Employee compensation for new accounts

Discussion in 'Starting a Lawn Care Business' started by fla1st, Sep 5, 2012.

  1. fla1st

    fla1st LawnSite Member
    Posts: 2

    We have an employee, our manager, who is capable of bringing lots of new business to the company. He has lots of contacts in the local community and is the type of person that people love to work with. Bottom line is he knows his stuff, has endless contacts, and the charm that could bring lots of new business to the company. How should he be compensated for new accounts he brings on board though? A one time payment or say an indefinite 5% of account gross revenue, 10%, 25%??? Cant find any guidelines for this, any and all help is greatly appreciated.
     
  2. zak406

    zak406 LawnSite Bronze Member
    Posts: 1,519

    I dont have an exact percentage but I will say this, treat him right. it sounds like he will make you alot of money in the long run. I would give hiim a percentage (unsure as to exact percentage) and treat him and his family to alot of steak dinners.
     
  3. crosel

    crosel LawnSite Member
    Posts: 13

    For compensation maybe offer a choice of a one time payment or a 5-10% commission for as long as he works with you and the account is being serviced. Comission is safer, one time payment may be cheaper. If I had a trustworthy employee I would choose comission because it is more attractive and since it is 'for life' may encourage him to get more accounts to increase his pay (and yours). Though I would prefer it to be me the one getting new accounts.

    This is just my opinion coming from a solo point of view. In a larger scale business this wouldn't be much of a problem, but in small scale business I would be wary of having an employee be a significant source of potential accounts in a specific area if they know him personally. Should he get in a fight with you/you fire him you may have to kiss goodbye to those accounts.
     
  4. 123hotdog

    123hotdog LawnSite Senior Member
    Posts: 482

    This is just my opinion coming from a solo point of view. In a larger scale business this wouldn't be much of a problem, but in small scale business I would be wary of having an employee be a significant source of potential accounts in a specific area if they know him personally. Should he get in a fight with you/you fire him you may have to kiss goodbye to those accounts.[/QUOTE]
    I totally agree with this. I am a small operator with only two part time employees. I have one that can be sent out alone on the jobs and does well. Last year he got a turkey for Christmas this year he's getting a 1999 Ford Ranger. One thing I've learned in any industry, let your good ones know you value their service and the odd bonuses and things you give them is what sticks in their mind. Money alone won't do it. We all just spend what we make, even the owners. Think about it.
     
  5. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    Job cost and give him 5% of net.
     
  6. sehitchman

    sehitchman LawnSite Senior Member
    Posts: 763

    4% the 1st 12 months, 2% after that for the life of the account and his employment. Think about it, 4% is very close to the same ammount as a free cut in a 20 cut season when you factor in your share of FICA etc. You could adjust this percentage to match the cuts per season if offering a free referral cut. Most of us would gladly offer a current account a free cut for a quality referral. Also, spell out a comission reduction if the service contract is negotiated at less than the standard rate to meet or beat a competitor's quote. You cannot pay comission if the margin on the job is to low, also gives him incentive to keep prices up.
     
  7. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    I have no clue how commercial account reps are paid in this industry. I am sure you have to set out some standards on estimating and such. That is why a percentage of gross is scary to me. Any wing nut can sell products and services at a loss to the company.

    Net is much safer but they may object to how the account is managed. If you are paying salary plus commission then that is one rate, straight commission is another. You also need a non-compete/ no raid provision.
     
  8. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    We give the 1st visit to the employee.

    I had a guy that brought in a large appartment contract, it was 1200.00 Per visit.

    he got the 2st 1200.00

    GREAT insentive
     
  9. 123hotdog

    123hotdog LawnSite Senior Member
    Posts: 482

    I couldn't agree more with the non-compete/ no raid provision.
     
  10. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    It is but on Commercial accounts, someone still has to routinely visit the client. You do not want the sales rep off always chasing new accounts. That would be a good bonus for sure but not a great way to keep them interested. Unless you plan on having account reps too.
     

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