I think it is a great idea it gives employees more control. We are getting ready to launch this program. Here is an idea I had a guy give me this secnario he also post some others on my thread you might want to go check it out. Here you go.
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
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.