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View Full Version : Salary Vs. hourly rate for employees


Mr. C
12-29-2004, 01:37 PM
I'm trying to decide whether I should change from paying my employees salary (wage per day) to an hourly rate. I know I can cut down on my payroll expense by using an hourly rate but how do I keep the employees from taking advantage and not producing the work? I know there are some incentive systems for both pay scales but I'm not really clear on the specifics of any one system. Can anyone help?

WigginsLandscaping
12-29-2004, 02:10 PM
This is not an easy question to answer.
Will you be with them? If your operation is big enough to warrant a crew to be alone most of the time then I would hire a foreman on salary (per day) to run hourly guys. Why..??? Well the salary guy will have the incentive to get off earlier and get paid the same while rataining responsibility for the quality of work. The hourly people will get paid for the work they do. Nothing more nothing less. If you will be with them then just have them work hourly. You should be able to tell if they are riding the gravey train. If you pay everyone hourly then even the foreman will ride you. If you pay them all by the day then they wont want to work longer days so you may suffer. I believe that the situation i described above will produce the best results. I would be interested in what others say on this as well.

Precision
12-29-2004, 02:15 PM
I don't know how well they would work, but some options are:

pay hourly with a per lawn bonus.

ie $4.00 per hour and $1.50 per lawn. The idea is that the per lawn part should make up 25-50% of their income. This is a big incentive to work hard. Balance that with deducting the value of the lawn if you get a complaint, so they still do a good job.

Same thing but pay a day wage and a per lawn bonus. this might work better IF you let them go home when they are done. And they won't complain as you add accounts because it is more money to them.

These only work on resi accounts that are roughly the same size and if the bonus amount is significant.

Day wages are not legal in most places. This is not salary. Check with the DOL.

But paying a weekly wage plus commision would be the same thing so long as your employees are not temp workers.

Salary is not a panacea for working your employees as many hours as you want. Again check with DOL.

In the next year when I have employees, I am going to give weekly rate plus per yard bonuses a try.

Mr. C
12-29-2004, 02:23 PM
Thanks. I thought about that scenario a while ago but it seems like is using one system or the other.

Tn Lawn Man
12-29-2004, 04:43 PM
The best system I have seen is the bonus system.

Without boring everyone with the details it basically goes something like this:

Tell the worker that they are responsible for the well being of Route X

If Route X is done in a timely manner with few problems and the customers are happy then at the end of the season (and it MUST be at the end of the season) then they will receive $____ bonus.

However, if accounts on Route X discontinue service because of the worker's neglect to the property or anything within the control of the worker or the worker is too slow in carrying out their responsiblities thereby causing the company to lose money then the bonus will go down. Also, if the worker leaves before the end of the season the bonus is forfeited.

It is not fool proof but it covers the employer if the worker turns out to be a dud and rewards the employee for good work.

Earth-N-Wood Landscaping
12-29-2004, 06:35 PM
The best system I have seen is the bonus system.

Without boring everyone with the details it basically goes something like this:

Tell the worker that they are responsible for the well being of Route X

If Route X is done in a timely manner with few problems and the customers are happy then at the end of the season (and it MUST be at the end of the season) then they will receive $____ bonus.

However, if accounts on Route X discontinue service because of the worker's neglect to the property or anything within the control of the worker or the worker is too slow in carrying out their responsiblities thereby causing the company to lose money then the bonus will go down. Also, if the worker leaves before the end of the season the bonus is forfeited.

It is not fool proof but it covers the employer if the worker turns out to be a dud and rewards the employee for good work.


I totally agree with Yard Man on this one.... We use this bonus system and it seemed to be working well for us. It makes every employee to be more efficient and more productive...why? MONEY! Getting a bonus for doing a good job and keeping the properties in good shape is like getting a raise for the employees. The foremans get higher bonuses than the crew members but their movitations are higher since they all know they can get that extra money. We do this on quarterly basis and we select a property or two from each crew to watch closely throughout the quarter (We dont let them know which properties we are watching because it makes them to do good job on ALL of their properties!) to see how much improvement they have done with the selected properties. This will evaluate how much bonus they get...For example: They are offered $XXX potential quarterly bonus at the end of each quarter after the evaluation. If I feel they are doing 75% of what I am expected of them then they are getting 75% of the potiental bonus. I made an evaluation sheet that helped me to keep track of points of each catagory....for example: Time is worth 30 points, Customer Satisfaction is worth 10 points, Cleaniness 20 points, etc. totalling to 100 points. That way the crews feel the pressure about getting the jobs done on timely matter so they can get the most points since time is worth 30 points and so on... Hope this makes sense and will help you.

Mr. C
12-30-2004, 11:01 PM
Thanks. I understand the point system but how do you determine the bonus amount so that it works for you and the employee. Like 100 points=$100.00 How do you get to those numbers?

