I am thinking of trying out paying a percentage of each job as opposed to hourly pay. I’m thinking about 20 percent once they are fully trained and can go out by themselves working solo. But what about when he is teamed up with another guy on a job? I’m thinking they both get 10% each but since they can generate more revenue in a day with that setup the hit to their pay won’t be so bad. I’m good with that. So far so good.
But what about when I work with them? What about when we are doing a big project that takes days and I have to hire extra guys temporarily for it? For those of you that pay percentage how have you worked out the tricky jobs for fair employee compensation?
From what I understand your labor cost should not exceed 30 % of your gross revenue. First figure the maximum percentage you want to pay out on your jobs based on your gross for the job or day. Then divide that percentage up giving a portion to each guy or guys based on what he produces on average per hour compared to the other guys. If you have them keep track of the hours they spend on every job this should be easy.
Based on this method you can use different variations. you might pay 25% for guys on there own and If they work together try to figure a percentage that will equal what they make on their own. If you send them out with day labor, pay the day labor by the hour and your guys a percentage that will equal what they make on their own plus some insentive to manage the job. Let them get a bonus for manage a crew. Just my two cents.
You’ve hit on one of my key areas that I’m working on now. I realized I wasnt charging enough on most of my residential work. That’s now changed thanks to Kevin Dubrowski. I’ve posted this question on another site and it seems those who run larger companies hover around 30%. This is good stuff for me.
Yeah thanks Larry. That is what I’m shooting for. And one other question within this topic for those of you that pay [B]employees[/B] percentage. Let’s say I do settle on a 30% labor cost per job. Is that also including taxes and workers comp. WITHIN THAT 30%? Because out here in Cali. that is a very expensive add on. For us it runs about 30%. So for every $100.00 in payroll we pay an additional $30.00 in taxes and workers comp. So when figuring out percentage pay do we include taxes and workers comp. in our labor cost or should that be something that is figured outside of that as an additional operating cost? I’M GETTING SOME GOOD ADVICE HERE!
Good stuff everyone. Do any of you guys run accross problems with employees knowing what everything is bid at? For some reason I just don’t want my workers to know all of my pricing and paying them by the hour allows me to keep that information to myself. However I think I may be overthinking it because the percentage system makes everything so much more predictable. Hmmmmm I just dont want everyone that comes and works for me to get the bright idea of quiting to start their own, then I am constantly retraining.
I wouldnt worry about that. Our prices have been open to our employees from day 1. In 7 years we have had 1 employee go out on his own. It just makes it so much easier if everyone is on the same page price wise.
Don’t forget you still have to track hours worked including travel between jobs! If they work over 40 hours in a week they are entitled to overtime. 1 1/2 their AVERAGE wage for that week. Still a great way to pay.
This is our third year on % pay. Before this we paid Hrly and our payroll would float around 50 - 70%. Now we do 30% with taxes and stuff it now comes to about 37% Figure in office Pr and we are back up to the 50% area. Keep in mind we have an 8 person office staff, that drives that # back up to 50% If we had a one person office staff we would max out at like 40%
One added benefit of the % system is our actual billing price has gone up substantially. Now that everyones on % you better believe every single piece of glass is being counted up correctly and billed for. We have found jobs we have been doing for years completely counted up wrong. The employees never said anything( for the most part ). It didn’t effect there pay, why would they ?
When I say 30% I mean thats split unevenly between members of the crew. What cut they get of that 30% depends on there role. Supervisor or just a technician. That extra 7% is just matching taxes and what we pay into the unemployment pool. Workers comp is separate and doesn’t come into the payroll equation for us.
Okay, I’m not finished with this thread yet. I still really like the idea of percentage pay. One of the main advantages for MY BUSINESS IN PARTICULAR is I am not paying for windshield time. Which I have quite a bit of and it can’t be helped.
I also like the idea of running a lead guy on a 2 man crew who will get a higher percentage than the “helper”. I will pay him more because he will ultimately be responsible for the customer’s satisfaction. If there is a complaint or callback, he gets called into my office whether it was his fault or not because I am paying him more to take the lead and make sure the job is done right the first time.
However, for the sake of simplicity I also like the idea of splitting commissions evenly. So for those of you that do it this way how would you handle a situation where one guy complains that the other guy is not pulling his weight, I have to do some of his work, is slowing him down so he can’t finish the work in a day, etc. etc. Ultimately his complaint is that it’s not fair that the slower guys is getting the same pay when the faster guy is doing more work. How have you handled that?