How to Switch from Hourly Wages to Pay-for-Performance

Ladies and gentlemen, welcome. We're talking about paper performance today. Doing a live stream, a live webinar and get everyone to hop on live.

We're gonna get started in just a few minutes. If you are in the waiting room, in the comments just on the side the chat, let's go ahead and put where you're coming from and the name of your business. Appreciate everyone hopping on today. First thing was new that I've never done before was the asking what your revenue was on the registration for today's webinar. Very enlightening. I was amazed actually at the size of some of the businesses. The average size of today's business in today's webinars is very sizable. So I know this topic is mostly once you have a lot of employees and so it definitely attracts a much larger sized audience typically. So welcome to Jordan. Jordan Midgley. I'm gonna go out on the limb there. Reggie from 907 Lawn and Landscape. Welcome. Thank you everyone. If you're just joining us, go ahead and introduce yourself, tell us where you're coming from and the name of your business and we'll get started here in just a couple minutes. We'll be on Skia. Jewel. Jesse Miller. Welcome. Superior Landscaping. We got Anchorage, Oklahoma. Oh no. Alaska. Reggie Griffin. Welcome Damon from Indiana. Indie Steamers. Let's go. Dalton Slickers, Platinum Landscape. Aiden Fox from Fox Pro Landscaping.

We got Alex Campbell from Campbell's Lawn and Landscape. Got a lot of lawn care and landscapers. It's because the way I pitched the days with most around lawn care and landscaping, I'm going to be talking mostly about that. But if you're not in lawn care and landscaping, paper performance works inside of pay for performance software. About 30% of people that use the software aren't even in lawn care landscaping. We got Eric from F and V Contractors LLC in Houston. We got Jordan from Lawn Life in Victoria, B.C. not far away. Let's go. We got Steve from Maryland, Jason Duckworth. Jarrett Slickers. Welcome everyone. Thank you for hopping on. I really appreciate it. I know I did take a little bit of a jab in my email and the promotion of the day's webinar saying that I do have the P4P trademark officially awarded to me. But I also want to make it very clear I am thrilled when other people are using P4P teaching P4P. Nothing makes me happier. So I don't ever enforce the trademark. But I do own it because I did come up with that term P4P way back now. I didn't come up with like piecemeal kind of working or commission pay. But that term P4P is mine and I wrote the book like four years ago. But I appreciate everyone hopping on today again. We got Chris from Highland, Illinois. We got Christopher from a team in Alberta, Canada. Got Travis from Grimsley Lawn Care. We got Landon from Revision Solar. Let's go. Oh, very cool, Brian. That's cool. I was looking at your website this morning. I always look through members websites, so good stuff. Joseph from Denver. Sean and Janet. Let's go. We got duo. Let's go from Illinois. Welcome everyone. Thank you for coming on. We got three season lawn and Landscape from Florida. Paul from Green Earth Landscape down in Arizona. Got Chris. We got Troy from Lawn guys. All right, cool. So let's go ahead and get started. I know people are still joining.

In from the chat. I apologize for my voice a little bit. I've been fighting stuff for the past week in my throat and snotting all over the place. But let's go ahead and get started. I thought it was important to do this today as kind of like the spring rush has finished. We're now in the summer. A lot of us actually have the time for this sort of sit down, let's look at what's been going on and assess really our teams, our efficiency and really what's next for the business. And so I appreciate all making time. It is 7am my time, but I know for most of you it's 8, 9, 10am But I appreciate you all being here. I promise I won't be coughing the entire time.

Let's go get started. I'm going to do about 20 to 30 minutes of a presentation and then I'll go right into Q and A. And so I want to kind of frame up exactly my story with pay for performance and why I'm so passionate about it. And so if you see me get pretty worked up over pay for performance, it's not because I have a software or because I have a book. It is simply a matter of.

I know what it did for me and it completely changed my business. It it took me from making nothing and being very, very frustrated and not being able to pay people what they are worth and being very, very frustrated with my business to making it very profitable, having time to go scale using the franchise model, being able to do a lot of different business ventures because I was able to take my locations and have a system that ran it and kept the labor efficient while I was gone. And so I do get worked up over this and so a lot of times because of that, people think it's because I'm trying to sell books or I'm trying to sell the software. And although I do that in order to be able to educate people about Pay for Performance and make it easier to run the system inside their business, I want to be really clear in that there are less than 6% of people that have signed up for Pay for Performance software that actually institute it and actually are able to run it. And so I have failed in the past to educate people enough and give them the tools required to actually make the change from hourly into P4P. There are more owners of Augusta Nation running Pay for Performance as it should be ran in its entirety than every other company in the world in terms of. In our software. And so I can see the software, I can see how people run P for P, I can see what people are getting paid. And. And to date, only about 6% of people that actually sign up for an account actually will run Pay for Performance to its full extent. As I talk about in the book, as I talk about in P4P university. So I want to give this presentation and my mission in home services is like, I really don't care if you use my software, I don't care if you get the book. I just know what this did for my life. I didn't know what it did for my business, I know it did for my employees. And I just really, really beg for the next like 30 to 40 minutes if you just give me your undivided attention. And if you use Excel spreadsheets, if you use paper to calculate, I'm going to actually show you how to do this with paper. If you're just getting started to be able to run paper performance in your business, it will completely change everything. And what I encourage you to do if you listen today, is either go all in with it or just don't touch it at all. A lot of people that have talked and say stuff in the comments about, you know, paid performance didn't work for me, or there's this problem or that problem.

