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ghunter502
01-12-2011, 10:49 PM
I need help with an issue.I have about 20 employees and have been kicking this idea around in my head not even sure it will work. Here is my question not even sure if I have it under the right category. I am trying to figure out how to get my employees to care more about their work which I know is hard to do, but here is my idea. There was an article in Lawn and Landscape where a company back east leased all of their equipment to there employees and gave them a cut of the profits. I am not sure how to go about this should I pay them a portion of the lawn/commission, figure out a way to make them lease the equipment against the lawns they mow, pay them by the square footage, pay them a percentage of the money paid per lawn just not sure on the approach. I think this would give them more incentive to not break equipment, get done with property in a timely manner, take pride in their work, make more money for themselves and make more money for my company.
In this equation it would take in to account how much I am getting paid from the property, fuel, equipment cost, truck & trailer cost, lost or broken equipment, buying new equipment, work comp, etc. I think you get the point

ghunter502
01-12-2011, 10:52 PM
We did this with installing and removing holiday lighting and it worked great. I hope I can get some great insight on this topic so I can get this figured out for this coming season.

Richard Martin
01-13-2011, 04:26 AM
It depends on how you structure it. If they have complete control over the equipment, including the trailers and trucks then yes, you should be able to do this. By complete control I'm talking about them taking the vehicles and equipment home with them every day and just generally being responsible for them.

What I'm thinking you would have to do here is severe the employee/employer relationship. They would have to become full fledged sub contractors. You lease them the equipment, you give them a list of jobs that need to be done in the course of a week or month and let them go. They have control over the equipment, the number of hours they work and the order in which they get the work done.

It sounds like you're trying to do some sort of hybrid sub contractor/employee thing and I would absolutely call the US Department Of Labor's help line at 1-877-889-5627 before I did anything like this. Just because you saw it in Lawn and Landscape doesn't make it legal. Sometimes the law gets tipped off by reading the media.

You can also play around with the US DOL elaws First Step website. It has the info that about 99% of us use daily.

http://www.dol.gov/elaws/firststep/

hackitdown
01-13-2011, 09:30 AM
If they are to remain employees, it may be legal to pay them on a "piecework" basis, or pay per lawn, so long as they are earning at least minimum wage.

Some friends of mine used to work at a manufacturing place and were paid to make windows, on a per window basis. But they got minimum wage to start, and as a minimum. Of course, if you were not quick enough to make way more money, the company gave you the boot.

ghunter502
01-13-2011, 10:15 AM
They will be making over minimum wage for sure but everything counts against them too. Repairs, fuel, lost equipment so on and so forth. It worked great for christmas lights I made better money than last year and they were making 2 to 4 dollars an hour more than they usually do.

Richard Martin
01-13-2011, 03:43 PM
They will be making over minimum wage for sure but everything counts against them too. Repairs, fuel, lost equipment so on and so forth. It worked great for christmas lights I made better money than last year and they were making 2 to 4 dollars an hour more than they usually do.

You really, really need to call the number I posted above. It sounds like you are making a mess of this and if someone turns you in for this you will be burned. Bad. You cannot deduct for normal wear and tear, accidents or losses of tools and equipment. If the employee intentionally damages equipment or steals it then you may demand payment.

Don't believe me, I don't care. But you had better call that number.

knox gsl
01-13-2011, 04:20 PM
You really, really need to call the number I posted above. It sounds like you are making a mess of this and if someone turns you in for this you will be burned. Bad. You cannot deduct for normal wear and tear, accidents or losses of tools and equipment. If the employee intentionally damages equipment or steals it then you may demand payment.

Don't believe me, I don't care. But you had better call that number.

I believe you are right about this, but would it be a better to give a base pay plus a bonus for good performance. I've worked for a warehouse similar to this. They would give a base of $10.00 per hour but then after 90 days you were expected to be at the 100% pay rate which was $17.25. If you did not mantain this production then the would put you on probation and or fire you. Putting this into play for a lawn care business maybe good or bad as long as quality dosen't suffer.

ghunter502
01-13-2011, 05:17 PM
I haven't done this yet just toying with it trying to make it productive for myself as well as my employees. I won't do this until I know all of my bases are covered by the law. I am not going to do anything that is going to compromise my company.

