Commission Question

I have heard so many good things about paying commission as oppose to hourly so this year once I train a couple of new guys I am going to try this.

First how long would you consider training them before putting them on commission

For those of you who pay based on commission how do you have the the workers track time, pay, % for each day worked? What do you make the employee responsible for in terms of showing when they worked?

I was thinking 15% each for 2 guys so 30% total then after a year 20% each.

definitely have someone who’s in charge and pay him more, like a 17%-13% split. You could make an excell spreadsheet for them to enter their data into. I wouldn’t go much over 30% on labor costs, if your jobs are priced good, they will make good money, but obviously that’s up to you :slight_smile: you should probably train for a couple of weeks first. You may have to still track hours worked, so you can prove they made above min wage

+1 and read the thread commission based pay.

I’ll be doing 30% working alone and 20% working with a fellow workman.So two guys take 40%. But I don’t want them to resent working with someone else. I always think 2 guys working together is better than 1 alone. A lower hourly wage during “training” is fair and then they should have to make the prospect to make more on commission, as previously stated. I think $15-20/hr on commission is fair. But a penalty has to be in place for shoddy work to refrain them from “rushing”.

I have had success using commission on route work. I know how long it takes to clean each stop on each route and what they pay. I basically based my commission on $ 20 per hour. I tell the person the route pays $ XX.00 each time you run it with no phone calls. If they want to lolly-gag around and take 10 hours, it pays the same as if they bust butt and get it done in 6. They have to get signatures at the stops and phone calls for poor service or attitude costs them.

Commission rocks!

My suggestion is to keep all commission paid out as close to the 30% + taxes mark as possible.

Commercial - my company pays 33% for the training week and then we bump them to 40% and give them annual 1% increases for 5 years ultimately maxing out at 45%. Of course there are deductions in there pay for callbacks, stores missed, etc.

30% for 1 man and 20% for each 2 man crew. My jobs are bid accurrately and we raise rates at least once per year. I pay my guys well and they stick around. It also fixes my payroll so i dont get screwed at the end of the pay period.

Since I started commission years ago, I have only had one guy that was treating it like it was a game. He was my senior tech and no longer works for me as of Dec 20, 2010. I would also suggest calling on jobs to check on customer satisfaction. You should really do that if you are paying commission or hourly anyway.

Commission does rock!

Steve

Thanks guys, I’m certainly seeing that commission is the better way to go and might actually help me find more reliable help too if they know they can make good money as I also offer 20% on any service they up sell too. I do mostly residential so once they see what I charge which they are going to do anyway can only benefit us as they will easily be able to work out what they will be making that day.

So once March hits here as I don’t do a ton of commercial will take 2 guys on for 90 days training then give the commission thing a go. I should of done this long ago.

Let me say something about commision. Its a new thing to me but I personally dont worry as much about the clock. My stress is down. This is my first pay period doing this and so far so good. I also think its great if an emlpoyee wants to step it up he can make more but it all depends on him…

Adrian,
My stress level went out the window the moment I started commission. It puts a whole new spin on your business. No more running the numbers everyday just to get even more and more upset at your whole business. I remember those days of paying hourly and thinking to myself “Is it supposed to be this way? How on earth can I make good money going at this pace?” I had to make some serious changes fast. There were several problems brewing inside my company that needed fixing right away or I would have to close shop or return to solo.

#1. I had no idea which jobs were profitable and which ones need to get raised or done away with. The guys were making their hourly wage so it didnt matter to them. They got paid regardless.
#2. Milking the clock. It happens. Its seems to be human nature.

These two things were killing my business. I had no control over labor cost at all. I was at the mercy of my employees. Thats not good.

Switching to commission fixed payroll, gave me feedback on jobs that werent profitable, sped up production, Got rid of the STRESS.

Steve

Sounds like you had it worse than me, but I too was headed down that road. Isn’t it great to lower your stress!?

Yep, It was pretty bad. Emotionally and financially. One of the major benefits I love about commission is that I no longer needed to keep track of what my crews were doing or the constant thought of if I made any money. Im glad those days are O-V-E-R!

does anyone compensate for drive time from one job to the next job.

Ed, In a way, yes when they are getting paid on the commission scale. I keep track of their hours and I go from that if they go over 40 and I owe them more money (this has never happend thus far). When I was paying hourly, YES!. It is illegal to not pay them. You can get into hot water with the labor board for back pay owed to them if an employee decides to go after you.

Steve

What was he doing to treat it as a game?

Jim, is that 40% for one person?

What is a fair percentage to pay a subcontractor for commercial work?
You still need liability insurance. Some companies pay workers comp also to be safe.
I have heard 50 to 60%.

I tried that for a few months a while back. I paid a sub 72%. That would have been fine since he was responsible for all expenses in executing the work and having his own insurance. But the cash and checks I received rarely if ever reconciled with the checklist. Needless to say we got shorted almost every time. And there was no compelling reason for my sub to make much of an effort to track down money. The way we did it, it was my problem. The whole arrangement was somewhat thrown together out of desperation. I believe it can work with good planning and both parties pulling their weight.