Payroll is the single largest expense for most small businesses, so it’s important that it be handled with intelligent planning. There are now so many options that make developing your compensation scale flexible enough for any size business.
But those options can be a bit daunting to those whose skills aren’t concentrated in administration. One idea is to consult with an outside accounting or payroll specialist. They’ll know all the important rules, regulations and tax codes to keep you in compliance, out of trouble, and knowing what kind of plan is best for you.
Here’s how a few of your colleagues handle employee compensation at their small pumping companies:
Philip Nulty of America’s One chooses an hourly wage compensation system for his staff. “It’s how I started, and it’s really the only way I know how to do it at this point,” he explains. “When I’ve been on large jobs with bigger plants, I have paid per thousand gallons pumped, but those aren’t common.” He explains that these projects are flat-rate jobs that string out over 2-3 days. “We know we’ll be pumping 30,000 gallons, so I’ll cut (the technicians) in as long as they work as hard as I do.”
As far as incentives, he says he tries to be a good boss, meaning fair treatment and respectful dealing. At Christmastime, the company offers “a little something” for a year-end bonus. And during what he calls the “dead heat” of the Arkansas summer, he encourages his employees to take their vacations, enjoy their families or take personal time.
“We never lay off, though,” he reports. “We stay consistently steady, just not with those big jobs. I’ve been in business long enough that I know where jobs are that have just kind of been waiting, so I’ll find side jobs we can do with the backhoe and get their hours in that way.”
Nulty says the longer he’s in business, the less downtime he has. Last year, he had only two slow weeks in June, which ended up being the area’s hottest month. So his crew was quite happy with the hourly arrangement.
Technicians at Drain Doctors are compensated on a commission basis, owner Carrie Mathie says.
“Normally, 23 percent of each job goes to the employees who work on it,” she reports. “Certainly there are exceptions to that, depending on what the job’s going to entail, and whether it’s a single guy going out on the job or a multi-person crew.”
She says the commission works as an incentive to sell more jobs so they can keep working. It’s based on experiments the company has made with hourly wage payment schemes. “We found that sometimes people were sitting around not taking service calls, because they were getting paid whether they were working or not,” she recalls. She says the choice between hourly pay and commission programs must be made based on the personalities in your crew.
Mathie says Drain Doctors offers large-job bonuses and holiday bonuses as further performance incentives. Individually, employees can earn bigger bonuses for seeking out new customers, closing sales, or otherwise going above and beyond everyday expectations. She says upsells are rewarded if what’s sold is truly what was needed for a proper execution of the job, especially where repairs are concerned.
Mathie feels bonuses generate more business and keep crewmembers working and happy.
Reliable Plumbing owner Shawn Lane has a simple compensation package. “It’s a small town, so we pay hourly wages with bonuses. The guys come in at (6 a.m.). They load their trucks, then go to work. They get paid holidays, vacation and retirement. They take care of me and I take care of the business.”
He says if it’s a good year, his employees get Christmas bonuses, but he doesn’t give bonuses for selling jobs. He appreciates upselling, but only if it’s for a necessary service and if it satisfies the customer. “My guys are compensated well enough, I expect that as part of the job,” he explains.
He had considered at one time using a salary system, but decided against it.
“Typically employees end up unhappy with that because they end up working more than 40 hours a week,’’ he says. “This way, they’re paid for the hours they work and everybody’s happy. My attitude is you have to give an employee something to lose when they approach their job. So if you pay them well and give them enough benefits, then they adhere to policy to keep their jobs. If they don’t, they have something vested to lose.”