Excuse me, I can go in the back end and see how they did, how they actually instituted paper performance. And no, they did not do it correctly. They didn't do it in its entirety. And so I really, really encourage you, if you're going to institute pay for Performance, it needs to completely transform and revolve around like the whole business model needs to change. And so I want to answer as many questions today as possible. I limited how many people could get into today's event simply because I wanted to be able to answer all the questions. So I'm going to be doing a presentation throughout. Feel free to make comments if you like. Realize I'm probably going to answer a lot of your questions as I go through the presentation, and then I will go through each question I possibly can over the next hour or two. And I just wanted to make it where every person that gets on this webinar I was thinking about this morning, like, what can I do to make sure that every person getting off this webinar by the end of the webinar is convinced, first off, that they need to switch away from hourly number two? They actually do the hard work because it's not easy to switch to pay for performance, and then over the next six to 12 months, actually implement every single aspect of it. It'll change your business. I just, you know, I don't know what to say. Like, I try to do everything I possibly can to promote pay for performance because I know it did for me and my business. And so I want to talk about today. I'm going to do a presentation, and I'll jump right into Q and A for everyone that is live. I'm not going to be seeing your questions right now, but I will absolutely get to them at the end of the presentation. All right, so some of this presentation might look a little bit familiar. I'm going to add some more context to some of it, and then I'm going to jump into real applications. I'm going to show actually my software for my location and what their guys are making. Actually, let me pull that up right now. I had thought about this this morning. I'm like, I need to actually show them that this does work, and here's why. Okay, so let's go ahead and get started. How I went from broke.