Az Gardener
01-13-2011, 05:33 PM
Couple of things. First I would like to read that article myself, so if you have a link or the month of the article and title author etc. please pass it along.

Second I have found most of the guys interviewed in magazines are very pleasant to talk to and don't mind spending a few minutes to answer questions. I would just look them up and call to set up a phone appointment to discuss or better yet have them participate here. I always try to have my questions written down and think through what I want to learn so I don't wast their time.

Imow4u2
01-13-2011, 05:45 PM
Hanging lights in the off season for some xtra cash, and keeping the beds and perimeters tight in july heat are two different things.. What that means is if work quality is already suffering, Why give them the keys if they're already half in the ditch?

With 20 employees I assume you have 6-8 crews with each a leader.. Maybe start there, at the top..

I'm sure you could make either work, the sub thing with your Iron sounds like a dead end road.. Just hate to see someone lose work after being well established...

MowMoney
01-13-2011, 06:33 PM
Here are a couple of ways you can structure it.

LET ME START BY SAYING THESE ARE GENERIC NUMBERS USED ONLY FOR PURPOSES OF ILLUSTRATION. THE FORMULAS WILL WORK, JUST PLUG IN YOUR OWN NUMBERS.

Scenario 1: Piece meal compensation (works best if the properties you mow are all similar in size).
Pay your employees a flat fee for every lawn they mow. This amount would be split between the crew members either equally or slightly more for the driver since he has the added responsibility. Example:

First, figure out what youíre gross profit (GP) overall for mowing is, or what you want it to be, realistically. Lets say its 55%. And lets say that you mow each yard for $35.00 per visit. Each mowing would leave you a GP of $19.25 and would cost you $15.75 in direct cost (DC) to mow, including fuel, equipment, labor etc.(does not include overhead) Now, lets say that DC, not including labor, is 3.75 per lawn mowed. This would mean that labor is costing you $12.00 per lawn mowed. Knowing this, you can establish $12.00 per lawn as the piece meal amount, meaning the crew will get $12.00 per lawn and it would be spit among the crew.

Now, if the driver of the crew will be compensated more then the others, you will need to use a point system to distribute the earnings for each day, week, etc. Here is how that can be done:
First establish point for each class of crew member. For instance 4 points for a driver and 3 points for a helper crew member. Then calculate how many lawns were mowed, for the day for instance, to get the total amount the crew will be compensated. 25 lawns X $12.00 = $300.00. Now lets say there were 3 crew members, 1 driver and 2 helper crew members. Add up all the points for the crew; 4 + 3 + 3 = 10 total points. Divide the amount of assigned points an individual has by the total points, for instance the Driver would be 4 / 10 = .4 or 40% and a helper would be 3 / 10 = .3 or 30%. This is the ratio of split for the each individual. So the driver would get $120.00 (40% of $300.00) and each helper crew member would get $90.00 (30% of $300.00). If you happen to have a day when one of the helpers does not show up for instance, the formula would work the same and would look like this:

20 lawns mowed (because there is 1 less guy doing the work)
X $12.00 per lawn
= $240.00
7 Crew points total. Crew consists of 1 driver (4 points) and 1 helper (3 points)

57%, Ratio of compensation split for driver (7 / 4 = .57 or 57%)
$136.80, Compensation for driver

43%, Ration of compensation split for helper (7 / 3 = .43 or 43%)
$103.20, Compensation for helper

You will notice that they both earned more in this scenario but ultimately it did not cost you a cent more because each lawn mowed only cost you the same flat rate of $12.00. Furthermore it will motivate them to be productive and efficient with their time in order to get more done in the same time frame. You will of course need to have some checks and balances in place. Like requiring them to return to customers yard to service it again if its not done right and they complain. This will take away from their normal time line and affect them directly, and hopefully incentivize them to do the job right the first time. it should minimize equipment damage as well because a broken piece of equipment will slow the entire crew down, again affecting them directly.

If done right this will control your costs, empower your employees to earn more, and directly and positively affect your bottom line.

I was planning on giving you a couple of scenarios but Iím running short on time and will have to do so later in another post. In the mean time I hope this is the kind of information youíre looking for and that it helps.

millenium_123
01-13-2011, 07:53 PM
Here are a couple of ways you can structure it.

