Contractor Talk - Professional Construction and Remodeling Forum banner

1 - 13 of 13 Posts

·
Registered
Joined
·
624 Posts
Discussion Starter #1
I'm trying to create a bonus program of some sort for my guys. I'm looking for a motivation/compensation for them to perform well and help keep projects on schedule/budget.

I think if they have skin in the game, it can help productivity. There hourly wage is fair, but not top dollar. For new employees, I do evaluations after 3,6,12 months and provide hourly rate adjustments (if any) at those times. A bonus will help them financially, improve awareness of profitability, and improve customer satisfaction

For those of you with a bonus program, what works for you? Is there a target % of their monthly hourly pay that you work with, or based upon each job?

It's important that the program be easy for my guys to understand and easy for me to add into the overhead as I write bids.

Thanks
 

·
Young-Guy Framer
Joined
·
551 Posts
Don't under-think this. Incentive programs can work, but if you go about it wrong, it'll quickly turn into a full-blown disaster for you.

If you emphasize straight production, you may see quality begin to suffer. Sure your jobs will get done faster, but at what costs? More call-backs, more customer complaints, and a poor reputation. It takes years to build a good reputation, but you can get a bad one in an instant.

You mentioned you don't pay top dollar. What if instead of offering incentives you did pay top dollar, with higher expectations? And if your guys can't cut it to justify the higher rate of pay, ax them and find someone who will.

That fact that your considering incentives tells me you believe your employees have more to offer than what they're currently giving you. While a bonus program may work in the short run, you'll be amazed at how quickly they'll adjust and lose motivation. You either have to figure out how to tap into their full potential long term, or find new guys who will give it their all.
 

·
Registered
Joined
·
230 Posts
I like what thehockeyman said. I've tried a variety of piecework, on time completion, and all sorts of incentive pay. Nothing seems to motivate people other then knowing that there is someone ready and available to replace them. Conversely, when I am shortstaffed and can't find anyone worth a damn to hire, guess what... quality and productivity goes down.
 

·
test
Joined
·
3,322 Posts
Don't under-think this. Incentive More call-backs, more customer complaints, and a poor reputation.

You mentioned you don't pay top dollar. What if instead of offering incentives you did pay top dollar, with higher expectations? And if your guys can't cut it to justify the higher rate of pay, ax them and find someone who will.
/QUOTE]
good point

yeah all im picturing is mad employees that had his hopes up for a bonus but didn't pull it off.

agree fully with replace with higher wage/skilled guys.
 

·
Hair Splitter
Joined
·
18,322 Posts
If my people are under performing, I don't bribe them to do their job. I make sure they know how delicate the balance between employed and unemployed is.
 

·
Banned
Joined
·
2,247 Posts
I like what thehockeyman said. I've tried a variety of piecework, on time completion, and all sorts of incentive pay. Nothing seems to motivate people other then knowing that there is someone ready and available to replace them. Conversely, when I am shortstaffed and can't find anyone worth a damn to hire, guess what... quality and productivity goes down.
I find exactly the opposite. I wrote a post several months ago regarding this issue.

I have been paying a percentage of jobs (piece work) for 43 years. My employees hustled and they always had very fat checks for the few hours they worked. My employees average about $75,000 per year and they are very relaxed and work very few hours. I have employees who average $2,000 per week plus and they often have pay checks for more that $2,400.

So, one day I thought I would increase my profits by putting my employees on guaranteed daily salaries. I figured that a guaranteed $200 per day was enough and they accepted the offer. It backfired on me big time. Now, it was taking all my employees 2 to 3 days to complete identical jobs that they were completing in 4 to 6 hours. Every day, they had reasons and excuses why they did not finish their jobs. Now, I was paying more money for each job and I would have had to double the number of my employees and double the size of my fleet to get my work done.

I put my employees back on piece work and they were so happy and motivated they immediately starting completing two jobs per day and that is the absolute truth.

I even pieced building 227 town homes and the job went flawlessly. I pieced installing all the gas piping to two employees and they installed all the gas piping for these 227 town homes and a few other other community buildings in something like 10 days. Watching these two employees work was awesome. If I would have paid daily or hourly to install the gas piping it would have taken 60 to 90 days and I would have had to utilize 4 to 6 employees. It is amazing how much work a human can accomplish when they are paid by the piece.

Paying by the piece sort of puts your employees in a position where they have the feeling that they are the owner of the business for that specific task and we know how much more work business owners claim they do vs. their paid employees.

If I am working for you I will take piece work any day over crappy hourly pay where I get the same pay as some lazy idiot doing 10% of what I am doing. Hourly rates don't get me excited and for a stinky little paycheck you are usually doing me a favor if you fire me because every time I changed jobs I always got a better job because I was more experienced, knew I was worth more money than you paid and I knew that I was worth more than a stinky hourly rate.

I believe in sharing the wealth and the best way to share where their earning is commensurable with their production is by paying by the piece without compromising quality. The quality issue is the best part because when you pay by the piece the employee makes his corrections for free. When you pay by the hour your employee gets paid for correcting his screw ups. I guess you can call that double-dipping on your dime.

I can walk into any shop and within less than one minute I will pick out the employees who are paid hourly or by the piece by watching those who are hustling and those who don't. You have to tell hourly employees what to do. Piece work employees tell you what they have to do and they tell you what they need to get their work done. There is a huge noticeable difference. Unlike hourly employees, my employees are mad at me when I am not on the top of my game having materials and paperwork ready for jobs. Hourly employees are happy when the boss screws up because they can relax and blame the boss for not being productive.

I piece every tiny every tiny task.

"Gas, grass, or azz. Nobody rides for free at my shop."