To $280,000 in profits in one year. Let me be clear, it's $280,000 in owner's distributions. So there was more than $280,000 in profits. But $280,000 is what I took out of the business after my salary, and that was literally the year after, you know. And I'm going to show you exactly the numbers, what this looked like. So at the end of the day, I'm going to do Q and A. I'm also going to give a free gift to everyone that was here live at the end of the presentation. So please stick around. And again, 20, 30 minutes, give me as a presentation, and then we'll jump into that Q and A how this presentation will make you money. You're going to get the best workers, you're going to pay them more, and you're going to make more profits. And if that sounds too good to be true, I would have said the same thing. However. However, most of us that have been in home services know that if you get great team members, a lot of things just fall into place. Even if you have to pay them more, if they can produce at a high level, the amount of management that is required from you drops dramatically. And so I generally believe you can get the best people in your market, where all the people that are working at your competition, all the A players want to work for you, you can pay them more and you can make more profits at the same time. So when I first got started, if you don't know my story, I started college when I was 13 years old. I did so by mowing grass very young and paid my way through college using lawn mowing. And I thought I was gonna become a medical doctor. That was kind of like my way out. I thought to be able to get out of kind of where my family was at financially was to go to school and become a doctor. And more specifically, a surgeon, probably heart surgeon or brain surgeon. I want to do one of the. One of the two. And so, excuse me. I started college when I was really young. I was 13 years old. And so when I was 18 years old, I went to Africa after finishing my undergrad, before I went to my medical school, my MD program. And, you know, really, I thought I was gonna become a doctor. It ended. After I got back from Africa, I went to Africa for six weeks. I went to several different hospitals, clinics, orphanages in and around Nairobi. So like Kenya, and that's the country. Tagoni and T. Kalanguari were kind of like the two little cities that are just outside Nairobi. And so I went there for six weeks. It was amazing. I did, like, all sorts of injections and surgeries and birthing and, like, I spent a lot of time in the burn unit. And I did all sorts of crazy things that I would never be allowed to do in the U.S. well, then I come back to the U.S. and started doing a lot of shadowing of different specialties and inside disciplines, inside of medicine, and realize that, like, half their day is spent shuffling papers around insurance and pharma. Pharma. Pharmacology stuff, like the pharmacist stuff. Didn't want to do any of that. I hated how I was only seeing a few patients a day as a surgeon in the US whereas over there I would see like 20, 30 patients a day over in Africa. And over in Africa, I could do all these different things versus in the U.S. it's like, look, if you're going to go to school for 12 years doing brain surgery, you. You're gonna be doing the same three to four specialty surgeries. If you wanna make good money, like that's what you're gonna do. And you're gonna have to cause you're gonna be a half a million dollars in debt by the time you get through school. And so got back, realized like, hey, look, I don't wanna be doing the same few procedures for the rest of my life. I don't wanna be shuffling papers as a doctor. I want to actually be helping the patients. So that's when Augusta Lawn Care started. So at the time I was like, look, I'm gonna drop out. And the only thing I knew how to do was mow grass. And. And so I started Augusta Lawn Care because I played tons of golf and you can kind of see the inspiration of the golf theme on the logo. Eventually had to move that because Augusta national didn't like it. So all that same, I just realized that the only skill I had was mowing grass. And it was definitely a trying time because those first few years there was no evidence of success. Massive amounts of work working seven days a week trying to get this thing off the ground and growing relatively quickly and having no idea what I was doing in terms of business. I went to school at night to get my master's in Business administration, my MBA at Western Washington University, while I was getting the business off the ground just so I could learn all of this stuff. And it was literally a 24, 7 deep dive into learning about business. Because during the day I'd be listening to business podcasts and books, and then from 6 to 10pm I'd be going to listen to lectures 10 to 12 at night. I'd usually work on projects with my classmates and. And then I'd wake up at five o' clock the next morning and I would start again mowing grass, doing the whole thing over and over and over again. And so that's how Augusta Lawn Care started. Now it almost ended a few years later. We were doing about 6 to $700,000, 6 to 800,000, I think, in revenue. And I had a few employees. Now this massive dump truck, this L7000, this is the actual dump truck that I got stuck underneath, got caught in the PTO and Basically the lever underneath that turns the PTO on. It's obviously a very manual processes and not a very high tech vehicle. And so it broke the cable that went from the cab where you pull and engage the PTO down the little cord that goes down underneath the truck and engages the pto. It broke. So for the past week or two, I'd been going, just going underneath the dump truck and pushing the lever and that would engage the pto. And the PTO is the thing that spins underneath power takeoff and powers the actual dumping mechanism of the dump truck. And you can see this thing's a beast. This thing's huge. We overloaded this thing, I'm sure, many, many times. I honestly didn't know GVW and all the rest of it, we just put tons of stuff inside of this thing and it somehow managed it. Anyways, I got underneath the dump truck, it catches my hoodie on my way out. So I engage the PTO on my way out, it catches my hoodie and it starts to suck me in in an instant. And you know, you can look up pto accents on YouTube and it's pretty gory. And so I remember being pinned up underneath again. This is like a split second looking up underneath the dump truck and just thinking, oh, like this is how it's going to end. And I wasn't like, you know, super anxious. I obviously couldn't scream because like everything bunched around my neck immediately. So my shirt and then my hoodie that I was wearing, everything is immediately sucked up around my neck and, and was strangling me. And fortunately the gearbox kind of pinned my, my bicep and kept me from just absolutely getting whipped around in the pto. And so I dropped out of the pto. Thank God. It just ripped all of a sudden. There was no seam, there was no zipper, just between the shirt and the sweater just shredded and I fell out. And so I spent a couple of weeks kind of recovering. And I was in the hospital, as you can see here. Literally from this hospital that I remember getting my phone out and literally video record facetiming my crew and showing them the next job site. And you know, one of them had to drive me back to the shop, which then the ambulance took me to the hospital. But, you know, then they had, they had to keep working the rest of their day. And I remember facetiming them, trying to walk them to the next job. I remember trying to give instructions to Liz, who was my office manager at the time, of what to do in the business and realizing over the next couple weeks that, like, thank goodness I had some really good people, but the business didn't have any systems. It all really came down to me. I was doing all the estimates. I was prepping all the trucks in the morning. I needed to be there for each and every work, every big project to get started and show the crew the job. I was the bottleneck for everything. And so that's how the Augusta lawn care almost ended, because I almost got squashed like a bug. And I realized that I really needed systems, and I was the system. FYI, if you don't have systems in the business, you are the system. It just so happened that if you remove, you, the business would fail. And so I realized that I needed systems. I was the bottleneck to the business. We kept growing the business. And at this time, if some of you from way back might have started, you know, started listening, was when I started landscape business course landscapebusinesscourse.com and that was me documenting the journey of me starting to implement systems in the business. So, like, every single thing was like, oh, instead of me, like, making videos from my hospital bed, I will make what I call estimate videos that I'll send to the crew so they don't need me on site when they're starting a job. They can just watch the video the night before, look at their estimate notes, and get the job started. All these little bottlenecks and systems that I encountered, I was just documenting what was happening as we changed. So my fifth year of running Augusta, we did 1.3. Little over 1.3 million in revenue. We profited $56,000 in the P and L, but I took no money out of the business. So again, I like to. I like to break out profit and distribution separately because really, free cash flow that you can actually take out of the business is really my definition of really, you know, a business that kicks off cash. And so I was spending 60, 70 hours per week in the business, but really pulled no money out. There was some profit, but that profit went right back into the business because we were growing. So my sixth year, the next year in business, the revenue was 1.5 million, little over 1.5. We did. We profited 326,000. And my distributions, as the title of this presentation assumes, my distributions were $280,000. That was money I took out of the business and went into my personal bank account, and I was getting a. Paid a salary on top of that. The time that I was spending was two hours per week in the business. So I'd come twice a week. I think it was Tuesdays and Thursdays or no, Mondays and Thursdays, for about an hour each time in the business. Usually a little bit less than an hour, but if you include drive time, it was about two hours per week I was spending in the business. What changed pay for performance? P4P? It gave me time to work on my business because I was literally working 60, 70 hours in the business before the next year. All of a sudden I made more money and worked less time in the business. So what is P4P? What did it allow me to do? First off, it's less micromanagement. And if you're like, wait a second, I don't even know what P4P is. Let me explain it really quickly. Pay per performance is this from the perspective of the employee. The harder they work, the more money they make. And you can just boil it down to the second thing is they make a percentage of all the revenue they make for the business. Great. And that's all you really need to know about pay for performance. You know, some people call it commission pay, some people call it piece pay, piecemeal pay or whatever. Like, I don't really care. You call it essentially, the harder you work, the more money you make, and you make a percentage of all the revenue you make for the business. Now why P4P? Less micromanagement. I remember we would track all of our trucks. You know, I was really tempted to like get cameras in the trucks, audio recorders in the trucks, etc.

