• Contractingbusiness 1782 Cb0212performancepay Group

    Performance Pay: Make Your Company a Great Place for Great People

    Feb. 1, 2012
    Performance pay is an important tool that will help you attract and keep top performers. It rewards outstanding personnel for their technical, communication, and organizational skills.

    Many companies say, "Our people are our most important asset." In the HVAC service business, it's absolutely true.

    We can't accomplish what we need to accomplish without good co-workers. We can't grow our companies if we don't have the people to help us do so. We need great people to serve our customers. And simply for our own personal satisfaction, working with good people makes a huge difference.

    Think about your business as needing two streams of quality people coming into it. One stream is people who want to do business with you: your customers. The second stream is people who want to work at your company. You want to build a company where great people want to work.

    That's what a performance pay system is all about. Performance pay allows talented, productive people to thrive and grow with your company.

    Performance pay is an important tool that will help you attract and keep top performers. It rewards outstanding personnel for their technical, communication, and organizational skills.

    What's In It For Me?
    When considering implementing a performance pay system at your company, remember that most people are always tuned into station WII-FM. That’s the "What's in it for me?" station. It's all about them and always playing their favorite hits. But that's natural. Your co-workers have to know what's in it for them.

    In all likelihood, your co-workers are not working for you because they love you. They're working for you because they have entered into an agreement with you. They do the job you ask them to do, and in return you pay them money and give them other rewards.

    That's the key concept to performance pay: As long as the rewards are something they want, people will work to maximize the rewards they receive. This means you have to make sure the rewards are appropriate, and reward people for doing what you want them to do.

    A performance pay system makes it easy to align customer needs, co-worker goals, and company goals. It rewards technicians who work efficiently, who educate customers, who offer options and deliver maximum benefits to customers, and who minimize callbacks.

    The following benefits can and should be achieved by a properly implemented performance pay system:

    • The average ticket will increase.
    • You will be able to recruit and keep the best co-workers.
    • Poor performers will either improve, quit, or work for less.
    • Employees will self-manage. If they're efficient and work hard they'll make more money. If they're sloppy, lazy, and inefficient, they'll make less.
    • You won't have to look over employees' shoulders constantly and tell them what to do.
    • If you can show them the relationship between training and increasing their performance, they will attend and pay attention in your training classes.

    When all those benefits fall into place, your company will be more profitable. It will also be a more fun place to work, because we have found that performance pay creates a sports-type environment, in which technicians not only strive to maximize their earnings, but also to “top” their co-workers in various performance pay categories.

    Implementing the System
    There are a number of steps to implementing a performance pay system. Beyond the paperwork involved in creating the plan and setting up performance pay rates, we have found that the most important step is choosing a test candidate to experience the system for a month.

    The test candidate should be one of your best performers. You need someone trustworthy and ambitious who will be successful and will become a champion of the program.

    Explain to the candidate that you would like to test a performance pay plan that will allow good technicians to earn more money. Assure the candidate that while the plan is being tested, you will pay him or her the higher of the performance pay earnings or his or her existing rate.

    As the candidate performs under the performance pay system for a month, keep communication flowing. Seeing another technician be successful and earn more money, and hearing about the benefits of the system from one of their own is a tremendous incentive to the other technicians. They'll see "what's in it for me," and they'll want to be part of it.

    It's true that implementing a performance pay system may cause you to lose some of your technicians. But that's not necessarily bad: you're most likely to lose the poor performers.

    Everybody wants to create a "great place to work." But it's different — and more difficult — to create "great place for great people to work." A performance pay system gives you the opportunity to reward the behaviors, actions, and results you want at your company. It will help you make your company a great place for great people to work.

    Ben Stark is the general manager of Stark Service Company, Hurst, TX. He can be reached at [email protected]

    How to Ensure Integrity

    One of the main concerns with a performance pay system is the fear of turning your technicians into "pushy salesmen" who will do what's best for their paychecks regardless of what's best for the customer.

    This is a legitimate concern, but it has a simple solution: education and monitoring. Educate your technicians about the behavior you expect from them, and closely monitor their performance.

    At Stark Service Company, we have a supervisor ride along on at least the first 10 calls that a new service technician runs. We also follow-up the first 100 service calls with a phone call from a customer service representative.

    Our invoices are set up so that we make a lot of recommendations, but they are just that: recommendations. Our customers are free to check the things they want to do now and the things they want to make a budget for and do later. In addition, every one of our invoices has a self-addressed, stamped response card attached to it.

    Hire quality people, let them know that you expect integrity, and they’ll deliver. —Ben Stark

    Yes, Performance Pay IS LEGAL

    Performance pay systems are perfectly legal.

    There are four basic types of pay:

    • Hourly
    • Salary
    • Incentive
    • A combination of the above

    Of course you have to follow the laws of your state, and you need to know about minimum wage and overtime laws. But you probably know all that already.

    In the U.S., these regulations are created by the state and federal governments. If the state minimum wage is lower than the federal minimum, the federal wage applies. If the state minimum wage is greater than the federal minimum, the state wage applies.

    In Canada minimum wage and overtime regulations are determined by the provinces and territories, and these regulations are sometimes overridden by local ordinance.

    To find the applicable laws in the U.S., visit www.DOL.gov (DOL is the Department of Labor). In Canada, check with the department of labor for your province. —Ben Stark