Paying Technicians On Commission: Fightin’ Words?

Feb. 19, 2013
Two articles regarding paying commissions to HVAC service technicians have sparked a debate about how that might affect their behavior when dealing with customers.

How do you feel about paying your technicians a commission on sales? Would you ever consider paying techs on a commission-only basis?

A few months ago, Contracting Business columnist Charlie “Tec Daddy” Greer wrote two articles. The first was about paying technicians a commission on sales (click here to read it), the second was about paying them commission only (you can read that one here).

Charlie’s columns spurred one reader, Kevin O’Neill, co-owner of O’Neill-Bagwell Cooling in Myrtle Beach, SC, to write the following letter. I know both Charlie and Kevin well, so I’m caught in a fight between friends here. I’d like to know what you think.

Here is Kevin’s letter:

Dear Editor,

I read Charlie Greer’s article about how upset he got upset when people cast doubts on the honesty of technicians who were paid commission on sales. My first thought was, “Baloney.”

Then I read the article he wrote on paying techs commission-only. That actually made me upset.

I have had experience with companies that paid commission over the years, both as an employee and as a competitor. In all cases, honesty was desired less than sales.

In a company that I worked for that paid commissions (Company A), we had meetings every Friday morning. The sales manager walked around the room and asked each tech: How many contactors did you sell this week? How many coil cleans did you sell this week? How many time-delay relays did you sell this week? And so on for the whole list of commissioned parts and services. Then he berated those whom he thought had not sold enough. If they responded that those parts had been in good operating order, the sales manager didn’t care, he berated them again. Ultimately, the honest techs left and the dishonest ones stayed.  Then tools started disappearing, and parts needed to be locked up because “shrinkage” occurred. Company A now has all its parts locked up and has hired warehouse people to control access to all parts and tools in the shop.

Another company (Company B) in my area pays both wages and commissions. The techs know if they want a good paycheck, they have to sell, sell, sell.

I went on a service call behind Company B once. My customer — who was the father of a woman who called Company B — asked me to do so. The woman and her husband had Company B out to their home because water dripped through the ceiling from the heat pump indoor unit. Company B had originally installed their system when the house was built. Their tech told them their unit had a cracked drain pan, bad blower relay, and bad heat sequencer. He quoted them $1,700 for the repairs. Then he told them their unit was seven years old and out of warranty, so they really needed a new system for $7,500. When I arrived, I found the blower working and the drain pan full to overflowing. I had them turn emergency heat on, and the heat relay worked just fine. All I found was a clogged drain line. My repair cost was the same as Company B’s faulty diagnostic.

Unfortunately, both of their neighbors fell for Company B’s line and replaced their systems. Company B installed all of the systems in that neighborhood and now replaces many of those systems after just six or seven years.

I went to a state association meeting where one of our contractors (the owner of Company C) was promoting commissions for service techs. He was challenged by another contractor saying that paying techs commissions would cause dishonesty. He responded saying that he told his techs not to replace parts that weren’t defective. But then he added, “But if you aren’t a performer, you won’t like working for me.”

Many of my customers previously used contractors who paid commissions. They tell me, “Every time they came out to my house they wanted to sell something.”  Many consumers get tired of that. They’ll look for a contractor who will treat them fairly. That contractor will be me.

In his article, Charlie stated that people are either honest or dishonest. He said, “A leopard can’t change his spots.” That doesn’t agree with modern behavioral science. It also doesn’t hold up when viewed against people that we all know. How many people would never shoplift or commit any other kind of robbery, but who cheat on their income tax? Will Rogers once said, “The income tax has made more liars out of the American people than golf has.” With the right (or wrong) incentive, many normally honest people will lie, cheat, and steal.

Look at General David Petraeus. He built his career on honesty and integrity. Yet when the opportunity and temptation came upon him, he cheated on his wife. If temptation could not change people’s behavior, then pastors of churches would have a lot less to preach about. Temptation can sometimes get most people to do things that they normally consider to be wrong.

Why tempt your employees to cheat customers with what amounts to a bribe such as a commission or a spiff? Once your reputation is ruined, it’s very hard to restore it. And remember, once your employees become convinced that it’s OK to cheat the customers, cheating the boss comes very easy. Once you have paved the way for your employees to increase their income by being dishonest with customers, you’d better put your tools and parts behind locked doors. And while you are at it, put GPS on all of your company vehicles.

If you believe that honest people never lie or cheat, I suggest that you read two books: The first is The (Honest) Truth About Dishonesty: How We Lie to Everyone — Especially Ourselves, by Dan Ariely. The second is Incognito: The Secret Lives of the Brain, by David Eagleman. Both books look at how we think and why we behave the way we do.

Your salespeople should be on commission. When they go into people’s homes, those customers understand the salesperson is there to sell.

Your techs should be paid decent wages. That way they and the customer know that they’re there to fix the problem, and that they won’t make recommendations for repairs or services that aren’t needed. The customer can trust them and your company. And you’ll keep your good reputation for as long as you care to stay in business.

How about it? Are you on Team Charlie or Team Kevin? Let us hear from you.