Comission pay for employees

Discussion in 'Business Operations' started by Maxwell, Dec 8, 2001.

  1. Maxwell

    Maxwell LawnSite Member
    Posts: 5

    I want to move all hourly employees to production pay. Can you please give advise on how to pay. We have mostly monyhly accounts. Two crews in summer (2man per truck) 1 crew in winter.
     
  2. Lanelle

    Lanelle LawnSite Bronze Member
    Posts: 1,361

    That could be a very tricky thing to set up and administer. Probably would help to consult with an attorney that specializes in labor issues. The last thing you want to do is get into trouble with the Feds over it.
     
  3. wolfpacklawn

    wolfpacklawn LawnSite Member
    Posts: 120

    I used to get paid like this when I used to mow for a guy in high school during the summers. I think we got paid around 30% of the price of the lawn. That sounds about right. I would be careful to 1099 them (independent contractor) though. I don't think you can do that but you can pay them production pay and then just take the taxes out as you would a normal employee. Just remember that you are giving them an incentive to cut corners and go as fast as they can. I would expect a drop off on quaility. I know when I was in high school and we were paid that way that we tried to go as fast as we could so we could get done early and head to Lake Tahoe.

    Perhaps you expain more as to why you want to go to production pay.
     
  4. brentsawyer

    brentsawyer LawnSite Senior Member
    Posts: 663

    Been thinking about trying a bonus program for good production and job quality. I think that if you were to include a weekly or monthly bonus for production above a certain level or paying for lunch if the day before, $XXX was done. Another idea was to give bonuses for customer satisfaction and retention. But I think that you need to stick with some kind of base pay/hour. You could lower this a little if your bonuses were frequent and expected for good employees. This way, bad employees will not land bonuses and not make enough and weed theirselves out and find another job to save you money. Fewer Umployment claims.
     
  5. Ric

    Ric LawnSite Fanatic
    Posts: 11,956

    Many of the big pest control companies pay straight commsion. 16 to18% is standard. 17% per employee with two employee would be 34% total labor cost etc. However you must also take into acc that your charges to customers and service change through out the year. 6 months Summer you cut every week and 6 months of winter you cut every other week. In fact your customer is paying a yearly fee that is spread over 12 months. using these simple figures you are being paid for 3 cuts each month. As lanelle has stated this is a hard thing to administer.

    DO YOU REALLY WANT TO GO THIS WAY??? Employees paid this way will speed up production that a given. AT WHAT COST?????
    customer retention, equipment life, and lost of add on work.

    If you are looking to increase your bottom line. Then turning employee lose to play go and blow will do that. Only the ink will be red. Better rethink your whole operation and what your goals are.

    Yes I give bonus based on my total net. That includes increase in sales and minus equipment repair and replacement. I call it profit share.
     
  6. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Posts: 1,277

    I started a thread a month or 2 ago, title was something like 'positive and negative incentives'

    Addresses the kinds of issues you bring up here. Might be worth looking into. I intend to implement some version of this plan in spring.
     
  7. John Allin

    John Allin LawnSite Bronze Member
    Posts: 1,489

    For Landscape Maintenance this would be difficult. I don't know if I'd go it alone unless I consulted with a labor lawyer....
     
  8. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Posts: 1,277

    The quality measure would be difficult - hard to get feedback in a timely manner, and would create a good deal of extra work (tracking customer perception weekly and having periodic site reviews).

    Maybe have a monthly ticket with check boxes for each week the lawn was cut - charge $5 more per month for your svcs in general, then offer a $5 discount for filling this out and sending it in with payment each month.... Make it a 4-5Q questionnaire.

    I'm trying to make it so quality is worth more than speed, so they don't mortgage one to pay for the other.
     
  9. Matthew Morgan

    Matthew Morgan LawnSite Member
    Posts: 45

    Given little info., I don't know your situation, but I would look at salaried employees before commissioned. Possibly a commision at the end of the year for high quality service on selected properties?? Just guessing here.

    Matthew
     
  10. Ric

    Ric LawnSite Fanatic
    Posts: 11,956

    Well said Stonehenge. That is what I was tring to say in my first post. Time is money. Quaility takes time. Quaility cost money. Quaility improves customer retension. Quaility increases word of mouth. Customer retension and word of mouth reduces advertiseing and estimating cost. Reduced cost increases bottom line PROFIT.

    Quaility is what builds long term business value recieved by customer. Speed is not as important as quaility. Tell your employees this, do not pay them for speed pay them for value recieved by your customer and your business. This is not my .02 it is my $5.50 worth I know someone is going to say I am wrong. If you can drive to over a hundren customer houses and not drive more than 6 miles and if you only put 5,000 miles on you lawn truck a year. Then maybe then you can call me on this post.
     

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