Always wondering, like, why are the guys taking so long between these jobs? Like they're five minutes drive apart and yet it took them 15 or 20 minutes between clocking in and out of the jobs. Once we instituted paid for performance, I was able to that year pay $4.81, $4.81 per hour more to my crew. Plus we added medical benefits, gym reimbursement, and paid time off. So two weeks of paid time off a year, we added a whole bunch of stuff like that. Call outs that year dropped by 40%. So amount of people that decided that they just were not going to show up to work last minute dropped by 40%. 60% drop in the number of people of callbacks to customers. So people that were complaining, or what we call yellow slips, dropped by 60%. Now, is there still callbacks? Absolutely. Do we still make mistakes? And there's low quality work? Yes, but dropped by 60% from the year I did not have paper performance to the very next year. And what's crazy is, since the day that we instituted pay for performance at my Bellingham shop, I have never one time had an employee ask for a raise. The four weeks leading up to the vote for us to implement paper performance, I had four people ask for a raise. So I think at the time, I think there was like 11 or 12 employees in the field. Four of them asked for a raise leading up to us changing over to P4P. And I remember like some of them deserved it and were making less than their peers. But I didn't have the money. I simply didn't have the money to give them. And that's a really painful place to be in, is like you don't have the money to give to your team that deserves the money. And it wasn't fair. Realistically, if I would have opened up my books and actually share what everyone was making per hour, it was not fair. It was simply who would ask for the money, who needed the money the most for their family's sake. And it was not based upon performance. It was not based upon who was bringing the most profit to the organization.

The result is that now we have over 150 locations in the U.S. canada and Australia. And all of Augusta Nation has benefited from the fact that I don't have to be at my locations anymore. And speeding up to today, I'm not at my locations at all. I don't go there. Like the two hour thing doesn't exist. I don't ever show up. So let's talk about for a little bit why this was happening. So ultimately, the 4L framework is this. All businesses stop growing at some point. You need liquidity or cash to get the business started. You turn that capital or that liquidity into leads. Alright? Once you get a bunch of leads, guess what you need. You need more laborers, you need more employees. And then once you get more laborers and you get more employees, you now need leadership to be able to manage the employees. And because you have leadership, that creates overhead expense, where now you have less margin. So guess what? You need more liquidity. And this is the cycle that you'll go in as you grow a business, regardless of what size of business you will be in. The 4L framework, okay, this is something I created about a year, year and a half ago. And this is what I've found. So often the time with home services is that many of us will stall right here. And based upon the revenue that everyone put in their registration for the webinar, about a third of the people watching are over $1 million in revenue, which is pretty Phenomenal. There's some big businesses that are actually watching today. And a lot of times the reason we are less profitable and the reason that we stop or we stop growing is the fact that we have labor problems. So I want to look at labor and this is what I call the car framework. Compensate, attract, retain. And this is like the three kind of parts of how we look at pay for performance. So the first part, let's talk about compensation. So the first problem you might be facing is like, I can't afford to pay more. I know exactly what it feels like. And I remember being like, I have no money in the bank. This person deserves a raise. They've asked for a raise, they need a raise. I can't give it because there is no money. Okay. I still remember to this day having this conversation with a team member that is now actually my accountant. Okay. Way back in the day was work out in the field, believed in what you were trying to build and would do his Accountant Things with TurboTax during the evenings and during the off season. And then he would work for us out in the field simply because he wanted to be part of what we were building. And now he's my full time accountant inside the office and he works with home service epa. But I couldn't afford to give him a raise when he asked for one. I just did not have the money. Like I remember we were in spring rush. He deserved the raise. I knew that there are other people making more than him that did not deserve it. And I knew he was fully bought into the company and had great work ethic and believed in everything we're doing. And I could trust him 100%. But I could not afford to give him a dollar raise. I couldn't. There was no money to be given. People asking for raises, lazy employees that get paid similar to people, they're kicking butt all day long. And I think it's absolutely abhorrent the fact that someone's making 19 bucks an hour, kicking butt and actually destroying, making lots of profit, the business. And yet someone else is making 17 or 18 bucks an hour and just basically lollygags throughout the day. There's a whole bunch of nothing and wastes time on the clock continuously and slows down the rest of the team. How is it fair that this other person that's kicking butt all day long makes a dollar or two dollars more per hour? It's not like be honest, it is lazy to keep having employees paid by the hour because it's so easy to track like how long did you work? Multiply by how long, how much I pay you per hour? Boom. There's your paycheck. Yes, P4P will take you longer than that. It'll take you more like a minute instead of 10 seconds to calculate, which is like six times longer. And that's why most people will not institute pay for performance. But try to convince me that one employee in your organization, your top performer, is not producing two to three times more profit than the person that's making literally a dollar or two less per hour than them. How is that fair? I wanted to get medical benefits, I wanted to be able to do gym reimbursement. I want to do paid time off. But we couldn't afford it. It's the bottom line. We just could not afford it.

