Performance based pay??

[misteraxe]

I tried this before, but didnt realize that I had broken the rules by double posting. So.....one more time.

I work for a small hvac company who recently made the move to change the way we are payed from hourly based pay, to commission based pay. It is based on 20% of the total on the invoice. That is, if the invoice is $100.00. I get paid $20.00....Thats it. No health insurance, retirement etc. I have been at this for quite a few years, and have never been compensated this way before.

I am in hopes that others in the industry, who are familiar with this sort of thing can share thier thoughts as well as how simliar systems of compensation work. Are there higher percentages, trip charges etc. I have no point of comparison.

Any input would be greatly appreciated.

[neophytes serendipity]

Sounds like you got the short end of the stick.

What is the average dollar amount you invoice a day? Is 20% of that number greater than or equal to what you made per hour before? That little bit of math would either make or break the deal right then and there.

What percentage is needed to meet or beat your previous hourly rate if 20% falls short? I would guess 50%.

How will you be compensated for overtime?

Are the changes even compliant with DoL guidelines?

Did you get benefits before? If not, then leave that off the table because it didn't change. If they are taking pay and benefits off the table, then why are you still there?

Something smells fishy.

[dash]

I've heard of being paid by billable or flatrate hours but not % of the total invoice.Godd money when expensive parts are needed.


Overtime is still required.For example you 50 hours,make $1000 ,divide that and it's $20 per hour,now they owe you 10 hours at halftime ,an extra $100.

They must make this calculation every pay period.Federal wage and hour will go back three years and make then pay it.

[Edited by dash on 12-09-2006 at 12:12 PM]

[isitfixedyet]

i seen 20 and 30 is common, but i know one that pays a 50 percent and ill explain u how

[Carnak]

Sounds like motivation to pad the bill, oversell, create cracks in an HX, leaks in coils. Not everyone is honest.

[alpha480v]

Sounds to me like they want you to be a salesman instead of a service tech. No way would I work for a company like that.

[dhvac]

while i think that performance based pay is the way to go
i dont think that this is a good deal for a customer or a tech

there is another thread that is going on right now that kinda borders this one but most of the responces there are negitive in my opinion

i think that there has to be a way to pay a tech top dollar and still make money for the comany without ripping off anyone

and as i have said in other threads, i dont have it figured out yet but i will, and it will be to everyones benifit

[misteraxe]

I appreciate all of your comments, and though the question of whether its a good idea or not is certainly there, ( I strongly resisted the idea) I do happen to be an honest mechanic, and I dont see myself ripping anyone off. However, my real question here is,
how do other companies that do this handle it?
What are the percentages?
Are the techs paid a trip charge etc.
I am looking for comparisons

[timmay]

I've only heard of companies that work like this.
What happens when you go on a call; year old furnace, out on high limit, filter is just plugged?

20% of the diag. Sell them a flame sensor?

what about drive time?

i have plenty of calls that are 30-45 minutes away from eachother. Timmay needs to be paid.

where is the other thread on this topic?

[Carnak]

a top notch tech should be able to get paid what they truly deserve

[dhvac]

Originally posted by Carnak
a top notch tech should be able to get paid what they truly deserve

I agree with this completely the problem is when you pay by the hour if you have several employees then they all think they should be making more then the other
Read the posts here and see how many people complain that they do more work then their co workers and get paid less

Now to some point I think this may happen on occasion but I think in most cases people think they are better then they are

Now if you can get a true performance based pay that works then you can pay each person for what they actually do and not for the time they spend doing it

I know this idea ticks off a lot of people but I ask why, if the system is set up right then the people who are good will prosper and the ones who are lazy or slow will not
I know this is not the way the word works now, but it used to and it still should

I don’t think it should be my responsibility as a boss or even a human to make sure that the bottom of the scale prospers

I also think that the ones who do the most and make the most should earn the most
It is a real simple concept but it is met with so much adversity that I have to believe that the people who speak out the most against it are the ones that would lose out

Now I understand that there are lots of ideas out there that don’t work and lots that will need work to get them right, but I think that there can be a perfect way to make sure that whoever works for me will either prosper or go by the wayside, and that will be up to each individual as to how they do

[dhvac]

Originally posted by timmay

where is the other thread on this topic?

http://hvac-talk.com/vbb/showthread.php?threadid=123160

[misteraxe]

I did not post my question because I wanted to find folks who could tell me what a bad idea this set up is. I do admit that I did have a lot of concern, and strongly resisted the concept in the beginning.

