How I Pay My Employees $30/hr to Mow Lawns

I'm going to explain today why 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.

I believe that paying your employees by the hour is lazy. 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. Today I'm going to show an actual project being done. And I do lawn care, I do landscaping. This works for any home improvement business when you have project based work or recurring jobs on a route. And today we're watching a project that's being done. It's a BlackBerry bush removal, literally clearing out BlackBerry bushes. It's not fun work, but it's work that needs to get done. And this customer specifically wants to haul the debris out of there. They didn't just want it chipped away. So today I'm going to walk you through the entire job, show you the notes, show you the actual job being done, and show you how much money the employees made on what we call P4P, which is pay for performance, the replacement, and the alternative to dollars per hour.

So as I continue with the video, keep watching the video here of the actual project being completed. Because when I'm done talking, giving my little spiel, I'm going to the whiteboard and we're going to go over the numbers of this specific job, the real numbers. So here are the job notes. It's a property cleanup. The project area is only the backyard. We're going to knock down the BlackBerry bushes and the grass and all the undesired growth and anything that's encroaching on the house, we're going to rake out all the leave, remove all the debris and haul it to the dump. We're going to also make a video for the crew so that they know exactly what to do and the estimator doesn't have to come back to the property. And it also says the client had to obtain permission to park the Augusta truck at the next door neighbors to load debris. Must have been just way easier for them to be able to get access to the backyard. So on this project we have 32 budgeted hours. That is how long we expect this job to take. So watch that as I begin to talk. Keep an eye on it, because I want you to think about how long you think it would be taking them. And then we're going to break down the actual numbers, how long it actually took Them how much money it was made as well as how much they would have otherwise made if they were just getting paid by the hour. Okay, so why do I think that paying an employee by the hour is lazy? It's lazy because it's very simple to do and everyone understands it. And just because everyone understands it and it's really, really simple and it makes a lot of sense and it's been done for tens of years, decades, hundreds of years, does not mean that it's right or the best thing for the business or your employees. Now, because I make social media content and stuff online, people bash me all the time. You don't care about your employees and you, you hate employees and you're. And you're greedy and all the rest of it, and that's fine. But ultimately, the number one reason why I started pay for performance P4P because I was just so unhappy with the fact that I could not pay my employees more. I wanted to be able to afford to pay them $25, $30 per hour when they were working really hard and deserving every single penny of it. However, in lawn care and landscaping, we don't have 50, 60% profit margins. We are not a tech company. We have thin margins and we need to operate on them. And so I wasn't able to give away a dollar per hour, 25, $30 base pay for some money. Somebody that has very little skill in the lawn care industry. But if they have a family, like I felt bad I could not provide for them when they worked so hard. So it's like, we'll just give them a raise. Well, then how do I give someone a raise? Based upon if the business can afford it. Based upon if they work hard in front of me. Based upon like this. In traditional workplaces, this is how people get raises. Look good in front of the boss, Take the boss out for drinks on the weekend, get cozy with them. It doesn't matter about what the team thinks about it, just as long as your manager or boss thinks you deserve a raise, then you'll get a raise. And then a lot of times raises go to the people who just ask for them or need them the most. When that's not fair. What should be done, if you have a meritocracy inside the company, is the harder you work, the more money you make, the more you contribute to the business. The more money you make for the business, the more money you should make. I believe to my heart that every single employee wants to be paid this way, the more they contribute to the business. The more money they make. Now, how you create a system around that is the hard part. And that's why people don't do it. Because I think 99% of business owners would agree with me that they would rather pay people based upon their performance compared to just how much time they spend on the job. However, the thing that they then don't take a step on, the thing that makes it difficult to do, that they shy back from, is, well, how am I going to calculate that? I've got to create parameters and rules and I've got to create this whole framework, a game and present it to my employees. And they've got to understand it. And it's challenging. It's not easy to make this massive switch away from what everyone understands, which is dollars per hour. But this is what I want you to think about 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 they get 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 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. That is what P4P is. Pay for performance is a way of paying your employees by how hard they work and how efficiently they work and how profitable they are for the business instead of just how long they clocked in. Whether or not you need employees more so you bump up the wages more. Whether or not you know somebody that, oh, they worked for 15 years with the company so they make more money. How is that fair? That someone who's just worked with the business for 15 years makes more money than the person that just got started two weeks ago? But hustles, shows up really early, is educating themselves, makes twice as much money for the business, doesn't spend 45 minutes at lunch taking a nap and then 15 smoke breaks and 48 bathroom breaks and three lunches and siestas throughout the day. These are the employees that deserve more money. But why does it take them 15 years to earn it? Why should you have to stay at a business for 15 years in order just to get a half decent wage? You should be able to work hard and within a matter of a couple weeks of getting trained up, be efficient and profitable and be able to make more money for you and your family. And by cutting out all the waste in the business, the business can still be profitable and more profitable to the point where they can afford benefits. We are able to afford health benefits and profit sharing. Once we instituted pay for performance on hourly, we were scraping by. And people are like, man, you're really passionate about P4P. I've invested hundreds of thousands of dollars in developing P4Psoftware.com because it completely changed my relationship with my business. And with. And now I know I feel a lot better knowing that if someone works their brains out all day long for us mowing lawns, right now they're making 26, $27 per hour. On average. There's people making over $30 per hour. And they don't have a degree, they don't have a lot of skills, but they work their brains out and they deserve every single penny of that. But in the past, I could never afford to pay everybody that. It was just so hard to gauge or measure or track who was actually driving business results and deserved a higher compensation package. So for everyone in the comments that says, well, how are you paying employees so much that the business will just become unpro? By cutting out waste that serves nobody, doesn't serve the customer, doesn't serve the employee, and doesn't serve the business by cutting all of that out. That's how you're able to afford to pay the employee more and still the business be profitable. And the best part of it all is that now the system of P4P is managing the employees Instead of you micromanaging and looking over their shoulder, rolling up to them on jobs, always texting them like, hey, what are you doing? Why are you at so and so's house? Why are you at the gas station? I saw you on your phone. What are you doing? I don't do that anymore. Because, like, look, they want to be on TikTok for half the day, that's fine. They're gonna make less money on P4P. That's their decision. And I believe that most employees don't want to be micromanaged, especially the top performers. They don't want someone looking over their shoulder and doing quality control by rolling up on them at a job. They just want to be able to do their job to the highest extent and the highest level. And if they're getting paid based upon that performance, the happiness of the customer and the speed at which they do the job and the efficiency and Profitability that is brought into the business, I believe it's a win, win, win. So now that you've heard me rant about this, I'm gonna go to the whiteboard. I'm gonna break down this job that you've been watching them doing, this BlackBerry cleanup. We're gonna break. And I truly believe that this is something you should consider. P4P software.com training, free videos on how to institute this in your business. And if you want to use the software, I believe it'll save you a lot of time because it only takes one minute per day per employee to calculate these numbers every single day. Let's go to the whiteboard and break down this job.