And I ultimately wanted to pay based upon performance, not based upon who had been with me the longest, who was experienced. And like we all have hired someone who said they had a bunch of experience. So you like hire them because you really needed them during the spring rush. They hop on board and guess what? They disappoint. They don't have the experience or they have the experience, but that comes with a lot of baggage and they somehow now feel entitled to drive around the company truck all day long and do no work. All right, so we look at the next part of the car framework. That's the attract. How do I attract good talent to my organization? The problem that the challenging part with attracting talent in home services is that our wages are similar to warehouse and retail work with minimum wage. Like for example in our market being like 16, $17 an hour over the next couple years. It's pretty difficult when that's the minimum and people are paying 18, 19, $20 an hour for something like an Amazon warehouse job or like other gig type positions. It's difficult. Employees don't show up to interview. You can't even get some people to show up to interviews where when it comes to attracting talent. So how do I stand out from the rest of the competition, the rest of the landscapers that are also paying 20 bucks an hour? How do I stand out to be able to actually get people to show up to an interview? Little spoiler alert. You share with them the leaderboard of the people that are in your organization of how much they're making and all of a sudden they want to show up to the interview because they're making your. Your team is making 5, 10, $15 more per hour than everyone else that they're going interviewing for. It's hard to differentiate Yourself, you know, everyone's mowing grass, everyone's painting walls, everyone is trimming trees. Whatever industry you're in, it's hard to differentiate yourself from just like the labor, applicants with experience want too much money. And so you're trying to do like these specialized services that now all of a sudden require big certification. It requires years of machine operation or a certificate or training. And it's like very difficult to find those people. And when you do, they basically are in the driver's seat of how much you're going to pay them because they're hard to find. The last part that we struggle with in the home services when it comes to the car framework, which is now retain actually keeping the employees, is entitlement. As people stay longer, they somehow feel entitled to all the extra benefits of being employed.

All of a sudden they feel entitled to having, I want to work, I want a company vehicle, I want a company.

Excuse me, I want a company provided phone. I remember being in our team meeting, an off site meeting where I opened up, we show all the numbers. We have open book management and at the end we do Q and A and people can ask whatever they want. I remember someone like, I remember knowing I just shared the numbers and there was like no profit. And in the Q and A, someone's like, when can we have company provided trucks where we all get to drive them home? And then the next person was like, when can we have company provided phones? Like, I want to have a phone from provided from the company. And I was like, in my brain I had to be very diplomatic. But in terms in my brain, I was like, did you not just see the fact that we're making no money?

People leave. It's really disheartening when good people leave over like a dollar two more per hour. And you know, like, hey, we're trying to grow the business. There's gonna be more opportunity for them in the future. But because you haven't made any system for them to make more money today, because they're not going to stick around for three, four, five years, typically in hopes of making more money, they got to provide for their family. They're trying to put food on the table for their family. And so them leaving for a $2 more per hour can be very frustrating. When you're like, I know the company they're leaving for has no future for them. They're not going to be able to make any more in the future. They should stay with me. But because you can't give that system now and that clear line of sight to make you more money, they leave for a dollar two more per hour someplace else. And when you, when you start trying to retain talent, one of the most demoralizing things for an A player, someone who's just amazing at their job, they hate working with people that are slacking off throughout the day. C players, these are the people that take 58 smoke breaks, stop at every single gas station they pass. They take at least an hour and a half from the time they clock into the time they actually start producing revenue for the business. These are the type of things that just drive a players up the wall. Regardless of whether or not you do P4P. It just makes them super mad to work with these type of people. So why not have a system like paper performance where the type of person that slacks off eventually wants to just leave because they don't get compensated, they don't get bonuses. And the people that are top performers hate working with them. And so those people get repelled from the organization.

