A Sales Compensation Plan that Supercharges Profits - Page 3 - Contractor Talk - Professional Construction and Remodeling Forum

Remodel Bud · 09-14-2008, 07:48 PM

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silvertree · 09-14-2008, 08:09 PM

If I may, I would like to start over, no more Tin man or anything but moving on to what matters. Sales, profits and satisfied clients. I apologize for moving us away from the subject matter and for wasting your time. Is that OK?

Remodel Bud · 09-14-2008, 09:19 PM

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pcplumber · 10-16-2008, 07:28 PM

Quote:

Originally Posted by wackman

Ron,

I'm very interested to hear if you have a similar program for incentive based pay for employees in the field.

I find employees who are paid by the hour to naturally slow down unless I'm around and keeping the pace humming along. I'm looking to cultivate an atmosphere based on speed and efficiency ALONG with quality.

I don't want piece workers per se because quality usually goes out the window. Most programs I've heard involve to much work or are quite complicated.

In my situation I do the estimating and overall management, then I have a superintendent and a few carpenters.

Any ideas?

Thanks in advance,
Wack

I've been using piece work very successfully for 35 years. I would not recommend anything else. The reason I think we are successful is because we have VERY strict guidelines and policies, in writing, that our employees must adhere to. I am the owner of the business and I go to almost every job we do at least once. This way, I catch problems before they escalate. We have a supervisor, that goes to every job, every day. We take pictures of everything. So, when delegating duties to an employee, we use the pictures to explain what we want, or what we don't want. After a while, the employees know exactly what we want and they do it. You can make your business run like a symphony.

Piece work has the best of two worlds. The employees work faster and they correct all their errors, for free. Piece work makes the employee accountable for his mistakes and not you. With hourly, you pay have to your employees to correct their own work. I never saw hourly employees work half as fast as pieceworkers. You can't say that because a pieceworker is working fast like an hourly worker should be, the work has to be sloppy. It is strange when contractors say that pieceworkers do poor work. Why would they? When paying by the piece, you can bid a job and don't have to worry about the labor going over the budget.

I built 227 townhomes in 1989, my last construction job, and I paid by the piece for everything. I smelled like a rose when the job was completed.

Organization is the key. We had three-ring folders with diagrams, pictures, and specs for everything. We went over everything many many times before taking on the job. When we signed the contract, with the owner, we were 100% confident that we would be successful. When you have any doubt, don't take the job. Keep crunching the numbers.

Jack

BuilderOne · 10-16-2008, 08:55 PM

Piece work is hard to argue with when it is run properly. The key is definitely organization and supervision with any company. I agree 100% and have had many of the same policies over the years. Our process included the sales people bringing back a picture of the sale ( no sales too ) and the contract, along with a worksheet for pricing the project. Our production field manager then would meet the customer, evaluate the project, do any drawings, fill out a pricing sheet to compare to the salesman's for commission purposes and then do a profit statement for that project.

The next step is ordering the materials, updating the job flow chart & tracking the material orders while filling out a production schedule. The crews would have their time allotted on the project and piece rate pre-calculated to keep on schedule. It was the supervisors job to visit the sites, keep the customer well informed and take pictures of the projects at each visit, that were evaluated during the production meetings once a week with me. I would also visit the projects to follow up on everything. ORGANIZATIONs need to be organized.

pcplumber · 10-16-2008, 10:33 PM

Quote:

Originally Posted by BuilderOne

Piece work is hard to argue with when it is run properly. The key is definitely organization and supervision with any company. I agree 100% and have had many of the same policies over the years. Our process included the sales people bringing back a picture of the sale ( no sales too ) and the contract, along with a worksheet for pricing the project. Our production field manager then would meet the customer, evaluate the project, do any drawings, fill out a pricing sheet to compare to the salesman's for commission purposes and then do a profit statement for that project.

The next step is ordering the materials, updating the job flow chart & tracking the material orders while filling out a production schedule. The crews would have their time allotted on the project and piece rate pre-calculated to keep on schedule. It was the supervisors job to visit the sites, keep the customer well informed and take pictures of the projects at each visit, that were evaluated during the production meetings once a week with me. I would also visit the projects to follow up on everything. ORGANIZATIONs need to be organized.

Sounds Great! Where can I apply for a job?

Lighting Retro · 08-11-2009, 07:35 AM

Great article Ron. I need to go back and read comments now. I suppose some of the challenges in some industries is disclosing costs and factoring overhead. Depending on the type of business, prices can change dramatically quarterly, and the labor cost is not something fixed. And some folks you don't necessarily care to give your cost numbers to I suppose. I'm sure some of this is addressed in comments. We are currently looking at revamping a sales model we can roll out, and this has given me some good ideas on how to put something together. Thanks.

Lighting Retro · 08-11-2009, 07:39 AM

Quote:

Originally Posted by pcplumber

I've been using piece work very successfully for 35 years. I would not recommend anything else. The reason I think we are successful is because we have VERY strict guidelines and policies, in writing, that our employees must adhere to. I am the owner of the business and I go to almost every job we do at least once. This way, I catch problems before they escalate. We have a supervisor, that goes to every job, every day. We take pictures of everything. So, when delegating duties to an employee, we use the pictures to explain what we want, or what we don't want. After a while, the employees know exactly what we want and they do it. You can make your business run like a symphony.

Piece work has the best of two worlds. The employees work faster and they correct all their errors, for free. Piece work makes the employee accountable for his mistakes and not you. With hourly, you pay have to your employees to correct their own work. I never saw hourly employees work half as fast as pieceworkers. You can't say that because a pieceworker is working fast like an hourly worker should be, the work has to be sloppy. It is strange when contractors say that pieceworkers do poor work. Why would they? When paying by the piece, you can bid a job and don't have to worry about the labor going over the budget.

I built 227 townhomes in 1989, my last construction job, and I paid by the piece for everything. I smelled like a rose when the job was completed.

Organization is the key. We had three-ring folders with diagrams, pictures, and specs for everything. We went over everything many many times before taking on the job. When we signed the contract, with the owner, we were 100% confident that we would be successful. When you have any doubt, don't take the job. Keep crunching the numbers.

Jack

Wow. Piece work is pretty easy to do in my business, but I would think quite a bit more complicated in yours. Props for the time and effort involved in putting that together. That is some valuable information you could probably sell. There's a ton of contractors that would kill for that type of organized info without having to reinvent the wheel.

hvbangs · 10-01-2009, 12:54 PM

good point about the irs

john elliott · 10-01-2009, 01:06 PM

Quote:

Originally Posted by hvbangs

good point about the irs

Good idea to use the 'quote' feature so that people know what you are talking about without having to go back through the whole 'kin thread.