productivity incentives

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Joster19

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Ames
I worked for a friend who started a pressure washing company. they offer their techs bonuses when they reach target hourly goals (1% of the job price if $75/hr, 2% of the job price if $100/hr, 3% of the job price if $125/hr, etc). So if they do a $150 job in 2 hours, they get $1.50 bonus. if done in 1 hour, 4% of $150= $6. I found this system motivating me to take ownership, be innovative and forward thinking. they remove the bonus if there is a call back or a tool left on the job site.

I have made attempts to track productivity in my tree company and provide this bonus as well, however the administrative part of it as an owner/operator has made it fairly impractical, so far I've ended up just giving a end of year % bonus based on net profit.

The other issue is the pressure washing work is pretty individually focused, rarely working more than one or two guys on a single job, and they can pretty much divide and conquer projects. say a big gutter job. Tree work is more of a team effort. maybe one guy doing the cutting in the air and one to several others doing various parts of ground work. I have mostly worked on two man crews, much less experience with more than three people on a crew.

have any of you developed bonus systems based on productivity? yearly profit? other methods?

thanks,




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RogerM said:
I think, no offense, this could lead to cutting corners and taking unnecessary risks possibly. You'd have to know your team. It could work.
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Exactly what I was thinking.

We provide a quality service, not a fast service. Yes, time is money and if we finish faster it costs less. I'm more comfortable with yearly, quarterly, months, or if you want to be more direct, maybe weekly bonuses. "Hey, you guys really killed it this week. Quality was great, clients had all positive things to say. Didn't even break any tools! Here's an extra $xx."
 
Thought a little more about this...so job is scheduled to be done at 3:30. Crew finished at 3:00. What do they do now to earn the company more money (what's the incentive to pay a bonus if they aren't earning the company more?)? Probably a little bit of maintenance at the shop, but no time to get a another job. Or maybe they go home early...which is great for company bottom line, but is a $5 bonus worth 30 minutes off the clock?

If they finish that 3:30 scheduled job at 1:30, they either didn't do something or whoever bid the job didn't do well with their estimate. If that happens on the regular, whoever is estimating time needs to change something. If you can keep pricing the same but schedule another job because they are getting some early, that's real money to be made and probably should mean pay rate increases.
 
thank you for your feedback, sorry I'm just responding as notifications don't pop up for me on my phone .

I understand the concern about cutting corners- but this is somewhat mitigated by the policy that the bonus would be removed in the case of a client call back. Unnecessary risks- I'm just in the process of hiring my first non-family team member climber apprentice, I'm trying to, as I have heard Dave Ramsey say, 'hire tough and lead easy'- money can't be their only driving factor. I am pursuing team members who have the higher purpose of blessing the client. I have heard the labor market is pretty tight but trusting God to provide quality people and may have some hard decisions to make in the learning process if I hire someone who doesn't pan out.

I was looking back at the incentives program provided by landscaping company for whom I worked, I can't remember all the details but think they offered a 4% salary bonus, spread over the course of the more active working months, Apr-Dec, if we hit our target goals. Any bonus is great, however, I never really understood how much a given project was worth money-wise.

I felt more motivation with the pressure washing job, but this was our individualistic in nature. So I am wondering if the system would work as well in a team environment...

can you imagine any negatives of telling your team the amount of sales completed each day?

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Joster19 said:
...

can you imagine any negatives of telling your team the amount of sales completed each day?

...
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Yes. If they don't understand what it takes to run a business, they can feel shorted pretty quickly.

"We brought in $2000 today and are only getting $200 bucks each. That means the boss is keeping $1400 and all he did was sit on his butt or talk to clients!"

I'd recommend if they see the sales numbers, they also are at least partially aware of costs. Don't be afraid to say things:
*"Just spend another $2500 to fix that truck."
*"Insurance came due this month, there's another $7000."
*"I can replace that saw if need be, but if we can keep it running well, that saves $750."
*Let them know that their $200 of pay also cost you another 7.5% FICA plus workers comp plus unemployment, etc... (plus accounting costs associated with tracking all of that and submitting withholding taxes, etc...).
 
I think there’s something even more important than monetary and other forms of bonuses, and that is company culture and environment.

Yes paying decent wages that helps contribute to employees wanting to show up to work is important, but so is creating an environment that is friendly, enjoyable, and with a sense of unity I feel.

You are right, a tree crew is a team. With the exception of if employees leave and new hires come on you work together more time than you spend away from each other. So build that team spirit, create an environment that is prime for employees actually looking forward to being there and wanting to be part of the team.

And unfortunately that sometimes means going through multiple employees before you find the right fits, but that’s just the nature of business
 
Personally I strongly dislike performance incentives. All kinds of stuff can go wrong, cutting corners etc. Plus its too uncertain for the workers and can make problems between workers. The pay should be good enough that people want to perform well without any carrot on the stick. My 2 cents... wage working is inherently flawed though. Workers can be empowered with joining b corps or being partners or stock ownership.
 
I can tell you from having just done so, that good people will leave a toxic work environment. I was working on some really awesome trees that should’ve been fun to work on, but the guy wasn’t fun to work for, and his one groundie was regularly unnerving to be around. I went back to mostly doing conifer removals, which has it’s fun for sure, but I really love delicately pruning large spreading hardwoods with mostly hand tools and occasionally some shaping with a little chainsaw cut. To emphasize the point: I walked away from the work I prefer for the crews I prefer.
 
I don't like the idea of incentivising speed for any high risk labor work. Perhaps a % of any up selling on the job if time allows. Idk, I've been trying to get commission for sales on PHC work at the company I work for for a while now though. I don't really have incentive to create proposals, follow up with treatment reapplication intervals, or generally just provide great customer service as we're on salary and it's technically not my responsibility. I do some because I care about providing great service and doing good work makes me happy but it does bring moral down a bit. If I sell a job with 25k net profit I would expect a bonus or commission, not just - great you have a larger work load now, if you sell more you'll have less time for personal growth and family lol.
 
Lignotuber said:
I don't like the idea of incentivising speed for any high risk labor work.
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Me neither. But I DO like the idea of incentivising efficiency. But I think the biggest barrier (discussed on other threads but not brought up here yet) is the disconnect between the sales guy and the production team. If sales underbid a job because he missed something like the septic field, or the gate is 2" too narrow, the production team has no way to get a bonus even if they bust their butts and bust out the job.

I think somebody on the buzz has thrown out the idea of a nomination-type system, where each employee nominates a co-worker tho they think went the extra mile to get the job done or make the customer happy. Obviously this system has drawbacks too, but I think it makes the most sense to me in our industry. I've never tried it though. Who is going to be the guniea pig to see if it works?
 
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If your crew gets the day's work done to standard a half hour early and the chipper doesn't need cleaned traileraxles don't need grease, send them home with a full day's pay, you met your quota anyway.

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