LET ME START BY SAYING THESE ARE GENERIC NUMBERS USED ONLY FOR PURPOSES OF ILLUSTRATION. THE FORMULAS WILL WORK, JUST PLUG IN YOUR OWN NUMBERS.

Scenario 1: Piece meal compensation (works best if the properties you mow are all similar in size).
Pay your employees a flat fee for every lawn they mow. This amount would be split between the crew members either equally or slightly more for the driver since he has the added responsibility. Example:

First, figure out what youíre gross profit (GP) overall for mowing is, or what you want it to be, realistically. Lets say its 55%. And lets say that you mow each yard for $35.00 per visit. Each mowing would leave you a GP of $19.25 and would cost you $15.75 in direct cost (DC) to mow, including fuel, equipment, labor etc.(does not include overhead) Now, lets say that DC, not including labor, is 3.75 per lawn mowed. This would mean that labor is costing you $12.00 per lawn mowed. Knowing this, you can establish $12.00 per lawn as the piece meal amount, meaning the crew will get $12.00 per lawn and it would be spit among the crew.

Now, if the driver of the crew will be compensated more then the others, you will need to use a point system to distribute the earnings for each day, week, etc. Here is how that can be done:
First establish point for each class of crew member. For instance 4 points for a driver and 3 points for a helper crew member. Then calculate how many lawns were mowed, for the day for instance, to get the total amount the crew will be compensated. 25 lawns X $12.00 = $300.00. Now lets say there were 3 crew members, 1 driver and 2 helper crew members. Add up all the points for the crew; 4 + 3 + 3 = 10 total points. Divide the amount of assigned points an individual has by the total points, for instance the Driver would be 4 / 10 = .4 or 40% and a helper would be 3 / 10 = .3 or 30%. This is the ratio of split for the each individual. So the driver would get $120.00 (40% of $300.00) and each helper crew member would get $90.00 (30% of $300.00). If you happen to have a day when one of the helpers does not show up for instance, the formula would work the same and would look like this:

20 lawns mowed (because there is 1 less guy doing the work)
X $12.00 per lawn
= $240.00
7 Crew points total. Crew consists of 1 driver (4 points) and 1 helper (3 points)

57%, Ratio of compensation split for driver (7 / 4 = .57 or 57%)
$136.80, Compensation for driver

43%, Ration of compensation split for helper (7 / 3 = .43 or 43%)
$103.20, Compensation for helper

You will notice that they both earned more in this scenario but ultimately it did not cost you a cent more because each lawn mowed only cost you the same flat rate of $12.00. Furthermore it will motivate them to be productive and efficient with their time in order to get more done in the same time frame. You will of course need to have some checks and balances in place. Like requiring them to return to customers yard to service it again if its not done right and they complain. This will take away from their normal time line and affect them directly, and hopefully incentivize them to do the job right the first time. it should minimize equipment damage as well because a broken piece of equipment will slow the entire crew down, again affecting them directly.

If done right this will control your costs, empower your employees to earn more, and directly and positively affect your bottom line.

I was planning on giving you a couple of scenarios but Iím running short on time and will have to do so later in another post. In the mean time I hope this is the kind of information youíre looking for and that it helps.

I really like the piece meal compensation plan but I have a question. I have been a solo operator and may possibly need to hire help this year. In that case how should I pay my employee since he will be working with me?

ghunter502
01-13-2011, 07:58 PM
I had a guy tell me about the article I am currently trying to find it to call and ask the company some questions about this process and maybe even go out to where they are located to check out their operation.

The Christmas light installation and removal is alot more than a little extra cash. We install lights with 3 to 4 crews for a month and a half before Christmas.

I really going to have to go back tomorrow and evaluate this scenario it sounds very interesting. I will have to pull out this years work orders plug in some numbers with what our crews have been doing to see how well that works out. Thanks for the input and help really a good perspective keep them coming.

ghunter502
01-13-2011, 08:02 PM
Usually they are fine when they are working with you it is when you send a crew out by themselves is when I am having the problem. When I show up on the job site or work with them they always work their but off.

oldclawn
01-13-2011, 10:20 PM
I agree with Richard---make NO decisions without really checking this out with the people that totally make the rules to begin with. nobody I've seen on this site is qualified to answer any of the questions regarding this--all opinions only..