I personally, when it comes to retaining talent, I want a meritocracy. A meritocracy is simply that based upon merit is how you get rewarded. It's not based upon anything else. It's not based on who knows the boss. It's not who's been around the longest. It's not who says the nicest things to the boss or worked hard in front of the boss. These meritocracy is like the numbers do not lie. If you make the business more money, you make more money. And it really brings down the politics because like in my businesses, I have the same base pay for everyone. Everyone is entitled to the exact same amount of dollars per hour as their base pay everyone. And then if you're so good and if you have experience and if you're so efficient, you will make significantly more. But if you're not, it will show in the numbers leading to much less politics. When it comes to retaining talent, I want to have very clear guidelines for increasing pay and increasing benefits. It's like, look, I'm not going to have some arbitrary. If you stay here a year longer, you make more money. If you, you know, mow 5,000 lawns, then you upgrade your base pay. Like that doesn't make no sense. It's like if you make more money for the business, you make more money. If the business profits more, we can give profit sharing and ultimately add more benefits to all that are working here. Now I want to show you how it's working. So let me actually show you this because a lot of times when I share this stuff, people are like, oh, you're doing this because you want to sell software. I'm going to show you how to do this without software. Going to show you how to do this using paper and pen. Okay, so let me show you this. Okay, fantastic. Let's go. I'm going to pull this out, see if this works. Let me actually bring up a better view so everyone can see a little bit better. Fantastic. All right, you're like, I do projects. Let's break down a project again. I'm going to get to the comments. Give me five or ten more minutes in the presentation and I'll be getting to the comments and answering questions shortly. Let's look at this project. The price to the customer is $6,300. That's what's on the estimates. What's on the invoice. Now the total labor revenue is 5000. Say, well, what's the difference to 1300? Probably materials, estimate fees, dump fees, all the rest of it. Employees don't get a percentage of the revenue, they get a percentage of the labor revenue. And I could determine this $5,000 by, oh, I charge, let's just call it $100 per hour. And I'm multiplying that by 50 budgeted hours. That would equal $5,000 in labor revenue. Fantastic. I don't mind showing the crew that I'm going to have on the estimate 6300, because they're going to actually know because of open book management, that the 1300 includes all the materials and other costs of the job that are getting covered. But they know that because there's 50 budget hours and we charge $100 per hour, that there's $5,000 worth of labor revenue being generated on this project. They also know that they're going to make 33% of that no matter how long the job takes, whether it takes them 30 hours, 50 hours or 70 hours, they're going to make 33% of that job, which is approximately, I'm rounding $1,650. So it's like, well, let's see what happens. If they do it fast, they do it in 40 hours, alright? So they maybe figure out, okay, we can cut down the amount of time this job is taking by taking out this fence panel. Instead of going around the side yard and going through the gate, all of a sudden they get the job done way faster. And so if you do the math, all of a sudden on this crew that instead of taking 50 hours that we budgeted for the Job, they get done in 40 because they come up with some creative way. Because they realize that, oh, we're not paid based upon the longer the job takes, the more money we make. That's how it is with hourly. Instead, we're getting paid $1,650, regardless of how long it takes. So guess what? We're incentivized to actually get the job done faster. Okay? So we take 16, 50, we divide that by the time they spend on the job. All of a sudden, they made $41.25. And everyone here is right now saying, I can't afford $41.25 to pay my guys per hour that in wages. And then this is what I would challenge you to do. I would challenge you.

Excuse me, Sorry, I'm getting over something. Okay. I would challenge you to do this. Instead of asking yourself, can you afford 41 per hour? This is what I would ask. You go to your p. L from 20, 23 or year to date, if you like. Look at your wages for the crew out in the field, not your office labor, not you as the owner. Unless you're out in the field doing the work. If you're out in the field doing the work, you are part of the field labor. You're part of the direct labor. I want you to take all those wages. I want you to divide it by your total revenue. And I can guarantee you, most of us, most of Us are above 35%. Usually between 35 and 50% of your revenue is going out the door to direct labor. So if you can lock that in at 33%, that's awesome. That's fantastic. And I'm happy to give my guys $41.25. Because the alternative is not having paid for performance. And this job taking 75 or 80, budgeted 80 hours because they're not incentivized to move faster. And guess what? They don't want to take the fence panel out. Because why? I can get paid more for this job by just simply clocking more hours. Why would I want to actually get creative to make this job go faster if it's going to make me less money? Think about it. In this scenario, if you're paying someone by the hour, the longer the job takes, the more money they make. The shorter the job takes, the more money you as a business owner makes. In this scenario, with pay for performance, the faster job takes, everyone makes more money. You're like, well, I don't want them to go fast. They're gonna do a bad job. There's gonna be bad customer service, bad quality of work. Here's the thing. If they didn't make a. There's a problem on this job site, and they make a yellow slip or a callback or they don't do a walkthrough with the customer at the end of the project, they have to go back to the project, and they're not getting paid any more labor revenue. There's the labor revenue is fixed. It's fixed at $5,000. They're getting paid the same amount no matter what. And so if they're gonna do a bad job, if they're not gonna do a walkthrough with the customer, they will end up having to go back to the project and they're not getting paid anymore. And guess who's really ticked off the rest of the crew, because so and so did a bad job on XYZ part of the project, and now we're all having to go back because the customer complained or we didn't do a walkthrough. And if you're tired of your guys not doing walkthroughs on projects, just realize when you start to actually show them the math of what a yellow slip or a callback to a customer's property does, they will, all of a sudden, when they're making $41 per hour, want to make sure that before they leave that project, the customer's happy and they actually do. Hey, Mr. Jones. Hey, I understand it looks great from your doorstep. Please walk out. Let's walk around the property. I want to make sure you're 100% satisfied before we clean up the rest of the project. All right? You're like, I don't do projects. I do. I do mowing. I do maintenance. I do some sort of route based job. Okay, let's break this down. So we have. Excuse me. We have 12 jobs. Let's assume that we complete 6.8 budgeted hours for the day. So some of them are half a budget hour. Some of our 0.75 budget hours, et cetera. All we have at the end of the day is 6.8 budget hours completed. All right, let's assume. Okay, okay, we got $80 per hour that we're charging for our labor rate per budgeted hour. That's the goal. And if we just do the math of 6.8 times 80, we make $540 of labor revenue for this crew. This one, this is a solo route for the day. Now, I know that if I am paying 33% of that, just a third, approximately rounded out. I'm making $181 in wages for the day as the employee. Now, let's look at the math. Let's say that this employee is kind of slow. They're not working very fast. It takes them 10 hours to get the work done. If it takes them 10 hours to get all of these jobs done, they're going to make $18.10 per hour. Right? That is 181 divided by 10 hours. Now, let's say that they're doing pretty good. They get done in eight hours. Okay, we do 181. We divide that by eight. Theoretically, they're making 22.$63 per hour. And if they absolutely crush it and they get done in six hours, theoretically they are going to make 181 divided by six. They're gonna make $30 per hour. All right? And you're like, that's impossible. There's no way that landscapers or lawn care guys or home service entry level employees can make $30 per hour. Okie dokie artichoke. Let me show you something really quick. Give me two seconds. I'm going to show you the difference of how we calculate P4P versus base pay throughout the entire week. But give me one second. I'm going to actually show you real. These are real people. These are real numbers from my location locally. Let's go to the last paycheck here. So this is in Bellingham, Washington. And yes, our cost of living is a little higher here. Our base pay is $20 per hour, and we have to pay 20 bucks an hour just to attract anyone into our market. It's a kind of the going rate. But that is our base pay. That's not what we pay them. We pay them a percentage of revenue on P4P. Okay, now I just messed up. Let me go back to my location. Okay, Bellingham. Great. Okay, let's go to payroll summary. I'm going to. I should be showing you this one second. Window. Window. Let me share this with you. Settings. Present share screen. Right. Where is it?

