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Thread: $ per hour vs. % of the job

  1. #11

    Re: $ per hour vs. % of the job

    When new constructions were being slapped up by the 100s down here I was in the painting business. I paid my guys, at one time 18 of them, by the S/F. They recieved money up front for paint costs, but did not see another penny until I got paid by the satisfied contractor. Things worked great that way. I also paid the forman all the money and he slit it up between the guys. I gave them $2 a S/F and charged $3, they were responsible for all expenses. When new constructions slowed down, I started taking on normal jobs in already occupied homes. The PITA outweighed the profit and I got out of the painting business.
    Ocean City Power Wash
    oceancitypowerwash@yahoo.com
    609.391.WASH
    Ocean City, NJ

  2. #12
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    Re: $ per hour vs. % of the job


    We've paid by piece work for several years now and it's the only way it my opinion. The only issue I have with it is finding guys that have the sense to take advantage of the opportunity. We tend to look for the guys who crave overtime and have a family and some responsibility under them. They tend to work the best and are willing to do 60 hours a week. Every new hire is probationary for the first two weeks and we run them hard....you'll know in a few days if they can hang or not :thumbsup: If they start complaining they're gone. One two weeks ago lasted a whopping 2 days before he quit :lol:

    The nicest thing about piece work for me is the controlled costs by far. For employees its the fact that to some degree they are in control of thier paycheck.

    my 2 cents anyway.


  3. #13
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    Re: $ per hour vs. % of the job

    I've worked pretty extensively with paying a percentage, or a commission else where, and it definitely has it's advantages. Like Ken said, when you change their mindset from working by the hour to a percentage of the profits they begin to be entrepreneurs. production increases, efficiency increases, customer satisfaction increases. And there is something to say for fixed labor costs.

    The negatives:

    1) Fixed labor costs - With hourly labor you have more potential to increase your profits by increasing productivity and efficiency. When one man making 10 Widgets an hour starts turning out 12 Widgets an hour your profit has just increased substantially. With a percentage in place the only way to increase dividends is to increase volume.

    2) Flexibility - When multiple jobs are easily and more efficiently handled by multiple workers the numbers can get complicated. Yesterday I had a helper on three different jobs - we stained one deck that was already cleaned and prepped the previous week, cleaned a deck and fence to be stained next week, stained a small fence that was a freebie for a house wash, roof, driveway, and interior painting job. Trying to calculate a percentage on this helper when he was not dedicated to individual jobs would be a nightmare. If you are going to be working with him portions of the time a percentage may get complicated.

    I have come to the conclusion (although I have yet to implement one that I was completely happy with - YET) that a combination of hourly wage and percentage (bonus) is the ideal set up. Consider a low hourly wage of maybe 75% of what he is making now and implement a bonus schedule for the remainder. The advantage for him is that he could make significantly more than his current restrictive hourly wage. The advantage for you is that if he doesn't produce your labor is reduced until you fire him for someone who can. It is more likely that you get the best of both worlds with an hourly worker that you can increase profits with by motivating them to do more to make more. They also share some risk by putting production and quality in their hands. If they perform well they will make very well, if they perform poorly or the work load decreases they will make less.

  4. #14
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    Re: $ per hour vs. % of the job

    [quote author=tonyg link=topic=4607.msg59753#msg59753 date=1210528089]

    The negatives:

    1) Fixed labor costs - With hourly labor you have more potential to increase your profits by increasing productivity and efficiency. When one man making 10 Widgets an hour starts turning out 12 Widgets an hour your profit has just increased substantially. With a percentage in place the only way to increase dividends is to increase volume.

    For the most part this usually isnt the case. Hourly provides no motivation to complete a job any faster. On a percentage basis they have every reason in the world to complete it. The catch 22 here is making sure they understand all call backs are on thier time or pulled from an escrow as Ken stated. Again IMO you have to find those certain individuals to make the percentage work well. Employees who are at the clock at 4:29 everyday to clock out are not who you want

    2) Flexibility - When multiple jobs are easily and more efficiently handled by multiple workers the numbers can get complicated. Yesterday I had a helper on three different jobs - we stained one deck that was already cleaned and prepped the previous week, cleaned a deck and fence to be stained next week, stained a small fence that was a freebie for a house wash, roof, driveway, and interior painting job. Trying to calculate a percentage on this helper when he was not dedicated to individual jobs would be a nightmare. If you are going to be working with him portions of the time a percentage may get complicated.

    On shared jobs we revert to the hour basis and divide that into the gross pay on the project to provide a fair split between the working parties. We have a prep labor pay and a seal labor pay on every work order with regard to woodcare.

    [/quote]

  5. #15
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    Re: $ per hour vs. % of the job

    I could go on and on about some of the guys that roll through here. One guy when told to strip the supports underneath a deck went down and washed river rocks. He actually sat there and washed one side, flipped them over and washed the other. Can you say "stoned". I don't drug test laborers (elimnates 95% of them) but maybe I should.
    :lol: :'( at the same time......

