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I recently received an email from George, a general manager at a Florida plumbing company. The email states: “Hello, Mr. DiToma. We enjoy each new article you write. We have gained a great deal of knowledge, insight and courage from your writings. We were wondering if you would address the pros and cons of paying commissions to service techs in the field. Whatever topic you choose, we look forward to reading and implementing it.
Well, here goes, George.
Have you ever wondered about the difference between a union technician and a nonunion technician? I have. I believe the difference is only in the words preceding the word technician.
Other than that, technicians are basically the same. They’re humans and technicians of their trade. And they all come with varying levels of abilities and assorted degrees of intent.
Smart and caring technicians realize that if they do their best and help the business to succeed, their own livelihood will be ensured. This type wants only to deliver excellence to consumers for the dollars that consumers spend with the business employing them.
I like to refer to these techs as Star Techs. Their abilities and attitude allow them to deliver excellence to your clientele and revenue to your business. They are the techs you should strive to employ.
The clock-watching techs could care less about their workmanship and start their workday when the workday clock begins and constantly watch that clock for breaks and quitting time. This group is hardly capable of being Star Techs and consists of bad apples that can spoil all the rest.
Then, there are those who fit somewhere in the middle. They must be monitored and trained to deliver excellence to consumers so they can be Star Techs rather than bad apples.
All technicians want to earn a living and not have to worry about money; it’s the reason why they work.
All humans want to enjoy life. As technicians, they chose their specific trade choice as a career to attain those goals.
Even though God created all humans equal, the abilities and intents of individuals may differ.
As a contractor, it is your responsibility to hire people capable of performing the services your business offers to consumers in an excellent manner. Some Star Techs are fast. Others are slower, but because of their meticulous manner, they are Star Techs nonetheless.
Star Techs who deliver excellence to consumers and stick to the job until it’s done expertly, whether they are fast or slow, are who you want to retain in your employ. To do this, you must compensate them in a way that is commensurate with their contribution to your business.
Clock-watching, schlock-serving techs can only serve to impede the success of your business. You would be wise to consider why you have them in your employment in the first place. After all, you don’t want them spoiling your Star Techs.
Your responsibility for your middle techs is to train them how to embrace excellence and shun schlock.
I dare say that all techs want the most compensation from the businesses employing them. That’s only human.
To help hire and retain Star Techs, you must develop a compensation policy to help you reward the levels of excellence each tech delivers to your clientele. You also want to compensate techs in a manner that is commensurate with their contribution to your business and helps you attain your goals as a businessperson.
Paying only an hourly wage is fraught with problems. If you don’t pay everyone the same wage, you will deal with the heartburn that comes when Tech A finds out Tech B is being paid more per hour.
Since Tech A believes he/she is just as good as Tech B — if not better — you have to give Tech A a raise. But then, up pops Tech C and so on and so forth.
You can leave everyone at the same pay rate. But then a competitor might offer them a dollar more per hour and steal them away from your business. This method surely defeats the premise of compensating techs dependent upon their contribution to your business.
You must also consider that if Tech A believes he/she is more productive than Tech B but gets paid less, Tech A will be tempted to be less productive and less excellent than Tech B.
In this instance, your business suffers and, eventually, your ability to deliver excellence to your clientele fades into the delivery of mediocrity and subsequently to schlock workmanship. After all, we’re only human.
Since it’s my firm belief that each tech delivers different levels of ability and intent to the performance of their duties, the question becomes — How do you fix this circular problem? The answer is as simple as it is logical.
Embrace the same pay level for all techs at their skill level — by that I mean helpers in one category and journeypersons in another category. Then, embellish each tech’s earnings by instituting an incentive program based on the amount of revenue each tech brings into your business.
However, remember the old saying, “Haste makes waste.” You want to control callbacks that might be the result of techs hurrying through tasks to bring in more money. Incentive amounts take into consideration callback rates and the costs of those callbacks, so techs don’t just rush through tasks — leaving a wake of callback costs behind each job done.
While incentive pay increases what each tech can earn, callbacks can reduce that amount. It’s the old carrot-and-stick theory and it’s logical and fair.
The reason any tech makes more money than another tech is because they bring in more money and have fewer callbacks. At the same time, all techs will be able to make more money by just applying themselves and embracing the delivery of excellence. It creates healthy competition while avoiding the argument that one tech may have if another tech makes more money than he does.
It also reverses the propensity of a tech doing less because he is paid less. If techs want to earn more money, all they have to do is emulate the performance of Star Techs.
Here’s the caveat — your techs must adhere to principled ethics. They must never tell a consumer she needs something so they can make a sale and earn more money. They can offer suggestions on the services your business offers. After all, they are your salesforce. But telling someone they need something they don’t could be considered fraudulent.
For example, after only seeing the consumer’s dripping faucet, a plumbing tech tells the consumer he needs a new faucet when, in truth, repairing the faucet is a possibility that might solve the problem.
When the word “need” is spoken by a plumbing professional, as in this example, there could be a misrepresentation of the facts when replacing internal faucet parts may solve the problem.
The plumbing tech should, instead, offer the possibility of repair with the caveats as to why an attempted repair may not solve the dripping problem, and tell the consumer the benefits of a new faucet replacement.
The tech can say to the consumer: “I can attempt to repair your existing faucet by replacing the removable internal parts and installing new parts. However, if your faucet body is flawed, the drip problem may not be resolved. I can perform this task for $X with no guarantee of the results. You could be paying for this service and defeating your purpose. Most often, the repair works, but there are those instances when it doesn’t.”
The tech may add: “Before you make up your mind, allow me to give you the prices for replacing your existing faucet with a new faucet. This includes a warranty from the manufacturer for the faucet and a warranty from our business for the labor to repair or change the new faucet.”
In this instance, the consumer can make up her own mind as to which way she wants to go — and there is no potential fraud.
Peace of mind
As a PHC contractor, I found that the price to replace the existing faucet with a new one, plus a warranty, was often not much more expensive than attempting a repair to an existing faucet when the price to repair was properly calculated.
And if the repair attempt didn’t solve the dripping problem, the cost of the new faucet replacement was certainly less than the consumer paying for both the attempted repair and a new faucet replacement.
Techs must know the products and services their company offers, give consumers options, and provide pros and cons of each option so consumers have all the facts and can decide what they want to buy.
As a contractor and a tech, I always preferred to change a faucet rather than repair an existing faucet. A nice, shiny new faucet makes the consumer feel better than paying for a repair and still having an old faucet that might not be so shiny. In addition, the warranty gives the consumer peace of mind.
I learned this from a customer when I first started my PHC service contracting business so many years ago. At that time, I used a time-and-material pricing method because it’s the way all the other contractors billed for their services. Sound familiar? That’s the definition of ignorance being bliss.
As I entered her home to address her faucet drip, I quickly went to the faucet and visually saw the problem. I took out my tools and the replacement parts for the faucet, did the repair and handed her the bill. I thought I performed the service in the most expeditious and excellent manner.
She looked at the bill and said, “Rich, what would a new faucet have cost?”
I gave her the price of a new faucet with installation. She said, “I would have preferred to replace the faucet with a new one.”
She was absolutely right. I hadn’t given her the options available to her. That was the last time I used the old T&M pricing method and switched to giving consumers options and a contract price (upfront price or flat rate price) in writing before commencing any task.
And I had the consumer authorize in writing said tasks at the agreed prices before starting the job.
I hope I have addressed your request, George. If you or any contractor needs assistance setting up an incentive program, call me. Have a healthy and wealthy life.