Aha. Here we go. Am I sharing it? Pull a roll summary.

Beautiful. Except I want it bigger.

Boom. And then let's go ahead and add me in here. Let's go. Okay, so this is inside of P4P software. I want to show you. Let me just go back. Let's do like the first pay period of July. So we do two week pay periods. So every two weeks, our employees get paid. Let me just do July 1st, actually. Is that a Monday? Yeah. July 1st let's do. And then let's go to, like, two weeks later. Okay, so these are pay periods. This is the Bellingham shop. Let's see what they made, like, two pay periods ago.

All right, for context, this location will probably do a little over a million dollars in revenue. I don't spend any time here whatsoever. Let's see what they're making now. They raised prices relatively recently here at this location, and so they're making a killing. I know that after this. This specific page period, we reduced the percentage that we were giving the employees from 33% down to 25%, simply because they were making absolute killing on P4P. And so we were able to actually make more money. Oh, whoops. I didn't click on that. There you go. Okay, refresh.

Boom.

Sorry. I have multiple locations open, so it's trying to run all these other reports. Give me one second.

Delete, delete, delete.

Boom. Okay, now I gotta redo it. Oh, man. Sorry. I had all these other tabs open this morning. Custom range, July.

13Th. Create report. Okay, let's see what we got here.

And so if we look at here, I'm gonna pull this one up and share, because this is what everyone's gonna want to see present.

There we go.

Perfect. Okay, so if we look at. Why will it not let me share the screen? Okay, Give me one second. We're making it. We're making it. Present, share, screen window. Okay, so what you're going to see here when I show the report. Bam. Is gonna be P4P versus base pay. And so when we look at P4P versus base pay, it's over the course of the entire pay period. Okay. Still I have all these tabs open. Give me one second. Guys, I am going to. I want to show this payroll, but I have, like, five locations, and I need to delete them all out. Give me one moment.

Perfect. Okay, so when we look at P4P, we are always comparing versus base pay. People that are like, oh, you can't do P4P because it's illegal. The bottom line is I am not advertising to my crew that they are going to be making, you know, 30, 40 bucks an hour. But they do. So what happens is every single day. Can you see it? Yes. Good. Very good. Okay. So every single day, I am doing one thing, and this is literally how you want to look at P4P in general. It's like, over the course of the whole pay period, I am simply looking at, okay, P4P. This is how much they earned. A Day base pay. This is how much they earned on Monday and then Tuesday. So we have all the days of the week that stack up. Maybe they don't do so well on this day. And then you got base pay stacking up over the course of a pay period each day. And all you got to do inside the software is literally just each day be tracking P4P versus base pay. @ the end of the pay period, you're simply going to take the higher of the two. So in this case, they get paid P4P. However, if base pay was higher for that pay period, you would pay them base pay. They're always guaranteed to make at least a certain amount per hour on base pay. Now, I got all these tabs closed. I can actually share with you my screen for. For their paychecks and show you how much they were making. If I can share it. There we go. Share. Okey dokey. Let me go here. All right, so this is the pay period from July at my Bellingham shop. Okay, so what do we got here? We got base pay of 20% or $20 per hour. At the time, we were giving them 33%. So let me just move this screen out. There we go. Very good. Okay, so this person worked 27 hours in this pay period. They their base pay. If you take $20 per hour multiplied by 27.95. $558. But they made $853 on P4P. So they made an extra $300. Let's go per hour. Sorry. For the. For the pay period. Okay, let me just go ahead and add in save. Very good. All right, so let's look at the next person. This person may they work 32 hours. Their base pay was $646. They earned $962. Fantastic. Okay, this is round $30 per hour that they're making most of them. So then we got. Let's see here. We got 27 hours that this person worked this week, 27 the next week. They worked 55 hours. Their base pay was $1,000. How much did this person make? So let's see here. We got their total P4P.

