Dan,
This is the beautiful thing about commission. If they slack, its their your own fault that they arent making the money. This is all true of course if the jobs are profitable. Commission whipped most of my guys into shape that were slacking here and there. It also whipped my business profit margins into shape as well. The guys know when a job needs to be raised- be it the complexity or just simply one that has fallen through the cracks and never had a rate increase.
I have seen plenty of pros for paying commission over a wage, however, what cons are there?
For those of you who pay commission did you start out that way or start with a wage and changed overâŚif you started with a wage and changed at what point did you decide to make the switch?
When you pay commission and have new employees do you start them on a wage during training or start off with commission?
Have any of you had bad experiences with commission and if so what should we look out for?
Is there a certain type of employee that better suits commission based window cleaning?
Iâd still like some responses to my earlier questions:
The thing about percentages is you cant have a certain amount of people working with each other one day and a completely different number of people working on the same job the next. Thatâs just to complicated and there is no way to divide the job up logically other than kind of guessing and thatâs not a great way to do it. What you would have to do in that circumstance if you were paying commission is start with a certain number of people and do what you can to end with that same number of people. If itâs a large job where you just donât know whatâs going to happen, then just pay everyone hourly. You can pay employees commission for certain jobs and hourly for other jobs. Thereâs nothing that says you canât. I personally like the idea of having my team leader or supervisor make a commission on the job and pay the rest of the guys on that same job hourly. That way the team lead will want to get the job done as fast as possible and he can supervise the hourly people and make them put some pep to their step if they start falling behind. Thatâs what we do with our maids and it works great. I think that the larger your company gets and the more people you have on the job and mix things up, the more paying hourly becomes a better way to do it. If you just have a minimum amount of employees, IMO you would want to have your team leads commission and your regular employees at hourly. If itâs just going to be one employee on a job, I would definitely pay them a commission.
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I handle the problem in this way.
I have my crews fill out what I call a Job Summary Sheet. On it are spots for listing who worked on the job, what time they started and finished for the day, and what types of windows and how many of each type they did and at what price each window was. The form is set up for 3 such columns across the sheet. On days when a job takes longer than 1 day or even if I have extra employees join another crew after the first crew has started, it makes it easy to tally up what each crew did. In the case of additional employees being added during a job on the same day, counts are taken when they arrive and the second column is used from that point on. I have used this system for 4 years and have not had any problems with it.
OK I will try to address most of the questions you guys have. My guys were hourly when we switched to commission. Some thought it was going to be a joke and shook their head(these were the ones that would slack if they could fly under the radar and get away with it). The other guys were pumped! They did the math. They knew that they could easily get a $300.00 job completed in 4 hours. Two of those jobs done in 1 day would gross them $180.00 a day? They thought they were in heaven!
The slackers had to get productive or they were stuck pretty much in a rut. No more screwing around at the shop, clocking in early, hanging out at restaurants in the AC for 30-45 minutes extra in the summer âON MY TIMEâ.
The proâs of commission I have already discussed in this thread or look up my other threads.
The Cons is that your Workersâ Compensation will go up (if you have thatin your area). I am enrolled in a program for a group rate discount through my local BBB. Its something like 75% off which is killer.
I have had one guy fly around houses that we clean and get complaints from about him from time to time. He is ADD so that is the primary reason for the complaints I believe. I have to remind him to âslow Downâ. Commission could have a small part of this. But then again he was that way before we switched. I could see an employee doing this to earn more $$ though.
On having several guys at one job site (major panes). This doesnt happen very often in my business but it has. It will be a pane but you will have to (a) switch them back to an hourly scale or (B) keep track of hours of all guys working at the job site. When you are finished with the job, divide the hours up. that will give you a base rate that can be divided commission wise. If an employee is working by himself, the commission is 30%- If they are working as at crew of two then its 20% each. If you have 4 guys working on the job the whole time then they all split the 40% commission. It is confusing but it is fair. I rarely encounter this situation because I am primarily residential. On large jobs, the guys are thankful to have extra people there knocking it out. If they make $120.00 or $150.00 that day, they are really ok with that because they arent stressed out and the job was completed.
That does help some. I was thinking I would have to revert to hourly pay for passing out flyers and other indirect revenue producing activities. It makes sense to pay them hourly for very large jobs where theyâre in and out.
Rob,
That would probably be the easiest option to go hourly on extremely large jobs.
min wage here is 7.25 i start at $8.00 and give raises. If I could find a decent employee and hed stay i would pay 10-12.00 hr. I do bonuses, bdays, Christmas and usually buy lunch, coffees, etc.
Do you pay for travel time?
If they are on commission you donât pay travel time. That should already be factored into job price.
You may want to check into the legalities of that, especially if they are in a company vehicle, I think I remember it being brought up in a different commission thread.
Many companies in our industry state they pay commission to their window cleaning employees. Be very cautious. If you read the FLSA (Fair Labor Standards Act) our industry falls into ânon-exemptâ employee category. Window cleaners are classified as ânon-exemptâ employees that are entitled to:
- At least Minimum wage
- Overtime over 40 hours per week.
If a window cleaning company were to pay 30% commission only to a window cleaning employee, this could be in violation of FLSA.
To get around the violation, the company could pay minimum wage and overtime at 1.5 over 40 hours then subtract the commission rate of 30% showing the difference as a âbonusâ.
Example: Jim works 41 hours this week. (40x$8 if minimum wage = $320, 1 hour overtime at $12, = total hourly wages of $332) Jim produces $2,000 in revenue or 30% of $2000 = $600.
Commission $600
Hourly wage $320
Bonus $280
To pay a window cleaner commission only without documenting the regular hours and overtime hours worked could result in legal problems if the employee wanted to pursue legal action.
Examples of "exempt employees"
Management
Sales people
Technical
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Of course you have to pay at least minimum wage. But if they are making a lot more than minimum wage then you donât need a base hourly wage. They also are not eligible for overtime if paid only on commission. If you pay hourly + commission then you need to worry about overtime laws.
You may want to double check on that, I understand it to be that you need to keep track of the hours so that you can prove that you are actually paying over minimum wage, and if the above poster is correct even commissioned employees need to be compensated for working more than 40 hours
The laws vary state by state. Our state law only hourly employees can get overtime. Salary and commission positions are exempt. I imagine it is similar elsewhere. If commission salespeople could get overtime then that would be absurd.
The key here John is properly classifying âexempt employeeâ or ânon-exempt employeeâ. Outside sales people are typically classified as âexempt employeesâ and the employer is not required to track the sales employees hours. Window cleaning employees are classified as ânon-exempt employeesâ. Employers are required to track regular hours worked and overtime hours worked per week. If you pay commission only to a ânon-exemptâ employee there are other factors that must be considered other than meeting the current federal or state minimum wage laws. Here is a link that may be useful Commissions | U.S. Department of Labor
Not following the proper procedures as it relates to employee wages can result in huge fines.
This is EXCELLENT advice! Iâm in the process of hiring and will implement this without a doubt,
Thank you for sharing! IMO this is a brilliant solution. Especially considering we offer various Janitorial Services like Window Cleaning and Maid Services.
