Base Pay + Performance Plan

[cletis]

I"m trying to implement a base pay and performance bonus plan for my technicians. I want to keep it fair but still make some money. Here is a crude concept of my idea, but there still are alot of fuzzy areas

Base Pay (probably near or at minimum wage)

Performance based on gross profit of job (probably around 30-40% based on employee)

Here is my rough idea I may try out. Let me know your thoughts on this


Chunks of jobs come in and we will dispatch to the technician that is best at. Generally, jobs will be $150 - $ 5,000.00 for now. This is a service business so small service calls, service upgrades, ceiling fans, can lights, landscape lighting, emergency commercial troubleshoot, residential troubleshoot etc...

We send a chunck of jobs with all pertinant details to tech, they schedule, plan, design, pick up material (we pay on accounts), make customer happy, then they collect payment (check, cash, CC called into office). No pay, no bonus. :)

Gross Profit will be calculated like this

Revenue - 10% off the top then all expenses related to that job (gas, material, labor (at minimum)) will be subtracted. What's left is gross profit in this case or whatever that's called. They would take care of all facets of the paperwork, scheduling, warranty work etc.. and just turn papers in once a week or so. Papers will include job info and profit including all materials itemized per job.

Our first tech should make 1.25-2x what he normally makes but takes a huge load of work off us in the office in this method. I particularly like they schedule and line up their own jobs. This eliminates alot of problems.

Oh, if they don't get payment they dont get their bonus (is this legal ??)

How does this sound ? Any flaws or additions or subtractions to this needed ??

[vangogh]

It sounds reasonable. As long as you're employees are happy with and you're happy with it. Naturally you have to make sure you're still as profitable as you want to be. You also have to make sure your employees can earn enough. The best can. What will the worst make? Will it be enough for them? Or will they have to be so bad as employees that you'd be fine with them leaving and finding other employees. It does sound like you've though through this a lot.


if they don't get payment they dont get their bonus (is this legal ??)

I have no real idea of the legality. Their base salary you have to pay, but I would think as long as it's understood as part of the hiring that the bonus money is tied directly to sales or payments or something then it's fine not paying the bonus if they don't meet the something they have to do. Plenty of sales people earn money based on the sales they make. They don't make the sales, they don't get that money. Having said that I don't think it would be too hard to imagine scenarios where you still would have to pay what you're calling a bonus. I have a feeling the correct answer to your questions is in the details.