Mike Andes (speaker) argues that paying employees by the hour is inefficient and misaligned with owner incentives. He advocates replacing hourly pay with a pay-for-performance model where employees receive a percentage of the labor revenue they generate. This aligns incentives so both employee and owner prefer quicker, high-quality work, improving retention, employee earnings, and reducing callbacks.
Paying your employees by the hour is lazy, ineffective, unprofitable and again all your best talent is not going to be going to a dollar per hour business in the future. There's a more profitable more efficient way that you can pay your employees more, be able to retain them and they are able to see the fruits of their hard work on dollars per hour. The employee and the owner are going in different directions. The employee wants the job to take as long as possible because the longer the job takes the more money they make whereas the owner wants the job to take less time because the less time the job takes the the more money the business makes. When if you do pay for performance where they get a percentage of the labor revenue that they earn for the job, guess what? You're now both going the same direction. The owner and the employee wants the job to get done as quickly as possible and to a high enough quality where there's not callbacks and the customer is satisfied.
