The question: How can I pay a great employee really well and yet still make money myself?
Steve’s answer: Train them on the “Emotional Dynamics” of residential and then watch their income (and your profits) soar!
My wife and I have run a very successful carpet cleaning business for many years. However, as you told us in SFS: “One day that cleaning wand just isn’t going to look as good as it did 20 years ago”! And that has happened with me! So we want to pay our first projected full time employee well. But we also worry about the slow season.
So we have come up with what we think is a unique way to solve this dilemma. A modest base weekly salary (guaranteed no matter what our schedule is like) and then a small percentage of the invoice total. The percentage will rise in increments of 1% as the person reaches certain milestones such as passing all 12 Skills Reviews in your “Winning on the Home Front” audio training , their first 90 days of employment, achieving IICRC certifications, etc. Then they could earn further small percentage increases by attending Jon-Don’s VAST seminar, being able to be on the truck alone, training another tech, advancing to crew chief etc.
After looking at our sales from last year even if the person never achieves more than the first level (they wouldn’t be with us any longer but that is another story!) they would make $30,700 a year with the base salary and starting commission. Once they reach the top of the commission scale with base salary they would be earning $45,800. This is something that realistically could be achieved within the first year of employment.
We structured this pay system because we don’t want to lose a good person in our slow times and they make more money only if we make more money. So Steve, what do you think?
Puzzling It All Out In Buffalo
First, Buffalo, let me tell you I “feel your pain”. I’ve been there- done that- several times! Successfully making the jump from owner-operator to a viable, stable company with employees was one of the hardest things I have ever done!
On your actual income levels for a beginning tech the amounts required to live a “decent life” vary wildly around the country. So you’ll need to check your local market for that. I will remind you of the words of L.L. Bean: “I always felt if I paid my employees 20% more than they could earn elsewhere I would get 40% better employees.” Think seriously on this one!
Now for a suggestion. I (of course) love the idea of letting your employees get oriented on the Emotional Dynamics of the Home Front by using my training materials. But instead of giving your employees even a small raise when they hit some of the goals above why not give them a cash bonus?
For example, many of our SFS members who use my “Winning on the Home Front” technician training course give their new hire a crisp, new $100.00 bill when he or she successfully passes all 12 Skills Reviews. Even if you only give an employee a small .10 per hour raise that is over 200.00 per year and goes on forever! Meanwhile, which will have a bigger immediate impact in your worker’s life? 10 cents per hour or a 100.00 bill?
This same principle applies to many of your proposed milestones. A cash bonus will normally be more appreciated by the employee PLUS it is much cheaper for you over the long term.
NOTE: By the way, I always paid these “Recognition Bonuses” in cold, hard cash instead of including them in the employee’s weekly pay check. Remember that the regular check many times is delivered right into the waiting hands of their spouse. But a cash bonus can be your employee’s “Mad Money” and that is a very precious thing!
Let me know how your compensation schedule works out. Remember, we are all in this together!
P.S: As your company grows always try to pay these Recognition Bonuses in a public setting with lots of verbal commendation to your employee. You can’t give too much sincere recognition to your “company family members”!