would you describe your approach to leadership, corporate and otherwise?

I founded Performance Services 22 years ago with a commitment to provide 100 percent customer satisfaction, a desire to take great care of my employees, and a promise to treat all partners fairly. I also committed the company to God, with me being the steward of His company. This guided our development of our “no change order” guarantee, wherein we commit to delivering projects as promised for the amount agreed to upfront and with the guarantee that every customer would be happy with their project results.

While it cost us additional time and money to fulfill these promises, it has also made us much better at delivering projects right the first time and has resulted in both loyal customers and us achieving our 100% customer satisfaction goal.

Yet my most important responsibility as President and CEO is to ensure we consistently live and deliver upon our Guiding Principles, which we formalized 15 years ago. We review and find evidence to substantiate each sentence in our Guiding Principles, Mission, and Vision on an annual basis and, when necessary, take the corrective action. We have found that, if we succeed here, then everything else takes care of itself. I find the same to be true in most other areas of my life as well.

Suffice it to say that our most satisfying accomplishments as a business have directly resulted from our annual process of reviewing and verifying both our team’s fulfillment of our Guiding Principles and achievement of our Annual Goals.

3. Provided the opportunity, what leadership lessons would you most like to impart to your peers in the energy service industry and why?

Focus on delivering excellence to every customer and fulfill all promises. With consistent and excellent results, customers will work hard to find ways to continue engaging with ESCOs to solve their problems. This will attract new customers to the ESCO market and, in turn, give all providers more opportunity for success.

  1. i.e. are there any completed projects, corporate initiatives or other developments that you think have shaped the company’s culture, service offerings, relationships with customers, etc.?
    One example that comes to mind is our Customer Experience program, which we implemented to track how well we’re meeting our 100 percent customer satisfaction commitment. We ask customers for feedback at five critical stages during each project, starting with the design phase and ending one year after project completion. The comprehensive, collective feedback from these five surveys enables us to immediately resolve any project issues. The construction industry average Net Promoter Score is 43 out of 100, but in comparison, ours was a 70.

4. Can you speak to Performance Services’ corporate social responsibility (CSR) record?

One of our most important Guiding Principles is stewardship. We gave back quietly in our first several years because we didn’t want to boast – we weren’t doing it for public recognition. However, I realized that engaging in charitable work as a team would be enormously rewarding for our people.

So in 2011 I decided to do a larger project for a community in Haiti called Vialet through the Food for the Poor organization. At the time, we had 50 families in our organization, so we decided we would dedicate a portion of our income that coming year to providing 50 families in Haiti a house, cow and five fruit trees. People in this community were living in small, informal makeshift structures with poor sanitation and the rainy season only worsened living conditions. The idea was we could help 50 of these disadvantaged families in Haiti improve their standard of living long term in one year. Our people were excited by the opportunity and many contributed some of their own personal funds to support the project. Afterwards, we took a team of 20 to meet with the people of Vialet, take stock of the assets we had provided and celebrate the completion of the project with them.

So rewarding was this project’s transformative impact that we went on to visit other local Haitian communities and do several additional projects.

5. What changes to the market do you anticipate will materialize in the short- and long-term?

The need and desire for sustainable living, using resources more efficiently and wisely, will only increase as the younger generation moves into decision-making positions, so we anticipate that the demand and opportunity for our industry will surge moving forward. I believe the amount of this future work to be delivered by ESCOs will depend on how effectively ESCOs deliver projects and fulfill promises. We also need to share these great results with all stakeholders so that customers and legislators better understand that ESPC is the best procurement vehicle to deliver energy-related work. NAESCO can serve as an important resource in helping its members achieve these results.

  1. What changes would you like to see in the market?
    I’d like to see legislative changes allowing public customers to do comprehensive ESPC projects that address all of their energy and infrastructure needs, bringing the greatest long-term value.

6. Of course, we would be remiss if we did not address the elephant in the room: COVID-19.
How has the ongoing pandemic impacted Performance Services? And what measures are you taking to adapt?

We are currently able to deliver on projects that were sold or agreed to prior to the COVID-19 pandemic, so our short-term revenue results should be fine. But developing new projects with new customers is a different story.

Our customers are focused on COVID-19 related issues, and our spring and summer conferences have been cancelled. The pandemic will likely reduce our sales from our original forecast for the third and fourth quarters of 2020 and could impact 2021 if current restrictions remain in place. Nevertheless, I feel blessed that the business is doing well during this difficult period. Performance Services is adhering to recommended CDC guidelines and industry best practices to keep our employees and customers safe in both our offices and on jobsites. This approach is working, and we are exceedingly fortunate to have not had any reports of positive COVID-19 cases in our organization.

7. What effect(s) do you anticipate the COVID-19 pandemic will have upon the wider energy service industry? Do you have any recommendations for how your peers in the industry may navigate and recover from this crisis?

I think the negative impact COVID-19 has had on our economy and the uncertainty it has caused may compel some customers to delay or cancel some projects over the next 18 months. But this will depend upon how quickly the pandemic is brought under control and our country gets back to work.

A federal stimulus program focused on energy efficiency could provide our customers enough incentive to justify moving forward with an ESPC project now and ultimately sustain many efficiency-related jobs and provide ESCOs needed revenue.

As NAESCO members, we should work together to make the case that stimulus money given to public entities will allow ESPCs to provide the most leverage to get the greatest amount of work done, sustain much-needed industry employment, and lead to improved results thanks to our performance guarantees.

Date Posted: 6/15/2020