Okay, we're at the whiteboard now. Let's walk through this job and actually go over what happened with this project that we've been watching. So, first and foremost, the budget hours, 32 hours. That is what was determined by the estimator. And this is labor only. We're not going to talk about the debris or estimate fees or any other costs besides just the labor. Because the only thing that matters when it comes to P4P, employees don't get a percentage of the revenue. They get a percentage of the labor revenue. And on this job, let's just assume that we were charging $80 per hour for this work. I think this local location does more like 90. I don't remember, but let's just use 80. If we used $80 per hour and that's what we're charging for labor, that would mean that the labor revenue equals $2,560 as the total labor revenue. Now, there's two employees in this job, as you saw. And now what we're going to do is walk through three different scenarios. Does the job take them 24 hours to do? They crush it. They beat budgeted hours. They hit budgeted hours. They match what was expected in terms of how long the job was going to take, or does it take them longer than expected, and it takes them 38 hours to get the job done. So here I've wrote how many hours each of the employees would work, because again, there are two employees. So if there's 24 clocked hours, that would mean that both employees work 12 hours each. So let's break down the math. And this is the beautiful thing about P4P and pay for performance is I'm giving them a percentage of the labor revenue. I'm going to assume in this case that I'm giving 33%. Okay? Now on P4Psoftware, dot com you can customize that, you can change it, you can change it based upon the type of job or services, that's fine. I'm just going to assume 33% or 1/3 of that labor revenue is going going to the employees. What that means is before the job even starts, I know that the total wages paid out to the employees on this job is going to be $853. Doesn't matter how long it takes them. Again, they're incentivized to get this job done as efficiently as possible and make sure the customer is happy. So there are no callbacks. They're going to do a walkthrough, they're going to make sure the customer's happy. But ultimately, before the job starts, doesn't matter who's working on the job, who my most efficient people are, it doesn't matter the weather, it doesn't matter what happens to the equip. I know my wages will be $853 on this job. I would much rather have a fixed expense of labor than having it always all over the place based on weather, whether or not people will want to work that day, whether they feel good, all a host of different types of variables that come into play and affect your profit margins as a business. Alright, So I know I'm paying $853 because that's 1/3 of the labor revenue and that's a fixed expense that I know I'm paying on P4P. Now the question is, well, what does the employee make? So let's go ahead and calculate this. If we take $853 and we by the 24 clock hours, if they get this job done and they really crush budgeted hours, they're literally going to make $35.54 per hour on this job.

That's incredible.