JasonX
12-31-2004, 03:15 AM
Here, read this thread about paying help by the lawn. JustMowIt has 12 trucks and does 2000+ lawns a week.

http://www.lawnsite.com/showthread.php?t=86317&page=2&pp=10

Mr. C
12-31-2004, 09:51 AM
That sounds great for mow and go but what about condos and strip mall type properties. Do you know how could get in contact with these guys?

Earth-N-Wood Landscaping
12-31-2004, 02:49 PM
That sounds great for mow and go but what about condos and strip mall type properties. Do you know how could get in contact with these guys?


The point system will work well with the commerical accounts. In our system, we have 100 points possible and we are offering $200 to foremans and $150 to each crew member in potential bonus cash.

launboy
12-31-2004, 03:00 PM
i don't think i understand what your point system is Earth n Wood. Please explain

Earth-N-Wood Landscaping
12-31-2004, 05:28 PM
i don't think i understand what your point system is Earth n Wood. Please explain

Ok...let me try this way and hopefully it will help.

We have 4 full-time crews going out everyday so this bonus system works great for us...if you have one crew then you can use this system as well. Even you can use this point system on individuals instead of the whole crew if you rather.

Here how it works.... The bonus system is based on quarterly basis. Before each quarter, you decide which property (or two) you want to watch closely throughout the quarter. Tell the employees that you will offer $XXX in potential bonus cash this quarter and let them know that you already selected the properties to watch during that quarter. Dont tell your employees which properties you are watching because they will focus on the selected properties more than others so that way it will make them do well in all of the properties they maintain. After each quarter, you will evulate the selected properties on how well they look in different categories by using the points system. For example:
Hedge / Shrub Trimming 20 points
Lawn Mowing/Edging/Weedeating 20 points
Planters 10 points
Cleaniness 10 points
Time 30 points
Customer Satisfaction/Relations 10 points

Total: 100 Points possible

What you need to do is to evulate each catogery and decide how many points they "earned" on each category. For example, they did great on trimming so they get 20 points and they need to improve on mowing so they get 10 points and so on. Time is worth the most points so it will put some pressure on your employees to use the time management wisely and not to be screwing around...we saved many hours of overtime because of this category and still do the good job on the properties.

After you add all of your points from your evulation, that will determine the percentage of the potential bonus they earned. We offer $200 to foremen and $150 to crew members in potential bonus cash. Say they got 75 points added up, meaning they are getting 75% of the potential bonus cash....foremen get 150 bucks and crew members get $112.50.

This has been working well...our properties has been looking better every quarter and our reputation has went up. We have not been losing contracts as much as we normally do. So it is a "win-win" situation for the employees and the owners. And for the customers as well. This point system helped us to train the employees to be more "all-around" since they want to make the properties look better everytime they touch the places...helping out others in the crew, pulling out weeds as they see them, touching up where the others left off, etc... All they want to do is to get the most of the bonus.

Hope this helps. :)

launboy
12-31-2004, 06:46 PM
very interesting, never heard or seen anything like that before. thanks for the reply.

Now for those of you who have a crew leader on salary and the others on hourly. Then what about overtime, the others would get it and then the crew leader doens't? Ya the salary guy is getting paid a salary due to his level of experience, but will the o.t guys get paid more then the salary guy at times or will the summer slow down even it out?

Mr. C
01-03-2005, 02:35 PM
The best system I have seen is the bonus system.

Without boring everyone with the details it basically goes something like this:

Tell the worker that they are responsible for the well being of Route X

If Route X is done in a timely manner with few problems and the customers are happy then at the end of the season (and it MUST be at the end of the season) then they will receive $____ bonus.

However, if accounts on Route X discontinue service because of the worker's neglect to the property or anything within the control of the worker or the worker is too slow in carrying out their responsiblities thereby causing the company to lose money then the bonus will go down. Also, if the worker leaves before the end of the season the bonus is forfeited..


It is not fool proof but it covers the employer if the worker turns out to be a dud and rewards the employee for good work

Can you go into a few more details like how do you determine the bonus amouts so that it work for both of you.

Mr. C
01-04-2005, 11:19 AM
The point system will work well with the commerical accounts. In our system, we have 100 points possible and we are offering $200 to foremans and $150 to each crew member in potential bonus cash.

Can you give me some more info on your system? How can you tell if the service time is accurate and how do the bonuses affect your profit margin?

Earth-N-Wood Landscaping
01-04-2005, 11:36 PM
Can you give me some more info on your system? How can you tell if the service time is accurate and how do the bonuses affect your profit margin?

After we started this bonus system, the overtime hours has dropped. This is because the time category of the points system has the highest points than any other categories...the reason is we have a goal to have the employees to use the time management wisely. Meaning they need to work faster and not to "sitting around" too much. We dont have a specific service time because each route are different but if you watch the time closely on how much they spend on the routes and drop by some surprise visits while they are on their routes often...this will give you a good idea how much they are using the time management on their hands.
Anyhow, since the overtime hours has dropped....we saved lots of big $$$ from this. We offer up to $200 in bonus at the end of each quarter but we always end up saving more than we give out on bonus and the jobs are looking better...our customer retention went up as well.