Chris, it looks like your concern is the newbie making too much too fast (stronger employee)? Just put him on a lower percentage.
In my experience trying this set up ages ago, the hourly guy resents the commission the leader is getting (once training etc is all over) and will go slow purposely to prevent him from making any more (which leads to other disciplinary issues, but who needs those headaches)
and many other ‘sabotaging’ games you would be surprised at.
a $750 day for 2 people, with 30% for wages would be $225 for wages
so the leader could get 20% of revenue (66% or 2/3 the commission, $150 or $18.75 hr) and the assistant 10% (33% or 1/3 the commission, $75 or $9.37 hr)
For me, when I felt my commissions at the standard 30% of revenue did not produce a desirable hourly wage, I took it as a symptom of my pricing being off, or too much driving or something that was limiting the total that could be made in a day. At 40% pay, which I’ve paid out before, I began to look at that additional 10% as giving away my 10% business profit goal. I made changes after that and got to the 30%.
I have found that employees fall into 4 basic groups:
abuse hourly - milk the hours - write down bogus times, go slow, “getting paid anyway, why rush”
slow but steady - not fast, prefer hourly cause not fast/efficient/too meticulous, “don’t get” commission, prefer security of steady check rather than unknown of commission
good fit for commission - have the skills and initiative to solve problems, including raising their pay, they learn jobs, get more efficient, they may prefer to get off early or may prefer to make more money with more jobs. Usually go at same speed as owner used to when solo. Appreciate and value the commission structure.
abuse commission - no conscience, anything to get off early or get more money, skip jobs, skip half the job, tick off every customer they come into contact with - these people are probably a better fit for hourly and they don’t know it, they can’t manage themselves - and if they were on hourly they would probably abuse that too
It’s definitely the same thing, finding the “right” people who are the right fit for what you are offering.
I can also see how companies who are dealing with multi day, multi week jobs all the time may prefer hourly, and get more results with it and then just have a quarterly bonus structure instead - at end of quarter if wages come in less than 30%, say 27%, then pay out the 3% in a bonus. It’s still “commission” just over a longer span of time. Heck, could even be done monthly for companies with smaller jobs too.
commission is definitely a winner for most wc co’s who have smaller jobs where several are done in a day, it’s a reward for managing their day better and showing initiative on how to optimize best
Kurt,
It is what it is. Some jobs just pay more. We completed a gutter guard install last year and after material was deducted from the job, my two guys grossed over $250.00 each for about 4 hours of work. I try not to focus on what I am paying them. I have found that it is easy to “let Go” with a commission scale when you are guaranteed profit at the end of each job. If they are making great money-so are you! I look at cutting big paychecks at the end of the payroll period a good sign. They make great money and I do even better.
Great feedback Steve, I appreciate that. Your thoughts are along the way I’m doing things right now. The thing about pressure washing is it’s not the occasional rain flow install, it’s darn near a daily job. So there will continuously be a pressure washing tech making almost twice as much as a window cleaner. Consistently paying someone 30 dollars an hour for pressure washing seems high to me. Well, it will probably even out to be around 20 to 25 / hour. In fact, we are getting more new pressure washing gigs this year than window cleaning so far. That may change soon though. We will see.
We have a very low turnover “Knocks on wood” which I attribute to paying hourly with benefits to some degree. We have only lost 1 employee in the past 3 years. The downside is our labor costs can be as high as 40% or better at times. My job is to sell our other services such as power washing, window caulking, gutter cleaning and guarding which typically have a better profit margin and can take the labor % back in our favor.
I will be moving to commission with my 2 guys in May after their training period is over but both of them are equally responsible for doing a great job.
I will be paying 30% so 15% each however this will equal out to approximately $12 - $400 an hour as they will earn commission on all of my services so something like gutter protection and roof cleaning and pressure washing etc will pay much higher. Last gutter protection job I did just by myself before taking the guys on recently I made $800 an hour for 2 hours work after expenses so I can see them being able with it- obviously 2 of them doing that job would had only taken them an hour or so somewhere around $200 each they would make on that job.
I do think the commission is the way to go having read a lot of stuff on here but I admit this will be all new to me here and all going well will allow me to work on the business more instead of constantly doing all the work.
I will also cut their commission down to 10% each though if I or both myself and wife have to help out on a job as not only will the job go quicker anyway so they still are making good money but that will only happen if the job is a pretty big one to begin with and extra help is needed. My thinking behind that is they are less likely to be lazy and ask for help if it brings their commission down
They are very excited and looking forward going to commission in the near future.
I also even right now offer a 20% commission on any service they up sell to the customer so if they sold a gutter protection job or even pressure washing etc along with their commission for bringing in that job that person would then make 35% and something I push them to do as when I have done the work myself I have made a lot of extra money talking to the customer about extra work needed and the services we provide while working on their home so if I’m going to NOT be on the job most the time I expect them to up sell on occasions or else I’m leaving money on the table.
I love the idea of commission. Sharing the prices I charge for every customer makes me nervous. The guys paying commission, has that ever been an issue with people stealing work? I feel like I’m setting myself up by giving away everything I’ve built.
A thought for percentage. I’m just starting the commission plan. I shoot for every employee to make 500-600 a day and pay them 25%split. 1-2-3 guys they always make $14-17 hour so far. They may not work a full day though so their is still high for time worked. New guys and labor a little lower percentage. If this works and I see the guys hungry for more I plan to raise percentage closer to 30%
