I am constantly asking this question! I want to get it just right. We are currently doing straight up commission. 30% across the board, unevenly distributed to the crew.
[COLOR=Blue]I voted hourly but am considering going to commission. The other day I had a guy take 45 minutes to do a storefront with only two 6x6 windows and 2 glass doors. He makes $9.00 hr, the ticket is $12. He said the owner was talking to him, is why it took so long. I am keeping my payroll under budget but think I could pay my people better if they were on commission.[/COLOR]
Well…i must say i have plenty of experience with paying commission/piece i will say its good if you can pay your guys well enough and still make money.Im curious as to Chris’s reply about the 30% across the board,i take it that divided up between 2?
You see out here 15% ain’t cutting it,i wouldn’t keep people long at that % if indeed thats the case. Another thing to consider about comm/piece is…everytime you raise your rates your employee’s get a raise too unless your doing things differently then i did?
What i’ve done is gone hourly & implemented a “bonus” of 3% for getting the gigs done at or below budget,as well as a 5 to 7% bonus for "upsells like pressure washing,gutter clean-outs,bird control etc.
This way…it helps somewhat with the “Milkman Mentality” I also pay my crewleaders/leadmen well from 12.50 up so if you train them right they will see to it the gigs are done as expected otherwise…there’s going to be hell to pay plus…they sacrifice there bonus. Bonuses are nice in that it actually raises there hourly rate,alittle incentive if you catch my drift?
My particular situation now…is after going with a payroll service and a comm/piece combined it was killing me of course i was way out there with the comm piece% especially with my main guys. Now i’ve somewhat been able to curb that and concentrate on being closer to the 33 rule which is easier said then done.
Wow, it seems like most of you guys are getting away with paying super low wages.
Maybe I should rethink that whole thing…
I guess it would be rather hard to say what is low or what is high with regards to pay structure,i guess it solely depends on your location.
For me 8.00 to 9.00 is somewhat low or would be considered so! For me i learned the hard way in the past with paying extremely high on a commission basis.
Another thing to consider would be the size of your operation as well as how well the gigs are priced. Smaller companies may be able to pull it off(then again my company is small) and it was KILLING me with all things considered matching taxes,work comp coupled with all the other expenses(overhead) associated with running a legit business.
For me & my situation…with the big jobs it was pretty good the “milk & honey” was flowing but…you also have those smaller jobs that don’t pay as well so the trick is booking the gigs correctly so you can make as much as possible in the least amount of time. Drive time always plays a factor in this so there are so many variables to consider with regards to whats a good pay structure and whats not.
[COLOR=Blue]“Super low” is relative to the area that you are in. In my area $9-$12 is considered good money for “unskilled” labor. Of course the cost of living here is only about 85% of what it is in the rest of the country.
One reason that I am looking at paying comm. is so I can pay more but keep my costs level.
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Its divided up between 2 - 4 people.
So
Supervisor: 30%
Supervisor 20%
Helper: 10%
Supervisor 15%
Supervisor 15%
Supervisor: 15%
Helper: 7.5%
Helper: 7.5%
etc… There are allot of possibities
I need to make allot changes before this spring… Not sure what yet though.
So…what type of changes did you have in mind? I take it your going to stick to a commission based pay structure?
[COLOR=Blue]This is your current scale?
P.S. - I really like your pre-employment agreement. Can I adopt it?
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I pay my two guys (when i need to bring them) hourly. I did the % thing with my first guy and it blew up in my face. It was only a few months when he asked for over 70%. He was gone after we talked. Funny he was supposed to be a friend that I knew for over 4 years. I have not heard from him since May. What a DICK. I don’t like the guys knowing what I am making or think they know what I am making. Over time I think it will cause just as much turn over as a low pay scale. Only difference is the employee will have gotten and idea of how much can be made with very little start up and now you have another competitor. I’m in business to make money, not start careers for people. I know that may sound ****ty but that’s me being honest. I tried helping another window cleaner in July (young kid 20 yrs old) and that also blew up in my face. So I won’t be doing much helping to local cleaners that’s for sure. But back on topic. In the cleaning industry an hourly pay is pretty standard. Workers get bonuses in the line of prizes, trips etc or financially. I don’t know of any other industry where an employee gets paid % other then sales. Sales people get % because they are bringing in $$$. But an employee does not bring in money, they complete the job that was gotten by the owners work. If they do bring in a job or an add on, then I can see giving them a bonus, not a %. Once again I don’t want them to know the money I am making, or think I am making. When I was younger I worked for a professionail photo lab that dealt with some very high end shooters. My boss charged big bucks for the work to be completed. I was young and never thought about the money. One day I worked my butt off like I normally did for the guy, but on my drive home I calculated the $. I made the guy $7000.00 that day. Then I thought of all the other jobs I did in one month for the company and roughly how much I should have brought them in. Then I pulled out 75% for all his cost, went in the office the next day and wanted a raise. When the guy offered me $0.50 per hour I brought up the calulations. He told me “Yeah so what? It’s my company. Do you feel you deserve a % of my money? You get an hourly paycheck, only my brother who is my partner gets a %”. He made a very valid point that I could not argue with him over. I was being paid $8 per hour, I was trained by his staff over 3 months. I worked there for 5 years. He got his work out of me and everyone else who was there and rightfully so. If not for him and his contacts those large paying jobs would not have come in the shop. If not for the owner the worker would be working for someone else and most likely being paid hourly. Now I know there are some who would argue that point, but my view is like this. I can do the employees job if needed. Can the employee do mine? I pay my guys $12.00 and $15.00 per hour and they don’t get a penny more. Does that sound ****ty? Sure does, but that’s business. There are not many jobs, requiring very little to no skills that will pay those wages. Hell even Home Depot who is known for being a great employer starts people out at $10.00 per hour and I’m willing to bet their store manager crack a whip a lot worse then I will.