One more thing that is very interesting is employees do not work for you for the money. Employees work because they need to survive and there are reasons they chose your company to work for. Put another way, the amount of money you pay an employee has nothing to do with whether or not he will work for you. While you may think that an employee will choose your company over another company solely because you offer more money then you are wrong because the amount of money is not the sole motivator for a person to work for you. So, when the boss is sticking his hairy chest out, barks about production and threatens his employees he is barking up the wrong tree.

I was working for a company, earning double the industry average, more than I ever earned in my life and my 5-year old brother has an accident and died. I flew from California to Massachusetts for only 5 days to comfort my parents and when I went back to California my boss told me that my sales were down. No duhhh! I never could understand why he jumped on me that day because the company had a weekly competition board and I was always on the top 3 of 25 employees. Doesn't everyone claim they were on the top? My next action proved that money is not a motivator because I immediately told my boss to shove his job where the sun doesn't shine and I never regretted my action. I always found that every boss was an egotistical 'you know what'.
 

·
Hair Splitter
Joined
·
18,322 Posts
I always found that every boss was an egotistical 'you know what'.
And now your are the boss. :whistling:

BTW, taking guys from 2400 to 1000 a week, how could it not backfire.
 

·
Registered
Joined
·
255 Posts
I do year end bonuses based on what the company made, how many days missed, work ethic, attitude, job completion, ect. You know who made you money through the year. A week before Christmas a bonus in the thousands gets remembered all year.

I think it keeps them motivated and know they are working for more than my tool addiction. Like others said, job based bonuses rarely work. My guys don't need motivation though, they enjoy where they work.
 

·
Banned
Joined
·
2,247 Posts
And now your are the boss. :whistling:

BTW, taking guys from 2400 to 1000 a week, how could it not backfire.
I can't argue and you are right, but there is a little part of the story I forgot to clarify. I changed from paying by the piece to an hourly rate for only two crews where those employees were earning about $1,000 to $1,200 per week. I was not dumb enough to reduce the earnings of my better employees who were earning $1500 per week plus.

There is one more reason I chose to change from piece work to salary for two crews. Because the two crews were not top producers and the employees had a credibility problem my ex-wife was paid to be their field supervisor. Since I run my company with a very precise maximum budget for the money I pay workers for each job I had to draw money from somewhere to cover the money I paid to my ex-wife. My ex-wife went to every job, signed the contracts with the customer, made sure the employees adhered to the scope of work in the contract, handled customer problems and collected the money on the jobs. These are normal tasks the higher-earning employees do.
 

·
Hair Splitter
Joined
·
18,322 Posts
I can't argue and you are right, but there is a little part of the story I forgot to clarify. I changed from paying by the piece to an hourly rate for only two crews where those employees were earning about $1,000 to $1,200 per week. I was not dumb enough to reduce the earnings of my better employees who were earning $1500 per week plus.

There is one more reason I chose to change from piece work to salary for two crews. Because the two crews were not top producers and the employees had a credibility problem my ex-wife was paid to be their field supervisor. Since I run my company with a very precise maximum budget for the money I pay workers for each job I had to draw money from somewhere to cover the money I paid to my ex-wife. My ex-wife went to every job, signed the contracts with the customer, made sure the employees adhered to the scope of work in the contract, handled customer problems and collected the money on the jobs. These are normal tasks the higher-earning employees do.
You said your employees average 75k a year. I didn't figure 52k was the low end of the average.
 

·
Registered
Joined
·
7 Posts
It seems cheesy but we just try to treat our emplyees really well.
We have a very low turnover rate of our employees for our trade and location (most have been with us over 3 years). Our Crew works hard for us but they know that we are working hard to keep jobs flowing.
We pay over average wage but most of all we generously bless them whenever we can. We buy lunches, pay vacation and sick times, match their Retirement investments up to 3% of there pay, and randomly give them bonuses.
Treat them well, work hard for and with them, and they will do the same to you.
 

·
Registered
Joined
·
8 Posts
I'm trying to create a bonus program of some sort for my guys. I'm looking for a motivation/compensation for them to perform well and help keep projects on schedule/budget.

I think if they have skin in the game, it can help productivity. There hourly wage is fair, but not top dollar. For new employees, I do evaluations after 3,6,12 months and provide hourly rate adjustments (if any) at those times. A bonus will help them financially, improve awareness of profitability, and improve customer satisfaction

For those of you with a bonus program, what works for you? Is there a target % of their monthly hourly pay that you work with, or based upon each job?

It's important that the program be easy for my guys to understand and easy for me to add into the overhead as I write bids.

Thanks

I'm new here and just about to head out the door but I'd thought I would write something up quickly.

Why not give them a bonus that also helps you?

You could set up an employee referral program where they bring you leads and those that turn into sales you give them some of the profit. This way they are incentivized to bring you leads and you both win.

One way you could do this is when they are on the job they could offer a small gift card to the homeowner in exchange for 1-5 referrals. They would bring you the leads and then you or someone else tries to land the appointments. You could also allow them to offer friends and family deep discounts to incentivize people they know to act.

Also, at the end of the day you should have them do the 10 door knock. Have them knock ten doors to the left and right etc. and simply state that you are doing work in the neighborhood and if they or anybody they know could use your services. They could also offer the gift cards like before.

The number one way to give them incentive is to reward them. Offer a percentage for jobs they bring in, hold contests to win prizes, offer a free vacation or paid time off. These things WILL give them the motivation to pursue their own leads.

Just some thoughts that you might be able to use to give them some extra skin in the game while at the same time bringing you some additional cash. Hope it helps :)
 
1 - 13 of 13 Posts
Top