Wednesday, April 23, 2014

Home News The ABCs of commission pay

The ABCs of commission pay

Industry News

ABC Home & Commercial Services compensates maintenance crews on a commission-based pay plan. Here’s how it works and why workers stay on board.

| June 7, 2012

The more crews work, the more they get paid at ABC Home & Commercial Services, which targets the Austin, San Antonio and College Station, Texas, markets. That’s because maintenance employees get paid on commission rather than taking home a base salary – a system that owner Bobby Jenkins drafted over from the pest control side of his business.

“In every analysis of business processes we do, I am trying to make sure that there are three entities that win: customers, employees and the company,” Jenkins says. “I firmly believe that commission-based pay is in the best interest of all three entities.”

To prove this to crewmembers before rolling out the system to all maintenance employees in all locations, Jenkins tested the pay model with just one crew. “We didn’t just ram it down everyone’s throat,” he says. “We ran the pay plans side by side, and we told them, ‘We’ll pay whichever one is better.’ After several pay periods of seeing the commission-based crew getting paid more, everyone else was happy to go on that plan.”

Gaining buy-in was critical for rolling out the commission-based pay model, Jenkins says. “You have to demonstrate that commission-based pay is better for everyone involved,” he says.

Employees get paid more, and in return, the company gets focused, driven workers. Quality delivery is the real barometer of whether the system works, though. Commission-based pay isn’t all about rushing through a route to complete more jobs in a day. At ABC, hours are tracked, detailed route sheets are distributed that denote a production value for the day.

“There’s a fixed commission for the revenue generated per job, per day and at the end of the day, those commission revenues always prove to be higher than if employees were paid on an hourly rate, even with time-and-a-half,” Jenkins says. 

 

Diversifying the core. ABC Home & Commercial Services was founded as a pest control company and began offering complementary lawn care services 12 years ago. Shortly after that, the firm branched out into lawn maintenance, landscaping and irrigation. “We saw that model of diversifying our service offering seemed to work well,” Jenkins says.

So ABC delved into the handyman business, then heating and air conditioning, plumbing and electrical. Now it also offers tree trimming, pool cleaning and other repair and maintenance services. Anything in or around the home is territory for ABC Home & Commercial.

Covering more ground has resulted in a wider market and deeper customer relationships, Jenkins says. The risk of this model: “It’s a constant challenge to make sure that every line of service delivers the same high quality of service, and if one of them doesn’t, you could jeopardize losing multiple services with a customer,” Jenkins says.

The upside to the business is being the household solution – a real one-stop shop. “The opportunity to do three, four, five different service contracts with one customer is incredibly powerful,” Jenkins says.

Plus, it’s a way to grow the business. “You can grow a business in multiple ways,” Jenkins says. “You can open new locations in different markets, or you can focus in your market and build diversity of services so that each client becomes every more valuable to you – that’s the model we’re following now.”

Jenkins has stuck to his Central Texas service district and concentrated on securing greater commitment from each client by locking in multiple contracts with each customer.

To maintain the quality clients expect from ABC Home & Commercial, Jenkins expands into new services by hiring in a professionals in their fields. “I have learned that we are completely dependent on whoever is running the line of business,” he says. “If I have a good manager for that line, we’ll be a good business. He will know what that business entails. He’ll hire and retain good people to provide the service. The most important piece is, whatever the new line is, you must have someone who is taking charge of it who is philosophically in line with how your company has historically done business.”

Sure, Jenkins has made hiring mistakes. The first manager he brought on to run the maintenance division wasn’t “the one.” “We did suffer at first, and I had to bring over a manager who had been with me for 20 years and really understood what we meant by quality service and customer care,” Jenkins says, underscoring the importance of hiring managers who understand the company’s values.

Jenkins also has learned that a single manager cannot be responsible for all lawn and landscape services. The maintenance division runs 25 crews. “It’s a good size operation,” he says. This year, Jenkins decided to separate the lawn care and lawn maintenance divisions, assigning managers to each department.

“Lawn maintenance and lawn care have different labor pools, different business models,” Jenkins says. “The lawn care piece is more similar to our pest control business from a business-model standpoint,” he says. For example, one or two employees in a truck may service accounts vs. three-man maintenance crews.

Now, all employees in every service line under the ABC Home & Commercial umbrella are paid by commission. “We have always paid commission in pest control and termite services,” Jenkins says. “We have always been a commission-driven company – we’ve never been an hourly place.”

So it made sense that lawn maintenance would follow suit.

 A commission culture. Crewmembers liked difference they saw in commission vs. hourly pay when Jenkins tested the model with a single crew. So when Jenkins followed the same start-up plan in his other locations, paying one crew commission and the others hourly so the crews could decide which model yielded a bigger paycheck.

Every time, commission wins out, Jenkins says.

And the deal is, Jenkins will honor the greater of the two pay rates. Hours are tracked on a pay-period basis – employees clock in and out each day. “Each guy knows he makes X percent of whatever he bills that day,” Jenkins says.

Detailed route sheets that list every account needing to be serviced that day are distributed to crews. A total production value is assigned for the day. Crews work through their accounts each day – some accounts earn higher commission than others.

“There will be some wins and some losses, but over a period of time, those balance out and overall this is a better pay system,” Jenkins says. “You can’t look at it on a day-to-day or account-by-account basis. For some accounts, the commission will be light. And for some, the commission will be heavy. But as a pay plan overall, it’s much more valuable to everyone involved.”

There are three levels of commission determined by an employee’s role. On a three-man crew, the crew leader gets 15-16 percent and crew members 11-12 percent. On a two-man crew, the crew leader receives 21-22 percent and the crew member earns 16-17 percent.

The graduating commission scale motivates employees to stay on board and work for the higher percentage. “I hate turnover in any of our divisions,” Jenkins says. “We want to make sure we have incentives and benefits to attract and keep good people.”

The commission pay scale is just one of the benefits ABC Home & Commercial offers. All employees can take advantage of company health insurance and everyone has a 401(k) opportunity. “Everyone gets a profit-sharing opportunity,” Jenkins adds. “All of our drivers have the ability to take trucks home at the end of the day. It’s a fairly rich benefits program for everyone who works here.”

The result is a talented labor pool of workers who stick around year after year and help drive the company’s success. Because when the company makes more money, so do they. And when they work hard for the company, they reap the rewards.

“We have developed a reputation in our market as an employer of choice,” Jenkins says. “I think when are people are able to compare what they make at ABC vs. other places, it proves to be favorable compensation.”

 

 

 

 

 

Top news

The Death Book

Sure, it’s morbid. But it’s essential. Create an instruction manual for your company in the event of your untimely demise.

An anti-complacency culture

Employees at Capstone Landscape Management are pumped – and the company is primed for growth. Why? There’s no opportunity to get stale.

Cat's Built For It trials

Five of Cat's machines go head-to-head with a stack of blocks in this video.

Morbark increases safety emphasis

The ChipSafe shield and training requirements are designed to increase brush chipper safety.

PGMS accepting Green Star applications

Professional Grounds Management unveils new system for submissions.