My issue with Hourly is there is 0 incentive to hustle or do more work or even bill correctly. This is the first year we were on percentage. I have noticed 2 major things.
[B]1)[/B] We have the same amount of employees as last year and are now getting 25% more work done than last year. Why? There paycheck is now directly related to how much work they get done
[B]2) [/B]Homes we have been doing for years now have many more windows than they had in years past. Did they all have additions put on? No the guys in years past had no reason whatsoever to count things up correctly. They didn’t care that the company was getting the correct amount of money. They were on Hourly… there paycheck was the same regardless. Now that the amount of windows billed is directly related to there pay, you better believe they are counting up and billing out for every piece of glass cleaned.
I will never go back to Hourly. The years not over but so far its looking like our payroll is about 11% less than last year… combine that with getting 25% more work done than last year and you have significantly higher profits.
Things are out whack though the commercial guys are getting payed to little and the residential guys are getting payed to much. I’m thinking of changing it in 08 to 25% for residential guys and 40% for commercial guys. Other than that are administrative expense has grown very high due to keeping track of the percentage system. It is very labor intensive compared to simply adding up hours on a time card.
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Interesting insights…
Juggernaut: You’ve made some great points. I’ll keep them in mind for future discussions with guys working for me. Thx.
Thats why i enjoy discussions like this,it gives you a better understanding of various scenarios. In the case of Chris…i know your not an “hourly guy” and obviously…comm/piece is working for you to some extent.
Remember…not sure how it is in your area but…commercial will never compare to residential (money wise) that is why i focus more on the residential.Grant it…on the flip side commercial is year round rain,snow or shine for you guys(for the most part) whereas…even out here friggin rain puts a damper on business.
One question with the consideration of paying more to your route guys will the route(s) support themselves good enough to where you can pay them what you mentioned and still make good money?
Out here im lucky to get 45.00 hr on commercial work & only a small % pays well.As a matter of fact my route has decreased substantially… due to im not into losing money which seems to be an occurring thing.
Partly to blame are the “trunkers & hacks” but…on the flip side we do pretty good where residential’s concerned. We get SO MANY referrals its pathetic.
Chris I think next year is going to be the time when you can see if this has paid off for you or not. They are getting more work completed but what’s the quality? Are you going to have repeat business from those customers? But the point I’m trying to make here is when people start getting % on piece work won’t they start rushing work just to get it under their belt and move to the next gig? If they are paid hourly they move to slow, if they are paid % they move to fast. There has to be a pit bull someplace. Are you driving out to these jobs and checking your guys work? I have a friend here who does lawn service, it’s a 7 figure business. He does not cut 1 blade of grass anymore, he just drives from house to house making sure the jobs are done correctly. If he sees a problem he takes pay away from his guys. Do your guys have any fear of losing pay for rushed or bad work?
They will if the resultant call-backs to correct quality issues must be completed on the employees’ own (non paid) time.
I had a feeling someone would inquire about the “Quality Issue” associated with comm/piece thats another reason why i didn’t care for it. Now…there are 2 ways to look at this if there conscientious about there work or have a leadman checking prior to bailing it can work.
Also…i have had guys that were real good start to slack off and yes…one nice thing about comm/piece is your not having to pay them for time to go back & touch-up or fix …but…your are [U]losing money[/U]
Dont get me wrong im not trying to pick apart your thinking just stating a FACT that i was up against Im in it to make money.Of course im alot smaller of an operation but…im sure you see my point?
I think this is a really good topic. The responses are way better then any other board regarding this issue. I think there are pros and cons to both. Making it work one way for one business may not work for another business. Even though it’s the same industry. At this point I will stay hourly cause that works for me now. But who knows, I could end up going a different road in the future. This is just like the soap debate. One thing I always keep in mind with your posts Chris is that you have a very large operation and it did not get that way by pure luck. I always take your advice and it weighs very heavy on the choices I make with my business.
How do you keep your invoices from the employees. I really don’t want them to know what I make per job. If I do commercial they are invoiced when the job is done at store level it has the price on the invoice. Residential pays when the job is done. I would like the employee to know less about the money end it saves bull on how much I make and how they should get more money.
Thanks
Ed
I invoice by email or mail for all Residential. I never ask for the money at the time the cleaning is done, but give the client a couple of days to look around and make sure they’re happy.
In the extremely rare exception that the client asks to be invoiced on the spot, I’ll have the invoice delivered in a sealed envelope by my guy.
For smaller commercial stuff ($10-$100 per clean) I don’t care if a worker of mine knows, and they can collect cash payment on the spot, with the invoices I’ve prepared. For larger commercial, I email the invoice, or mail it out, so they have no idea what the client is generating.
