1. What is the commission on labor and / or material that you recommend?
   

   Just figure out the commission your pay currently is (best if you use billable hours vs. actual worked hours). For instance, if it costs you $15/Hr for your techs with burden, and you currently pay them $10. Then the commission equivalent is 65% on cost of labor. This is a great way to introduce commission pay without over extending yourself. The techs can still make more. If they only take 45 min on a 1-hour job they are getting paid for the 1-hour. It adds up. Plus the bonus to you is you are no longer paying overtime. You can also introduce bonuses for material sales in addition to commission on labor.



2. Why do you recommend paying commission on cost rather than sale price of labor?

   Paying commission on cost is more accurate for you and your employees. The major problem with paying commission on sale price is that the techs get raises only when your prices go up. This is not right! Let's say your overhead went up by 10% because you added a 401K plan for your employees. This means you need to raise your prices. When you do this, the techs get a raise, even though you did not intend them to. You only raised your rates to cover a benefit you created for your employees. Now you need to readjust your numbers again to cover the raise and the impact it has on your bottom line. If you pay commission on cost they only get raises when YOU want to give them. This is the BEST way to pay on commission. We have found that companies that pay on sale price of labor are ok for a couple of years and then they start to hit a roadblock.



3. How much is the guaranteed wage?

   7I states - you must guarantee 1.5 times minimum wage for every hour they work. So if they work 40 hours they get 1.5 times min wage guaranteed, but if their commission calculates to more than that they get their commission pay. It is not 1.5 times min wage and commission. It is which ever is greater. It is advised to check your state laws.



4. How do you handle and uniform rental?

   Check with your state laws. Some states say you can only take a deposit for 1/2 the uniform cost (not retail) as a deposit. Which is the most common. Most states also say that you are responsible for cleaning or you can give them $$ for cleaning if you don't want the hassle of collecting them each week.



5. What are the pitfalls of commission (other than over selling)?

   None! You can have a tech on hourly and have them oversell. But you can tell just by looking at the ticket (most of the time) if they did that. Why worry about that on commission. Train your techs, and gain their respect and that won't be a problem. Your A & B players will love commission. You may loose some C players, because they won't make enough. But C players are OK to lose.

   

   Suggestion on implementation:
   If you want to implement commission. I recommend that you keep paying them hourly and calculate what they would have made on commission. Then after about 2-3 months bring in each tech one by one and show them what they would have made on commission.
   Ask them which one they want.

   The choice will be simple. They would leave you for a 10-cent raise, don't you think they will want more money. It is best if you can show them the figures for a bad month and a good month. That way they can't say you just picked the best month they had.

   Plus, by brining them in on the decision you are building a team. Their wages is their business, they should know how it works. I recommend printing a commission book that the techs and payroll can keep and check at anytime they want. (See a sample of a commission pay book in the Flat Rate Section.) A commission pay book also helps to show a new applicant how commission pay is beneficial to them.

Till next week,

"My goal is to translate response into results.
Some teachers teach for others to learn. That's not me.
Some teachers teach for others to accomplish. That IS me."
   - By Jim Rohn