Ok, I realize I may be lighting the fuse on a powder keg here….
Over the past few months, I have received a few calls and emails from Company Owners/Managers asking me for some insight on how to keep employees happy and retain them when things are slow in the industry. Unfortunately, this is a common issue we are all faced with at some point.
There is no easy answer to this because every Country, then the States/Provinces/Territories within them, each have different labor laws and Employment Standards that must be met. The trick is to find what works for YOU because what works for one, may not work the same for another.
I have spoken with many of our Members and there are a LOT of great Companies out there that know how to treat their Employees well. It has been proven time and time again that it costs us more to fire, re-hire and re-train a new Employee than it does to keep them happy in the first place!
In this article, I will NOT get into or discuss actual wage values. This is a very contentious issue as wages are regulated by the location, experience, skill level etc. etc. Contracts, Union Agreements and the actual type of work being done can all play into the end wage for the Employee and this is not the correct forum for that discussion. That must be done between you and your Employee/Employer on your own level.
Below are some ideas and methods that I have seen used for Pay Structures over the years in various locations around the Industry. This is in NO WAY a definitive list and should NOT be used as legal advice. I urge each and every Employer to know, understand and comply with your local laws governing Employment Standards.
- Hourly wage plus Overtime (if applicable in your area):
This is by far the most commonly used method for paying an employee. Not only our Industry, but in every Industry! Your worker arrives at the shop or location and is paid for every hour worked on that shift until they leave.
This generally is the best situation for the Employee but has some disadvantages for the Employer. Having to pay Employees for time that is not billable to your client is usually the biggest sticking point and can definitely hurt your bottom line.
- Hourly Wage paid from Job Ticket only:
This one CAN work if managed properly. You need to fully understand your Operational Costs and average hours worked over a year in order to come up with a fair and equitably wage to pay. You have to take into account hours worked by the Employee that don’t show up on the Job Ticket. We honestly cannot ask our Employees to work for free…there has to be some level of compensation for non-billable hours factored into the final hourly wage paid.
A variable on this can include straight wage (no overtime) plus a daily job bonus. This is usually a percentage of the Job Ticket before Taxes. This bonus will cover overtime, non-billable hours, shop work etc. When I first started in the Industry, this was the pay structure I worked under and to be honest, it worked really well. My average hourly wage ended up being higher than most other companies were paying and it was very easy for me to keep track of exactly how much I made each day.
The biggest potential problem here is that an Employee can try to “pad” the bill to make more money and this, in turn, could upset a client and possibly cause them to stop using your service. Again, managing this type of system can be difficult if not done correctly.
- A minimum monthly salary plus and hourly “top up” when working:
This was very common in Oilfield Circles many years ago. It may still be used now, but, I’m no longer involved with that type of Industry so I cannot comment on how mainstream this is.
As with any wage structure, you need to be on top of your costs and workload in order to come up with numbers that work for both sides. Pay too much salary and you Employees may be less inclined to show up when called. Pay too little, they will be off looking elsewhere pretty quickly. Knowing the number of hours worked on average, is crucial to calculating the hourly top up wage that is offered. You can put yourself in the hole if the Employees work too many hours.
A big advantage to this type of structure is that can help retain valuable employees when the workload drops. At least they are making enough money to survive and will be there when your phone starts ringing again. Do your homework before heading down this road!
- Straight Commission paid off the Job Ticket:
This structure is usually reserved for Contracted Employees that are required to handle their own Workers Compensation, Income Taxes and Insurances. It can work for your hired Employees as well if the numbers make sense. Again, this option can lead to padded bills and potentially upset Clients.
These are just a few of the potential Wage Structures available. As I mentioned before, the onus is on you, the Employer, to do your homework and figure out what works best. Again, please follow all local laws and requirements. We owe our Employees that at a minimum!
I realize that for every positive comment on any of these pay structures, they will 100 negative ones. I wanted to table this discussion for this exact reason. Let’s see what other ideas are out there? Let’s see if we, collectively as a group, can help each other out? At the end of the day, it is still up to YOU to keep your Employees happy and keep them busy. Don’t give them a reason to leave! If you can learn from another’s experience, why not take that knowledge to heart and build from it?
Give your Employees the tools and training for them to grow and move on….but treat them so well that they never want to.
I would love to hear from you on this, or any other topic. Please feel free to send me an email at email@example.com and I would be glad to share your ideas with the rest of the Nation. Together we can continue to build this great Industry.
Until next time, keep muckin’ through!