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  1. #1
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    Default Paying on commission vs hourly

    Clearance
    I am considering paying my lead guy on commission this year. Any comments or pitfalls I should be aware of? I appreciate your advice.

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    Paul,
    We pay 30% to our crew leaders( Depending on time w/ company). Out of that % they pay their labor.

    Crew leader makes 30% of every job he does.
    Laborer makes $10 hr

    Simple example: Job invoiced $100 takes him and his labor 2 man hours to complete job. His cut is $30( 30% of $100)- $10(1hr for his laborer)= He makes $20.

    All workers are employed by us (no contractors) and we do all the pay roll. We have a spread sheet breakdown of all the details for each crew leader put in with their check so they can see exactly how it is all broken down.
    Hope that helps.

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    This is always debatable but what works for us is 35% available commission to the Team Leaders broken down by;



    · 25% of total revenue generated minus the cost of hourly labor of all his helpers.

    o Ie. a $800 8hr. day pays the team leader $200 - $80 (helper at $10/ hr) for a total pay to team leader of $120



    · 10% bonus available for the following achievements – This is tracked by and paid every 2 week per pay period

    o 6% bonus paid for customer satisfaction of clients and staff. No complaints from jobs performed (random surveys performed by office staff). No complaints from office staff (ie. paperwork properly filled out, company policies and procedures followed)

    o 2% bonus paid for dependability of team (Team Leader and his team members arrived on time daily.) This helps puts the management of the employees on the Team Leaders.

    o 2% bonus paid for vehicle and equipment management. A checklist is used to inventory and inspect equipment as well as maintain the exterior and interior of vans clean and professional looking



    When a Team Leader receives full bonus in the scenario above his pay for that day goes up to $200. ($800 revenue x .35 - $80 labor = $200) In this example a Team Leader earns $25 per hour and his helper / trainee earns $10 per hour.



    Our direct labor costs always remain at 35%



    This may not be the perfect set up but is currently producing reliable and profitable results with little employee turn-over.

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    Brian and others,

    What method have you used to track and compensate for emplyee overtime hours, this being compliant with Federal Law?

    I have read that even if you pay commission, weekly hours must be tracked and overtime paid to employees.

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    Clearance
    Hello Brian,



    What do you do if the job is not profitable? Job was under bid. Some unforeseen problem that made the job go over estimated cost. The commission is paid at 35% any way? U lose? We win some & lose some hoping it all washes out in the end but how would this effect the Team leader commission?



    Also interested in how you pay/track overtime?

 

 

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