Our employees have been doing the same jobs slower and slower every year. We try to implement no-overtime policies, but something always comes up (equipment break-down, etc.). We are considering paying each mow crew on a per yard basis. Does anyone have experience with this and how to handle taxes, insurance, unemployment, etc.?
Performance Based pay
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i think this warrants a good discussion, and will add a few myself.
i am performance based pretty much. we have a system that works well so far. i am a crew leader and get payed a certain percentage of each job, minus labor and materials are shared costs. this gives a pretty good reason to get as much done as possible but do a good job as going back on a job only costs us money. well, lost revenue at the very least.
we pay our labor by the hour so when you have bad days due to whatever, you make less but they always make the same. i was thinking about implementing a percentage system(vary with experience and performance in amount per individual) for them too, but i know it would be very hard for some to choose it as some paychecks really might now be that great. adversely, some would be very good.
i am sure it could be shown to them the advantages of it, fut still then i am pretty sure they would not go for it like they were getting screwed or something. you know how these guys are. we are however are known to be fair, respectful and generous with good employees.
this would be a great way to control labor costs better and i think with motivation these guys might actually make more if they just work a little harder and smarter. this way they can directly see the benefit.
i am performance based pretty much. we have a system that works well so far. i am a crew leader and get payed a certain percentage of each job, minus labor and materials are shared costs. this gives a pretty good reason to get as much done as possible but do a good job as going back on a job only costs us money. well, lost revenue at the very least.
we pay our labor by the hour so when you have bad days due to whatever, you make less but they always make the same. i was thinking about implementing a percentage system(vary with experience and performance in amount per individual) for them too, but i know it would be very hard for some to choose it as some paychecks really might now be that great. adversely, some would be very good.
i am sure it could be shown to them the advantages of it, fut still then i am pretty sure they would not go for it like they were getting screwed or something. you know how these guys are. we are however are known to be fair, respectful and generous with good employees.
this would be a great way to control labor costs better and i think with motivation these guys might actually make more if they just work a little harder and smarter. this way they can directly see the benefit.
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i agree 100%, when you find a system that works let me know
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The company I work for has all full time employees on salary. A 2 man crew will do 75 yards in a week and a 3 man crew will do 100. The number of yards will vary depending on your area and average size of the yards. There are pros and cons to doing it this way. A pro to this system would be a fixed labor rate and no ovetime hours. One of the flaws I see in the system is that the guys are busting their hump to get all the yards done and things can get sloppy.
To put it plainly, I'm tired of busting my hump as a one-man show in the sole-proprietor arena for the past 7 years. Therefore, I came up with an idea of hiring just a couple of individuals, experience preferred, and pay them not only an hourly wage but an incentive as well.
For instance: if they use my equipment, I would pay $10 per hour plus $3 per property. If they use their own equipment, I would pay $12 per hour plus $5 per property.
Weekly or bi-weekly checks would be mailed out with either taxes taken out or just 1099 them. I haven't decided which to do yet.....whatever's easiest.
Granted, the number and size of the properties I have may be a crumb on the table compared to the full-course dinners some of you might have. I simply can't be everywhere at once to keep this business growing.
Currently, the only employee I have right now is myself. From the business end to the labor end and absolutely everything in between. I thought maybe this year I'll try something different and see where it goes.
Let me know what you folks think.
For instance: if they use my equipment, I would pay $10 per hour plus $3 per property. If they use their own equipment, I would pay $12 per hour plus $5 per property.
Weekly or bi-weekly checks would be mailed out with either taxes taken out or just 1099 them. I haven't decided which to do yet.....whatever's easiest.
Granted, the number and size of the properties I have may be a crumb on the table compared to the full-course dinners some of you might have. I simply can't be everywhere at once to keep this business growing.
Currently, the only employee I have right now is myself. From the business end to the labor end and absolutely everything in between. I thought maybe this year I'll try something different and see where it goes.
Let me know what you folks think.
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Paying them $10 an hour and then $3 per lawn is not performance or incentive based. I'd give them x amount when they complete a given daily goal whethre it be based on # of lawns or $ sales for the day.
Like someone else said you have to keep an eye on qulaity because they'll plow through them as quick as possible.
Like someone else said you have to keep an eye on qulaity because they'll plow through them as quick as possible.
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their are so many difficulties with these systems, not to say they cant work. but basing it on # of lawns or $ sales there are many flaws. think of it from the employee point of view. if he works just as hard each day and only makes the goal 2 or 3 times a week he might start to think, hey, im doing bigger lawns mon/wen, why am i being penalized? or im working harder on thursday but we're not grossing as much, maybe my boss didnt price these lawns right and i shouldnt have to suffer for that.
mix that negative thought with rushing sloppy work. then you get upset and tell them to do a better job if they want to make more. they get even more mad your taking it out on them and before you know it, you've fired all your guys or they have quit. and whose dime is it on when a machine goes down. if im the employee, im on the job, not my problem your machiens fail.
it would be great if you had an excact time it takes you to complete your work and try to have one guy repeat it. when you have a crew out, it only takes one guy dragging his feet to ruin it for all of them and that isnt fair.
sound like a liability nightmare. oh, and good luck finding a sub contractor to work for you for 12-15 bucks per hour...
first. multiple equipment break downs warrant an investigation. is it as a result of poor PM's, old worn out equipment or operator error. If its poor PM then they service guy needs to disciplined for missing things on the PM service. PMis not juts changing oil and sharping blades. its looking over teh machine for cracked belts, loose nuts/bolts, ect... If its old worn out equipment replace it. if it operator error..discipline.
if guys are working slow. then hold the crew leader responsible. discipline accordingly. once he realize that annual raises and bonus' are being based on his performance and annual reviews he will either get the crew in gear or let you know who is not performing and ask for new crew members.
there is also the fluctuating work week based pay. it kills overtime. it actually starts dropping the hourly wage for hours worked past 40... is a salary base though...