I believe now that it can be a win win proposition for both the employee and the employer. I do however have my doubts as to whether or not 20% is a fair percentage.
I have friends who ask me why I dont just work for myself and get 100% but as I am sure most of you would agree, being a sole proprieter is quite different than being an employee, and I am really not interrested in making that jump at this point in my life.

The statement has been made that approx 40% of the invoice is needed to break even. If that be the case, that leaves 60%. I get 20%, which then leaves 40% as profit to my employer. Pretty good numbers for him, not so good for me.

Am I unfairly thinking that I deserve more?

[scottsacavsfan]

I work for a mid sized company and we get hourly plus 10%
What that means is I GET XX.00 PER HOUR AND 10% of the total bill
Our diag is $75 I get my hour labor plus $7.50
If I spend that hour driving I get $XX.00
If the repair is a coil and its $1000.00 I get the 2.5 to 3 hours labor and $100.00.
If I go out on another techs recall I get the $7.50 that they would heve got because their diag was wrong plus whatever the new repair is.
I also get health, dental, vison ,suplemental,and 401K
We have a tool acount but it has to go through a approval process first.
This company relly takes great care of the employees it has the best pay program in the city they also havnt fired anybody in 12 years
the incentive usally weeds out the weak techs guys that are just hanging parts tend to get a ton of callback and lose all there commision so they dont stick aroud.
It kinda forces you to be honest because if your wrong im going to get it right and your not going to get paid what you think you deserve
sorry for the long post but a pay scale like this is very ivolved my company is owned by a bissiness man he has never worked in the feild he was a insulation salesman that bought the company because of the name.

[neophytes serendipity]

Originally posted by misteraxe
The statement has been made that approx 40% of the invoice is needed to break even. If that be the case, that leaves 60%. I get 20%, which then leaves 40% as profit to my employer. Pretty good numbers for him, not so good for me.

Am I unfairly thinking that I deserve more?

Only you can answer that. How do your callbacks compare to the other techs? Will you be stuck with the time consuming calls while someone else sops up the gravy?

If you know what you are invoicing per day/week/month- however you want to run the numbers- then you can see where your new pay scale will be.

It really isn't a question of "fairness".

It boils down to the boss offering you 20% without any bennies and you need to decide if you will accept those terms.

[dhvac]

I would also say you won’t know till you do the math
If you don’t have the right numbers then go ask them to pull all your slips for the past month or 2 or year
Add up what you would have made will you be making more now? Less? The same?
Can you work faster thus making more? (And still do good work)
Is it enough to live on, move up in the world, will you starve or buy a new yacht?

If you don’t know how much you will make you can’t answer any of this

[esornivram]

if they have an decent flat rate book, and you quote the job based on that before you do any work, them maybe, however i would not give an diagnoses for 10%
that way too small, i would take say 50% of diagonses fee, for my travel and time own site
however you can go back to fed non excempt rules(hourly employees, and who falls into non versus excempt pay catagories, if i am in the non cat, its hourly, and under fed rules only YOU can agree to anything less,
if you do then your stuck, if you stand up and dont agree, on the short run they may release you, however a quick trip to your closes fed dept of labor office will get you started, when they are done your little employer will have A NEW understanding, you will have back pay with many extra hours, including the time off gets reimbursed.
usually the state labor doesnt specify, but the feds do and it allways alpies.
mbr

[markettech]

Originally posted by misteraxe
The statement has been made that approx 40% of the invoice is needed to break even. If that be the case, that leaves 60%. I get 20%, which then leaves 40% as profit to my employer. Pretty good numbers for him, not so good for me.

Where did you see this statement made? Did it come directly from a business owner?

If I had made 60% net profit on each and every invoice, I'd be rubbing elbows with Bill Gates by now. :)

[isitfixedyet]

or mahvelous, news!

[isitfixedyet]

i thought u posted u had a two job option or so a couple months back?
now ur a business owner? or just pro contractor or pro employer, or pt time business owner and ft time tech for a company to keep busy and money flowing till ur company takes off?

[markettech]

Originally posted by isitfixedyet
i thought u posted u had a two job option or so a couple months back?
now ur a business owner? or just pro contractor or pro employer, or pt time business owner and ft time tech for a company to keep busy and money flowing till ur company takes off?

If I could understand a damn thing you've said on this site I might actually take the time to engage you in conversation. Honestly, I think I could have a more meaningful conversation with my 5 year-old.

You sir, are a waste of my time

[isitfixedyet]

u replied didnt u?
i bet ur son couldnt teach u some kindness, or consideration!

u sir are a waste of ur own time!

