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.