MowMoney
01-13-2011, 10:39 PM
I really like the piece meal compensation plan but I have a question. I have been a solo operator and may possibly need to hire help this year. In that case how should I pay my employee since he will be working with me?

Itís even easier for you, if you know you will only have one employee, then all you need to do is establish a dollar amount per yard that you will pay him, be it $5, $20, or anything in between, higher or lower. Just make sure itís a realistic amount that will provide you profit, and at the same time provide a fair compensation for your help. This simple method assumes that you will be there with him on every job. Alternatively, and better if you ask me, is to use the piece meal method I described in the previous post. I would assume you will be the driver, so, you simply allocated the 4 points to yourself, the driver, and your helper would be allocated 3 points. From there just follow the formula. I say this is a better alternative because it makes VERY, VERY TRANSPARENT the true cost of doing a job, at least as it relates to labor. In particular it makes clear exactly what it costs to do a job. Meaning you need to calculate the true cost including all labor, even if itís yours. Youíd be surprised just how powerful it is simply looking at and doing each job in this manner. I hear often self employed, one person operations and multi employee company owners, say I make XYZ$$$ but they are really clueless until itís to late because they never factor in their labor, among other things, when doing a job. Iíve been guilty of this myself in the past, but I have learned the hard way and fortunately benefited from my ďschool of hard knocksĒ education. Hope to save some of you others from having to learn the hard way as I did. Feel free to ask any other questions, Iíll answer as best I can.

jcbabb
01-13-2011, 10:51 PM
I've got a small operation, but I've been paying my employees a percentage of invoice and it has worked really well. I keep detailed records and always made sure they were making above minimum wage. It took some tweaking, but the guys really like it because they are empowered to make more money. Quality control was an issue until we got the kinks worked out.

JDUtah
01-13-2011, 11:38 PM
I like the idea but wonder about the legal constraints as well. I'm working on a system here (http://www.lawnsite.com/showthread.php?t=337704) that will reward my guys based on "over-production".

I think I have a way to encourage them to work productively AND to encourage them to work safe and care for company equipment. I am still working on it, but have enough work done on it now that I do not want to share some parts of it publicly; specifically parts that are relevant to your goal.

MowMoney
01-14-2011, 12:33 PM
Okay, here is another scenario more along the lines you were thinking.

Scenerio 2: Structure your crews as pseudo sub contractors: (Works well even if you provide a multitude of maintenance services). THIS CAN BE A VERY TEDIOUS PROCESS IN ORDER TO STRUCTURE IT SO THAT IT COMPLIES WITH THE LAW. BEST TO SPEAK TO COUNCIL AND MAKE SURE YOU KNOW FULL WELL THAT ITS STRUCTURED CORRECTLY.

The basic premise is that you pay the crew a percentage of the revenue (invoice amount) generated by the crew, and the crew will be responsible for the direct cost associated with running that crew. This will rely heavily on a good crew leader or foreman functioning as an independent sub, as well as an open book, full disclosure relationship between you and him/her.. For purposes of this illustration letís call this individual a Sub. There are several steps involved in doing this right. Here they are (not necessarily in order of sequence)

1. you will need to structure lease agreement for equipment/vehicles
2. you will need to determine monthly lease amounts
3. you will need to set up crews, well, as a Subs.
4. you will need to structure compensation based on percentage of revenue generated by Sub for instance.
5. you will need to make explicit what is expected of each party, and what each party is responsible for, Ie. Sub will be responsible for maintenance cost on leased equipment, fuel for vehicle and equipment, small tools (rakes, shovels, etc.)

First you will need to structure a lease agreement for the vehicle and equipment whereby you lease the vehicle and equipment to the Sub. It may be best to lease only the vehicle, trailer and machinery, leaving small tools like shovels brooms, buckets, fuel cans, etc., up to the Sub to purchase. In order to figure out a lease amount, you can use useful life expectancy of equipment. For instance, a string trimmer may cost $300.00 and is expected to last 2 years. So you divide $300.00 by 24 months which equals $12.50 per month Do this for every piece of equipment you lease out. Once you have all the equipment lease amounts calculated, add up the amounts to get a yearly total and then divide the yearly total by the number of months you operate. For instance, if the total equipment/vehicle lease amount is $1000.00 per month, you multiply this by 12 months which equals $12,000. Now if you season is 8 months long, divide 12,000 by 8 months and you get the monthly lease about which is $1,500.00 per month for 8 months. You may want to do it this way so that there are no lease payments they need to make in the off season when there is less money coming in.