Now they deserve the $35 per hour. Some people are like, oh, they know this is entry level work. That's insane that you're doing it. I just watched them and anyone could do that after a day of training. You're right, but they kicked butt and they worked hard the entire time. They beat budget hours literally BY like what, 20, 30%? They deserve $35 per hour. Because guess what? If you didn't have this P4P option where they got paid based upon how quickly they got and efficiently they got the job done, guess what? They would have made sure it took 32 hours. They would have taken more breaks, the drives, the dump would have been a lot longer, longer lunch, more smoke breaks. More going to the bathroom, more on their phone, all of that would have happened. I guarantee you, when employees are getting jobs done faster, if there's no incentive for them to get the job done quicker and more efficiently and more profitably, they're not going to. So the fact that they cut out all that extra wasted time, that's how I'm able to afford to give them the $35 per hour. Alright, they crushed it. They absolutely annihilated it. Now let's go ahead and assume that they hit budget hours. So it takes them as long as was expected in the job. So it's gonna take the 853 because again, that is a fixed amount that we're gonna be paying the employees. And we divide that by the 32 hours it took them to do the job and now they're making $26, 65 or 66 cents. Alright, so $26, not bad. They hit budgeted hours, they got the job done in what was expected of them in terms of the estimated time. Now, usually about four out of five jobs we are going to be able to beat budget hours. But there's going to be times when things go wrong. Weather changes, maybe something wrong happens on the job. You're starting to dig out something and you hit a rock. If you're doing a digging job, whatever it is, there's always things like that in the job. But I want to make sure as the business, I fixed my amount of wages so I don't have massive variety like, oh, 10% profit on this job, 80% profit on this job. Oh, negative, I lost my shirt. 50% on this job. When you have those fluctuations because of labor being so variable, that's why you lose your shirt on projects. And you have months where you do really good and months where you do really bad. So still the same $853. Let's assume that maybe they either could be a host of reasons. They could be A lazy, they could be bad on, not trained correctly, C bad weather. Four, A lot of times this is what happens. They run into unexpected and unforeseen things in the job that the estimator did not account for. Okay, well, let's go ahead and do the calculations here. We have $853 in wages that we're paying. Let's divide that by the clocked amount of hours that took them to do the job and now they're only making $22.45. $22.45. All right, not great. Below the average. That's currently at this location, if they take this long, but ultimately not horrible. What you're protecting yourself against on P4P is this job taking 60 or 70 hours because someone just wants. They're happy with base pay. They're happy with 18, $19 an hour that you give them as an hourly rate. So what do they do? They just SAP the clock. They just take tons of time. And all that wasted money is why you can't pay your top performers what they deserve. And they go out and kick butt every single day. The reason most business owners won't make this change is because this makes them afraid. It's a whole lot easier for them to say, oh, 24 hours. That's how long you took the job. Great, I'm going to multip that by $20 per hour. There's your paycheck. I'm sorry, I'm just being straight up with you. You are being lazy. If you're just paying dollars per hour and giving raises just infrequently and randomly, like, why is someone getting paid more Simply because they are, you know, hit a milestone of a year or two years or three years, they're not bringing any more revenue to the business. They should be paid based on results. And if you want to create a culture where people are motivated to get work done, cut out waste and figure out ways to make the jobs get done faster, you better be making sure that incentive programs to reward that action as soon as possible. Not quarterly, not an annual bonus, but every single day. They get paid based upon their performance and how quickly they get the jobs done, while also retaining a high degree of customer satisfaction. Because I know everyone's out there like, oh, no, if you make people go faster, they're not going to be able to do a good job and they're have low quality.

Okay, great.

Go watch the videos on p4psoftware.com training. We've thought this part through. We've thought about all the ramifications, and we've ironed out the kinks. Please, I beg of you, if you're in the home improvement industries, please go check this out. This changed my business forever. It changed my relationship with my business, and it changed my relationship with my employees. No more micromanaging, no more playing favorites. They don't have to feel like they have to look good in front of the boss. They know that the results speak for themselves and it speaks for their paycheck. And if they want to work harder and make more money, they know exactly what to do. Go talk to the people that they can see the.

On.

On the leaderboard that we share on the software. They can see who's making the most money. They can go talk to that person, hey, I got to learn from you. I got to make, you know, I got $300 extra car payment I didn't know I was supposed to have this month. I got to make some money. Can you please show me what you're doing to get ready for your jobs, be more efficient, cut out waste and beat budget hours. That is the type of culture I.

Want to be around.

And I truly believe it'll change your business. It'll change the lives of your employees. You'll be able to pay them what you want. I truly believe most business owners in home improvement industries really do want what's.

Best for their employees.

They're good people. They want to pay more to their employees, to the ones that deserve it, the ones that are actually doing the hard labor that is not fun, not exciting, but they're getting it done to provide for their families, and they want to be able to provide more for those families. I truly believe P4P is the solution. I beg of you to do the hard work. It's not easy to switch, but once you have done it, it's the best thing you'll ever do for your business. Please check out p4psoftware.com training. Also check out my book. It's on Amazon. You can get it for a dollar if you would like to read it digitally. Or you can get it on audible. I can't fix those prices. Those are done by Amazon, so they charge, I think, $19 or whatever it is. So please take the time, take the effort. We're heading into the winter season. This might be the time to take a few months, use the software on the back end. You can use it for an entire month for completely free. I'm also gonna allow you to talk to a CPA on our team, a certified tax accountant that is able to actually walk you through any questions you have about P4P. And this is a massive cost to me, but I've just seen it change my businesses, change the businesses of our Augusta Lawn Care franchisees. And I desperately want this to happen for you. So please check it out. We're constantly developing and improving the software. It's not perfect. I'm not like Google or Apple here. But we're making it better. Every single day, every single week, we're adding new things to it. And I truly believe it will change your business. Take one minute per day per employee, and change your business forever.