As business owners we all have monthy net income goals that we like to achieve. So what would be wrong with setting up a bonus for months when lets say your goal is $5k and you get $7k net give them a $250 bonus.
But if they are dragging and racking up more hours, breaking equipment, and so on they cost your more. So no bonus.
But if they are dragging and racking up more hours, breaking equipment, and so on they cost your more. So no bonus.
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I have racked my brain with this over and over again and the conclusion I came to was it wasnt worth it to me to pay based on performance. In the end you will get sloppy work and unhappy customers. I would reccomend a pay raise and if that doesnt motivate them tell them to go get government jobs where they can be slow!
Very difficult subject here. I am looking for a solution myself. Been contracting lawns for 7 years and tried everything. I did the per lawn payment system and I was getting complaints like crazy. The guys were flying through the lawns and leaving clumps everywhere, grass on sidewalks and mulch beds. Per hour basis and they dont get any done. Pay the main grass guy more and let him run the show. Eventually I would like to install cameras on the trucks.
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Search Pro Cuts response to this a few months back.
basically tell your employees it has to get done in a certain amount of time, or you will find someone that will get it done.
end of discussion.
basically tell your employees it has to get done in a certain amount of time, or you will find someone that will get it done.
end of discussion.
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This would probably work well in the current economic conditions. However, I would say that you need to consider this: How much does it cost to rehire and train a new employee, once you find one that is up to your standards? If your guys know your route, and do decent work, first take a look at your business and make sure that you have dotted your i's and crossed your t's. That is, is your equipment up do date, and well maintained. Do you have your routes laid out perfect? Is your shop organized....no matter if it is a shed in your parent's back yard, or a full blow shop. You need to set the example first, then integrate your employees. If they aren't able to step it up, then you look elsewhere.
I also think that bonuses should be tied to profitability, if they are getting call backs, that hurts the bottom line. Again, if you are well organized, then you should know how much you are making before and after expenses, thus being able to calculate bonuses.
Just my 2 cents!
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Some of you guys really need to read up on labor laws. You cant have a guy run YOUR EQUIPMENT and still consider him a sub contractor, he is now an employee. There are certain laws to hiring, paying and keeping an EMPLOYEE. In a nutshell sub contracting means, he uses his/hers own equipment, and there is a ton more things that defines a sub vs. an actual employee. READ UP! Your taking a big risk.
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you will have to agree it has been some interesting reading. WOW
I got this kind of response before when I suggested to someone to pay their guys like a subcontractor. I have found no laws stating that a subcontractor has to have their own equipment in my state. In fact the law spells it out for me that what makes them a sub is that they are supposed to give me an estimate for a certain amount of work and then whether or not they complete the work in the estimated time frame they still get payed per their estimate price. Kind of like a salaried employee, but I must have a proof of their insurance. Thats it. I guess not all states are the same in this aspect.
Thats how the law reads, thats what my lawyer told me, and my insurance agent (who is also my subs agent) said this is common and legal.
Perhaps you should create a "rental agreement" for your equipment and hire "subs"...
Bonuses are a great motivator, but you have to stick with the agreement. Sure none of us like to fork over chunks of money to someone for just doing a good job...I mean its not like we get to take money from them when things go wrong on a job. Paying by the job on everything is just stupid...
gotta remember what the state says is one thing. how the feds see it could be different.
here is the IRS web site and what it thinks.
http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
here is My Op. Of course my opinion and $1 may still get you a candy bar...
A sub contractor is someone you hire to do a job. who generally provides his/her own tools, and is not directed on HOW to complete a task. The Sub contractor generally bid a job and is paid a final price based on the completion of the job. Ie you hire an electrician to wire up your shop.
an employee
An employee is generally subject to the businesss instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
When and where to do the work.
What tools or equipment to use.
What workers to hire or to assist with the work.
Where to purchase supplies and services.
What work must be performed by a specified individual.
What order or sequence to follow when performing the work.
the litmus test IMO is discipline. if you can discipline a person. then they are an employee... You generally cannot discipline a subcontractor.
take a look at the fed site it may change your mind...
here is the IRS web site and what it thinks.
http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
here is My Op. Of course my opinion and $1 may still get you a candy bar...
A sub contractor is someone you hire to do a job. who generally provides his/her own tools, and is not directed on HOW to complete a task. The Sub contractor generally bid a job and is paid a final price based on the completion of the job. Ie you hire an electrician to wire up your shop.
an employee
An employee is generally subject to the businesss instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
When and where to do the work.
What tools or equipment to use.
What workers to hire or to assist with the work.
Where to purchase supplies and services.
What work must be performed by a specified individual.
What order or sequence to follow when performing the work.
the litmus test IMO is discipline. if you can discipline a person. then they are an employee... You generally cannot discipline a subcontractor.
take a look at the fed site it may change your mind...
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Very well put Marc. If I read correctly from the beginning of this post the goal is some growth of a one man operation. This can be a big step from my experiences. No matter how you pay or if you actually sub-contract when you hire someone else it is highly unlikely they will do the same or as good a job as you, especially in your eyes. If you can find someone who is trainable I found it best to hire them and work side by side for a couple seasons. The downfall here is you have to ad quite a few accounts by the time you add up all the costs of basically doubling your work crew. Even at $10 an hour you will have many other cost increases, such as workers comp. insurance. Plan, plan, plan and good luck to ya!
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Have you ever wonderd why you waste your time trying to explain, there's no hope.
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