The lease agreement is independent of the agreement to provide services you put into place.

The Sub will be responsible for operating expenses such as fuel, maintenance, vehicle parking space rental (you can rent him the space for $1 per month for instance) etc. He will also be responsible most every aspect of running and operating that crew as if it is in fact his on little one crew micro business.

You will be responsible for providing him work, perhaps agree to a minimum amount, and paying him a percentage of the work he performs, perhaps paid every month.

You can help administer some issues such as lease payments and parking space rental for instance, buy deducting the amounts from what you will owe him every month; provided itís agreed upon by both parties.

One challenging aspect is labor. Meaning who pays for the crew labor? Ideally the Sub would do this, making him truly independent. Alternatively you might set up an agreement similar to companies that provide Day-labor or Temp help, where by you provide the Sub with employees via a lease agreement (not sure if Iím using the correct terminology, hopefully you get the gist). He pays you for the temp help you provide him, and you pay the employees directly.

Here are a few things, conditions, that will be created:

In essence you will have set up an ďindependent Sub-contractorĒ. Sub is responsible for the cost of running his own little business (lease, tools, fuel, labor, etc), and is empowered to micromanage his operations to work efficiently to keep his costs down and keep more money in his pocket.

You will have fixed your direct costs
You will have relieved yourself of the tedious task of overseeing daily field operation for example, employees slacking off while on the clock, fuel being used for personal use, routing, equipment maintenance, production issues, etc. Quality of work should improve because a lost customer directly affects the Sub. And Equipment damage should decreases for the same reason.

Will this address them picking up side jobs? Nope it wonít, but at least its not costing you a cent because the sub will be paying for the fuel, the equipment, the labor, etc.

Itís also important to note that you have to do your homework and be reasonable and fair with what you charge your customers, keeping in mind that your Sub will need to be compensated reasonably/fairly. If you end up pricing your jobs to low, youíre sub will ultimately take the hit, not so much you, and the relationship will fall apart.

Is this a fool proof structure? Nope, its not. And itís not for everyone. But it will work for some and if done properly can be very powerful.

Ooomwizard
01-18-2011, 08:00 PM
Here's my solution that works for me. I don't pay by the hour. I pay my guys by the day.

If they want to go slow then they know that it will be a long day and they'll get home late. If they have a quick pace and if we finish early then that's great. I make a weekly schedule and each day has a full days worth of work for a crew. (I also calculate profit daily to make sure I'm making money for their days work.)

When I'm with them then there's no problem making sure that a great job is done. Otherwise, I tell them that if they do a poor or non-professional job that they'll spend twice as long on next weeks visit to that property. Even special instructions usually get carried out well if I describe the work thoroughly.

My guys usually do a very good job and I'm pleased to have them. They seem quite happy and grateful to have regular work.

Richard Martin
01-19-2011, 05:13 AM
Here's my solution that works for me. I don't pay by the hour. I pay my guys by the day.

The Wage and Hour laws have no provisions for paying employees "by the day" since the law says you must pay them by the hour.

You can't pay an employee the same amount regardless of how many hours they work in a day.

I don't know why so many guys are so intent upon paying their employees as little as possible.

oldclawn
01-19-2011, 07:06 PM
I totally agree with you Richard! It's the simplest thing----why o' why must everyone complicate it beyond their capacities???

Gravelyftw
01-19-2011, 07:37 PM
The way my boss does it is, the more money I put on the books, the more he pays me. For instance say i make $10/hr and put $500 on the books in 8 hrs, then he gives me 5% of 500 or $25 extra. It seems to work out good for both of us because im always trying to figure out how to make him the most money every day.

Richard Martin
01-19-2011, 07:39 PM
The way my boss does it is, the more money I put on the books, the more he pays me. For instance say i make $10/hr and put $500 on the books in 8 hrs, then he gives me 5% of 500 or $25 extra. It seems to work out good for both of us because im always trying to figure out how to make him the most money every day.

