Getting pay-back

Features - Cover Story: Benchmarking your Business

See how your pay rates stack up to industry averages and what perks and performance-drivers keep good people on board.

November 1, 2012
Lawn & Landscape

Location, location … that’s a key driver in pay rates for positions from mower operator to CEO. Cost of living, availability of labor and the skill of those workers, plus local economies all figure into the going rates for workers in the landscape industry.

But there’s more to pay than doling out an average (or more) rate and expecting potential employees to clamor for a position at your company. Performance, skills, certification, and benefits weigh into the pay scale.

For one, pay can work as a competitive advantage, attracting workers who might be considering minimum wage jobs in other service industries. “If you are going to have people do physical labor, you have to pay a bit more than the going rate,” says Todd Pugh, CEO, Enviroscapes, Louisville, Ohio.

Pugh says his firm attracts better employees because of workplace policies including pre-employment drug screening and background checks. Plus, the firm maintains a smoke-free environment. “We are looking to work with a little bit of a better person. If we are asking for a better person, we have to pay a better rate,” he says.

Also, in Northeast Ohio where Enviroscapes is located, oil and gas companies are paying $20 or more per hour for truck drivers. “They’re guaranteeing them benefits and year-round work,” Pugh says. “It’s important for companies in our market, whether you’re a landscaper or anyone who has to hire someone to work outdoors, to continually create better work environments.”

That includes challenging workers to give their all and compensating them for their efforts. Pugh believes the greatest opportunity in the future is performance-based pay as a way to keep the most productive workers on board. “Every business has waste,” he says, relating that number to about 20-30 percent. And that’s a lot of extra fat. “If you take our business at $9 million, 20 percent of that is almost $2 million.”

Getting top performance, which essentially means realizing the full investment of your labor expenses, means rewarding those who work hard for the business. “We can be hard on people in the field, and those are the guys we should congratulate more than we do because they are the ones out there making us money,” Pugh says.

Pugh has come up with some creative ways to stoke performance, involving tracking daily and weekly estimated crew hours on a white board. Each branch sends in a report to home office each week, and these reports are shared with the entire company. The report includes estimated to actual hours, indirect time and enhancement sales. “It gives us a good snapshot of what is happening at each branch,” Pugh says.

“We are constantly sharing best practices among branches,” he continues. “And there is this branch competition by awareness of the numbers.”

So, how does your business stack up in terms of pay rates for employees and the programs you have in place to attract and retain top talent? Here is a roundup of pay rates throughout the country and pay trends on the radar.

Standard rates. Entry-level mower operator pay rates depend on the availability and skill of labor, and what other service companies are offering workers. (Remember, you’re not just competing with other landscape firms here.) Jim Huston, president, J.R. Huston Consulting, says a starting mower operator in the northeast makes $10-$12, while the same position in the west/southwest garners about $8-$10.

The same goes for the South, while the Midwest matches the northeast’s $10-$12 rate. “It’s a matter of supply and demand,” Huston says. “And, it’s more expensive to live in the northeast.”

Major metro areas pay employees more, too. “The closer you get to a city center, the higher the wages go across the board,” Huston says.

A foreman in the northeast, midwest and high-end residential or city centers will make $15-$25 dollars an hour. In the South, Southwest and West, $15 is more average. “If an employee can work with minimal supervision, he or she is worth at least $16 or in the low $20 range,” Huston says.

In California, where labor rates are lower for entry-level workers, managerial wages are higher. “Laborers are a dime a dozen,” Huston says of the reason for this gap.

As for office staff, an office manager in the south/southwest might make $15/hour or about $30,000 a year. “But I’ve seen office managers earn from $15-$20 and upwards of $40 and higher per hour,” Huston says of the vast range here. Still, in the southern markets, that labor rate tends to be less. “When you’re dealing with labor, you have the influence of supply and demand, and wage rates tend to be lower in the southern states for whatever reason,” Huston says.

Matt Boelman, vice president of Perficut in Des Moines, Iowa, says an entry-level maintenance laborer earns about $10-$12 an hour, and foreman range from $14 to $16. “An entry-level account manager could start in the $40,000 range and advance to $75,000,” he says. As for administrative staff, the pay rate depends on responsibility. Some staff are paid $16-$18 per hour, while others earn a salary that exceeds $50,000 annually. “We look at experience in the marketplace and the level of certification that someone might have related to their skillset,” Boelman says.

Pugh says his foremen-in-training make $10-$13, and crew leaders make up to $15 per hour. Crew size dictates pay rate. So do certifications. “The biggest factors (affecting pay) are responsibility level and the type of property they work on,” Pugh says.

Moving on up. Pay rates are a starting point, but many employees want to know how they can move up the ladder. Perficut’s tier system is a structure that rewards performance with higher pay. Certain performance targets must be met to move to the next tier. “This system is explained at the start of employment,” Boelman says. Rather than spending too much time studying competitors’ pay rates, Boelman says the company focuses on its tier system. “We set our pricing matrix and our levels of pay based on where we think they should be if employees can perform the skills based on our standards.” Enviroscapes also strives to create a career path for its people. And, the company offers perks to sweeten the pot.

For salaried positions at Enviroscapes, a “total package” can include a vehicle, retirement savings and health benefits. That’s worth about $10,000, Pugh says. “All employees are eligible for a 401(k) after working 1,000 hours, and we match up to 3 percent,” he adds.

Employees want to feel that their value to the company is worth more than a dollar sign, Pugh says. “You have to treat your people as an asset and not a liability,” Pugh says. “If your people are an asset, that investment will grow. If you treat them as a liability, that liability will also grow.”