In the water damage restoration industry, compensating production team members can be an overwhelming task. We spend large amounts of our operating budget on this expense, dedicating 20 percent of our gross revenue to the compensation of production staff. This 20 percent goes straight to their wages, it doesn’t include social security payments, matching taxes, or worker’s compensation.
If we’re not careful, this 20 percent can quickly grow, especially when business is booming. At Power Dry, we’ve found ways to manage our compensation in a way that is profitable for both our business and our employees. Here’s a look at how thinking outside the box helped save us money on compensation of our production team.
Adopting Different Pay Structures for Different Roles
One of the biggest changes we have made is adopting a pay structure that is highly individualized to each team role. We’re not talking about simply paying different rates, this is done in every industry. Instead, we’re talking about paying some employees hourly, some hourly with a bonus, some a combination of hourly and commission, and others commission only.
This is important because it allows us to pay in a way that motivates our production team members and rewards them for the skill set without the risk of compensation costing us more than it should. In this blog post, we’re going to take a closer look at two roles and how their unique pay structure has profited our company, Power Dry.
Crew Chief
In this role, the team member is largely responsible for managing the team that will do water damage restoration work from start to finish. Most businesses in our industry have this position on their team.
We’ve long paid this employee an hourly rate but have made the switch to 100% commission. We’ve been able to do this by offering them a fallback rate, which is a rate we pay them if their commission payments to not average out to an appropriate hourly payment for their role.
Our Crew Chiefs are paid between nine and 11 percent of the job’s revenue. However, earning this high commission isn’t a given — they must manage the job well to guarantee the highest payout.
For example, Crew Chiefs are penalized with a lower commission rate if they pull on more team members to help them with the job. This saves our company money because they’re more motivated to complete the work with fewer hourly employees, which means lower labor costs for our company. Additionally, these team members are paid a commission for closing jobs, which is highly motivating.
Emergency Response Crew Chief
Our regularly employed Crew Chiefs are full-time employees. This means that we’re required to give them a certain number of hours each week, even when business is slow. At Power Dry, we found ourselves trying to juggle keeping enough Crew Chiefs on staff for busy seasons without hemorrhaging money paying labor expenses when there are fewer restoration jobs.
We created a new role to address this problem, the Emergency Response Crew Chief. This role is not a regular employee and their are no guaranteed hours each week. Instead, they are called in on an emergency basis and are paid a higher commission in exchange for their emergency rate.
In our company, these are ex-employees who have left the industry. They’re on-call staff with the skill level of a crew chief because they’ve already worked at Power Dry. They’re paid a 12.5 percent commission, with an additional two percent if they close a job and another two percent if they bring their own helper.
This is a role that averages $65 an hour. As you can imagine, these employees are incredibly happy with this rate and this motivates them to say yes when we give them a call. It isn’t just profitable for them, however, we’ve saved money since establishing the Emergency Response Crew Chief position because we have been able to reduce the number of regularly employed crew chiefs we have on staff. This allows us to take on large volumes of work without concerns about having enough staff.
Our Takeaway
Each company is different, and your water damage restoration company may not benefit from mimicking exactly what we have done at Power Dry. Our takeaway from all of this is to encourage business owners like you to think outside of the box when create compensation plans for your employees. Because we were able to question old ways of doing things at Power Dry, we created pay structures that motivated our employees and saved us money in the long run.
At More Floods, we help restoration companies operate their businesses in a way that is profitable and efficient. To learn more about the resources we provide our members, click here or call 1-886-667-3356.