That sounds like a winner to me.

Gravelyftw
01-19-2011, 07:41 PM
Basically I make $10 an hour plus 5% commission. It was nice Today because i did 2 prune jobs and treated 7 yards in a half a day and put almost $1k on the books. $100 for 5 hours wasnt bad. And as far as equipment goes. If i was ever in business for myself i would assign my employees their equipment. Then tell them look this is yours. you need to maintain this equipment properly because if it breaks on you and you cant fix it then you cant make money.

Fresh_Cut
01-20-2011, 01:39 AM
Here's my solution that works for me. I don't pay by the hour. I pay my guys by the day.

If they want to go slow then they know that it will be a long day and they'll get home late. If they have a quick pace and if we finish early then that's great. I make a weekly schedule and each day has a full days worth of work for a crew. (I also calculate profit daily to make sure I'm making money for their days work.)

When I'm with them then there's no problem making sure that a great job is done. Otherwise, I tell them that if they do a poor or non-professional job that they'll spend twice as long on next weeks visit to that property. Even special instructions usually get carried out well if I describe the work thoroughly.

My guys usually do a very good job and I'm pleased to have them. They seem quite happy and grateful to have regular work.

Hey, I have some questions if you don't mind me asking.

How big is your operation?

I see you addressed the productivity and professionalism concerns but what about the special instructions like you said? How do you convey the standard of service you and the customer expect?

How do you keep your crew(s) from damaging/abusing equipment?

You mentioned that you're with them sometimes, in what capacity? As an administrator or as a crew leader working and supervising?

Does your way of handling the crew give you less incentive to work with them if they will make the same money and cost you the same money whether you're with them or not?

Ooomwizard
01-21-2011, 06:42 PM
Sure thing Fresh_Cut:

I'm a small operation, only on my 4th year - I have 2 crews (busy season) and growing.

Standard of service for the workers has been taught by me. I manage a crew personally until I feel they know what is expected and what to do. I have one guy as a crew leader and he knows what I expect. On their daily work log I list any work and extra beyond the ordinary to be done. It is also their route to follow and a checklist. (I use GroundsKeeperPro.) I also explain extra work verbally to see if there are any questions. My guys have cell phones should a question arise. They're also required to talk to a manager or homeowner while they're there, if possible.

My guys do not abuse equipment. They are not allowed to repair equipment. If equipment is obviously abused, an appropriate amount comes out of their paycheck. I continously tell them that good working equipment makes THEIR job easier, and faster... and it does.

When I work with them I WORK with them (equally) as well as instructing the easiest and professional way of doing things. When I work I also access on how well they've done the previous weeks servicings. I correct and coach when needed. Large or technical work or installs I manage personally.

My incentive is to have productive crews while giving myself enough time to market, do accounting, repair or whatever else needs to be done. Most important is getting new clients. My confidence in my crews makes it no problem at all leaving for a weeks vacation or taking a day off to do whatever. My goal is to continually grow so I make more money while working about the same.

and,

Wage and labor laws can be "worked" with and nobody is complaining about anything. Lets call it a salary or commission "doh? (Richard Martin :hammerhead:)." And my guys make much MORE than the average landscape laborer. And I buy their lunches everyday too as well as occasional snack or drinks.

Richard Martin
01-21-2011, 08:05 PM
Wage and labor laws can be "worked" with and nobody is complaining about anything. Lets call it a salary or commission "doh? (Richard Martin :hammerhead:)."

You can attach all the cute little smilies that you want. You can't pay hourly workers a salary. All it takes is one complaint and your state's DOL and the Fed will be all over you. The wage law is pretty specific and leaves little room for illegal interpretations. My advice is to make sure you keep accurate hours of the actual hours that they work.

Gravelyftw
01-21-2011, 08:21 PM
you can pay hourly workers commision

Richard Martin
01-22-2011, 02:41 AM
you can pay hourly workers commision

Yes you can as long as their hourly pay doesn't fall below minimum.

ndols2
02-09-2012, 11:11 PM
When I was a auto tech. That's how we were payed, and there were times that we made 0 for days. I have paid guys this way, and they seem to hustle a lot more