    I know as we get quicker on the job even the kid that works for me caught on to he's not making as much on the jobs any more. I just give him his hourly and then a small bonus that would probably make up for how long it would have taken in the "olden days??" He's caught on pretty quickly and has even helped to sell one or two along the way. Once in a while just to let my daughter know how things are, we'll do a really small fill in job (painting) where we'll split the profit. She's found out that after all is concerned she usually makes more by the hour. On any jobs that go super smooth, I usually include a small bonus for all depending on their level of participation.

  6. #16
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    Re: $ per hour vs. % of the job

    [quote author=scrappy link=topic=4607.msg59735#msg59735 date=1210518802]
    how much are you paying him? I keep my helper happy because he makes 10 an hour and i buy him lunch almost every time we work . . . He is an excellent worker and from what i've heard those are hard to find and to hold on to one if you find one. . .
    [/quote]

    15.00 + , and I always buy lunch (come to think about it, he never says thanks)

    I want to be fair, but, how much is to much? I want to hold on to him but for some strange reason, I feel I am being squeezed for more.
    Mike Dennis
    Owner-Exterior Cleaning Solutions Inc.
    www.NoRoofStains.com
    www.cheaproofcleaning.com
    502-428-7474

  7. #17

    Re: $ per hour vs. % of the job

    Mike,
    I couldn't consider paying a %. Our business plan and financial plan is based on Hr. rate. My employees make so much per hr. If we have a good month, year, they benefit. We just spent $2,000 on taking them and their familys to an indoor waterpark for two days. If your worker is good, they should have an idea of where the money comes from and where it goes. I share some info with our employees and they have a good understanding what goes on. I do not share our total cost or profit. As you stated, we built our businesses from scratch. They were not even around when we worked 12 hrs. 7 days. They did not plow snow when there wasn't work. I let them know this. I also let them know we share the good and bad times. To be nice, if you want to retain this employee, if possible, raise their hr. wages. Give them extra bonuses, (not necessarily $), as possible. Explain the basics. You put your neck on the line for your company, you will always make more then anyone. If they cannot handle it, hire a new employee. Ken suggested, making them sign a non compete clause. Good Idea. We do this upon hiring. It probably won't hold up in court, but let's your employees know you mean business. If your paying this person, $15.00 plus lunch and never gives thanks, I'd seriously look for two others who will work for $8-10. hr. Look for a good worker, that will appreciate your business. You could teach two individuals what to do in quick time and watch your business grow. You could stand by, watch every move they make for a month, work quicker each day, make more money and have less problems? This will give you more time to work on your business also. Hope this helps. Thank You.
    Terry Miller
    Canton, Ohio
    330-418-8955
    Quality-Service-Price
    Your Service Company for Life!

  8. #18

    Re: $ per hour vs. % of the job

    Damn right you should reap the benefits.

    I just pay hourly. I work a lot, not washing, getting and making sure we keep the work. I give good pay and I also give bonuses. If you want to give percentage thats fine, I just couldn't be bothered. My guys are doing project this year at least 25% faster than they did some of the same jobs last year. Hell I want that extra in my pocket, thats why I'm in biz, to make more off each job every time, not to give it away to an employee, I am finally really reaping great benefits from taking care of and holding onto pretty good employees and MY hard work, those benefits are mine its MY business

  9. #19
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    Re: $ per hour vs. % of the job

    [quote author=Jeff link=topic=4607.msg59788#msg59788 date=1210554459]
    Damn right you should reap the benefits.

    I just pay hourly. I work a lot, not washing, getting and making sure we keep the work. I give good pay and I also give bonuses. If you want to give percentage thats fine, I just couldn't be bothered. My guys are doing project this year at least 25% faster than they did some of the same jobs last year. Hell I want that extra in my pocket, thats why I'm in biz, to make more off each job every time, not to give it away to an employee, I am finally really reaping great benefits from taking care of and holding onto pretty good employees and MY hard work, those benefits are mine its MY business
    [/quote]

    I agree with that jeff
    Mike Cooke
    Palmetto Power Cleaning LLC
    Myrtle Beach SC
    843-458-2303
    ppcmbsc@sc.rr.com
    www.ppcmb.com

  10. #20

    Re: $ per hour vs. % of the job

    What you guys may be missing in your equation is the incentive to work faster thus complete more jobs. Once everyone is up to speed I expect to be completing four more jobs per week @$1000 average. Could I have accomplished the same thing being a taskmaster in the field? Perhaps. But I can only be in one place at a time. Like I said, I am almost convinced. The burden on me is to make sure that I am not underselling labor or underestimating how long something like a hard deck strip will last. If I bill at 4 hours and it takes six, the guys on the job will be getting a raw deal. Keeping records has been a PITA since many of the guys (all the laborers) are run through an agency. I have yet to find a perfect system. In most cases either a guy is motivated to work or he isn't. No amount of pay will sway that.

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