Hi Paul, thank you for the presentation today. We know one mistake we have made is paying our technicians on salary without the performance based pay component. We were very generous and we see it is not sustainable. As we implement new systems any suggestions on how to create a performance based incentive that is easy to track and manage? For reference, we are a chimney sweep company. Inspector (salesman) does a paid inspection/report visit and creates a quote. Repair team does the repair work (2 hour repair to multi day repair). Thanks for your time!
Hey Kathy,
Thank you for joining the presentation and bringing your question here.
One caveat - make sure you have your recruiting engine happening in the background. When performance pay is implemented, there is a chance that some people will leave (i.e. the people costing you a lot of money). So you want to make sure you are building a bench for others to step up/step in.
As far as your specific example, I would still focus on hitting the 50%+ Gross Profit. For most home service companies, this means our all-in labor is less than 25%...which means our compensation is less than 20%. In your case this would include sales commission and the repair work labor. How you split that 20% up really depends on the business but what I see a lot is:
You'll want to play with the numbers to determine what works for your business. You can back test this and you can also create hypotheticals (i.e. How much could a great sales person sell if that's all they did? And then how much would we need to pay them in order to attract great sales people?
Hope this helps!
You also want to make sure that you set this up the right way legally based on your state/province labor laws as every jurisdiction is different.
Thanks!
