Commission based pay, also know as performance pay, has a mixed reputation. There are a lot of misconceptions, and downright lies being told about commission based service techs and companies.
In full disclosure, not all of my clients are on commission based pay for their service techs and plumbers. I think that is a mistake.
Because of my belief, I have decided to write the 11 things service techs, plumbers, comfort advisors, managers and business owners need to know about commission based / performance pay.
1. Commission based pay is not evil. I’m not sure who decided that commission based pay was the work of the devil, but they have done a good job of spreading that lie. Paying commission is far from evil. It is a good thing.
2. Commission based service techs are not crooks. Who is spreading this crap? Commissions don’t encourage you to steal. As a matter of fact, it may interest you to know that 55% of all business theft actually comes from managers, not front line people getting paid commissions.
3. Fixed labor percentages solve massive problems. Performance pay locks in one of the most troublesome numbers in business: field labor.
4. Budgeting becomes easier. Once your numbers are locked in, budgeting becomes so much easier.
5. Accountability becomes your business partner. Techs are actually more accountable to performance when they are paid for it.
6. Skill level goes up. Commission based pay requires a technician to be a skilled communicator and service tech. In the case of a pure salesman, he will sharpen his communication skills.
7. Reputation becomes more important. A commission based company never wants to get the impression of going for the “money grab.” It focuses the entire company on the critical task of maintaining brand.
8. Callbacks go down. No one wants to do double work for the same pay. Performance based pay encourages slowing down and doing it right the first time.
9. Marketing becomes more important. When your techs are not being paid for cleaning the shop, you will do your best to keep them in calls.
10. Service Techs get paid what they are worth. This is important. People deserve to be paid what they are worth. Not more, and not less. If you are receiving an hourly pay, then you are always in one category or the other.
11. Hybrid pay is another form of commission pay. If you are saying to yourself, “I’m hourly, and I get a bonus at the end of every month depending on how I performed.” Then guess what, that is another form of commission based pay. That’s cool too.
There is my list of 11 things to know about commission based pay. I hope you do something with it. “Like what?” Switch to commission, or at least a form of performance pay. That would be the first thing I would recommend.
What would you add to this list?