[scottsacavsfan]

I didnt mention in my earlier post that we to work out of a flat rate book also
It works for me everytime our parts cost gos up I get a raise

[kleerline]

I'm a supervisor in the Atlanta area, in a BIG corporate setting and all the benifits. I don't have a problem paying a man 1/3 of his yearly service dollars. divided buy 256 work days divided 8 hours= dollars paid per hour, on a 8hr/day.
***over time is @ time and a half***

PLUS: vacation days
holiday pay
401k match
life insurance
company van
uniforms
2.5% on equipment sold
monthly TECH contest

This is the formula for earning your keep,
and compines keeping the earners.
GOOD LUCK

[wuffdog]

What about the dreaded call back?????? :confused:

[scottsacavsfan]

I'm a supervisor in the Atlanta area, in a BIG corporate setting and all the benifits. I don't have a problem paying a man 1/3 of his yearly service dollars. divided buy 256 work days divided 8 hours= dollars paid per hour, on a 8hr/day.
***over time is @ time and a half***

PLUS: vacation days
holiday pay
401k match
life insurance
company van
uniforms
2.5% on equipment sold
monthly TECH contest

This is the formula for earning your keep,
and compines keeping the earners.
GOOD LUCK

Our program is very similar to this and I love it
For call backs you lose your diagnostic but not the repair
and the other tech gets aal commishion on new repair

[Tech #14]

I get 40% of the labor that I bill. It's not at all unusual to bill out $1,000/day in the summer, which makes for a nice paycheck.

[dash]

I get 40% of the labor that I bill. It's not at all unusual to bill out $1,000/day in the summer, which makes for a nice paycheck.

That's great,what do you get for warranty and service agreement calls??

Do you get paid properly for overtime??

[Tech #14]

What little warranty stuff we have gets pushed off onto our service manager, who is on salary. We get a lttle bit for service agreements, but it's not a lot...guess you have to take the bad with the good. :)

We don't have a time clock, so overtime is somewhat foreign concept around out shop. We do get time and a half if we go out when we're on call, but that's about it.

[dash]

What little warranty stuff we have gets pushed off onto our service manager, who is on salary. We get a lttle bit for service agreements, but it's not a lot...guess you have to take the bad with the good. :)

We don't have a time clock, so overtime is somewhat foreign concept around out shop. We do get time and a half if we go out when we're on call, but that's about it.


Piece rate overtime;

If you make $1,000 and work 50 hours in a week,divide $1,000 by the 50 -$20 per hour .You have now been paid the stright time for all your hours,and they owe the 1/2 time of $10 per hour on the 10 hours of overtime.

Calculation is made for each pay period,piece rate can't change from one pay period to the next to save the company money.

Federal wage and hour people will go back at least 3 years,and the company will pay it all.

[tbox8098]

I can't believe that you are even asking about 20%.

Lets think of this with industry averages. A service tech on average generates 100,000 of revenues for a company. A great service tech generates 150,000 for a company. Even if you are a phenominal tech and generate 200,00 for a company.

100,000=20,000 pay
150,000=30,000 pay
200,000=40,000 pay

I think any business owner would love a tech that can generate 200,000 in revenues and be happy making 40,000 with no bennies.

A tech should have an hourly wage and then comission spiffs.

[dash]

I did not post my question because I wanted to find folks who could tell me what a bad idea this set up is. I do admit that I did have a lot of concern, and strongly resisted the concept in the beginning.

I believe now that it can be a win win proposition for both the employee and the employer. I do however have my doubts as to whether or not 20% is a fair percentage.
I have friends who ask me why I dont just work for myself and get 100% but as I am sure most of you would agree, being a sole proprieter is quite different than being an employee, and I am really not interrested in making that jump at this point in my life.

The statement has been made that approx 40% of the invoice is needed to break even. If that be the case, that leaves 60%. I get 20%, which then leaves 40% as profit to my employer. Pretty good numbers for him, not so good for me.

Am I unfairly thinking that I deserve more?

40% it a typical over head,of the other 60% ,the majority is cost of goods sold,parts ,materials ,equipment,etc,and maybe a 5% before tax profit.

[heatermanbob]

I can't believe that you are even asking about 20%.

Lets think of this with industry averages. A service tech on average generates 100,000 of revenues for a company. A great service tech generates 150,000 for a company. Even if you are a phenominal tech and generate 200,00 for a company.


wow, are you serious? I made my company 160,000 last year and 155,000 the previous year and they had the nerrve to tell me i wasnt making enough money.