Their total P4P for the pay period was $1993.60. Divide that by 54.96. So this person made $36 per hour. Keep continuing on here. So the thing that you're looking at is like the payroll bonus. Is this the difference between your P4P and your base pay plus overtime? Remember, we're just always tracking base pay plus overtime versus total P4P, we give them the higher of the two. And if P4P is higher, they're getting performance dollars, they're getting a payroll bonus. All right, so someone here, this is same thing. Like this is probably $33 an hour. They worked 56 hours. They made almost two grand for the pay period. This person worked 60 hours. They, they made two grand for the pay period. Again, $800 is the bonus for the paycheck. Like that is what you're looking for. If you're just doing a hundred dollars or two hundred dollars more per pay period, you're simply not going to have enough incentive for the crew to work harder. Like if you're making, you know, 20 bucks an hour on base pay, guaranteed, and then they're making $21 or $22 on paid for performance, there's not enough of a difference there to actually get them motivated. But when they're making an extra 6, 7, 800, 900, 1000 plus dollars on a paycheck on performance dollars, they're super motivated. And secondly, they're making sure they don't make any callbacks or damage cases because that can be taken out of their bonus. So sloppy work doesn't get rewarded and it's going to lead to them not making their bonus. In fact, towards the end of a pay period, when they know that their money is on the line in terms of here, one second, entire screen, chrome tab, boom. When they know that their paycheck is on the line at the towards the end of the pay period, they are absolutely being extremely cautious around equipment, making sure they don't break anything of the customers, making sure they don't have any callbacks. Because if they don't, that all that money, all that performance dollars, 800, $900,000 per paycheck is on the table to be taken away. All right, okay, let's wrap up the presentation and then I will go to Q and A just momentarily. I showed what my location last month for their pay period was looking like. We actually, because they're making so much like average performers are making mid-30s, we actually reduced the P4P from 33% to 25% to pad the profits for the location. And they all get a piece of the profits. Okay, because you've made it this far, if you want to go to mikeandys.com freebook, I will actually send you a hardcover for free. You don't have to pay for shipping. There's none of that garbage. You literally just fill out a form and I Will send you the book for free, completely out of my pocket. By the way. There is no shipping cost, there's no handling charges. It's literally you fill out Google form and within a month or two I'll get you that book. All right. Secondly, all of this is like all this math and complication. That's why I made p4pssoftware.com if you want to join, feel free. It's 30 days. You can get a free trial of the software and if you want free training in addition to what I talked about today, just go to mikeandies.com P4P and what's called. Oh, you can't see it. Sick. Can you see there? There we go. Mikeandys.com P4P completely free. I actually have a couple coaching calls I recently put in there of walking through different scenarios similar to what we did here. I did a whole bunch of new training videos inside of P4P University. All completely free. There's no cost whatsoever. You please, please, please. If this is interesting to you, watch those videos and those training. I'm gonna go ahead and start going through these questions and we will jump right in. I appreciate everyone for sticking around for the presentation. We're doing Q and A. I'll do this as long as I possibly can and we'll get started. I am going to answer only P4P related questions by the way. I'm not going to answer anything else. I just want to focus on pay for performance.

Okay, let's see here. We have been talking about it all season. It's a lot of footwork before we can getting all our numbers and man hours logged properly. We have failed in that which makes it hard to even know where we are at. We are going back to the basics and hopefully can start P4P. There is a new video I just posted inside of P4P University. So mikeandys.com P4P if you're. If you have to revamp and switch everything to budget hours, it'll be really helpful. For example, on commercial projects where you're charging the customer a flat amount per month, how do you actually coil that back to give budget hours per visit for the customer?

It's all about being scared of change. Because it's been this way for so long. 40 years doing the same thing and getting same bad results is insanity. It's time for a reset and it's not easy. It is tough. Like I'm not going to discount the fact that changing the P4P completely changes the culture of the business. How you hire, how you train, how you retain customer employees. But if you can do this, I just. I guarantee you in 12 to 24 months, if you really actually implement it fully, that you won't regret it. Do you have the biggest impact? It does have a tremendous amount of legwork to implement. But like the saying goes, nothing great ever comes easy. We all know the labor force is not what it used to be. They have to be incentives in everything they do. This way, they make their own incentive.

All right, I'm just trying to stick to pay for performance related questions. He had to come up with a bonus model just to get them to do the very basic parts of their job. I. E. Fill up, fill out their route sheet, put cones out, clean their truck. Basically, just giving money away. P4P would solve so many things where the employee would feel responsible for their own wage. Yeah. And ultimately, with yellow slips like callbacks, it's their responsibility, too. Damage cases, their responsibility. I don't go around doing quality control of my crews. It is their responsibility to do a great job. And if they don't, a customer complains, they're going back to the job site, and then I'm going to fill out a yellow slip, I'm going to put it on the desk, and at the next team meeting, everyone's going to talk about that yellow slip. Whoever's responsible is going to read it out, talk about what they did wrong, how they're going to. How they have to fix it, the customer's name, what went wrong on the yellow slip. And so for some people, this just the social pressure of having to talk in front of their peers about their mistake is just as bad, if not worse, than the deduction on their paycheck.

What happens when you become more efficient and that trickles down to your new estimates? Employee efficiency needs to continue to improve in order for them to continue to earn more. Assuming you use historical data to drive future estimates. Yeah. If someone's getting more efficient, they should be able to beat budget hours more consistently. And then if you're like, well, that means you're gonna, over time, bring the budget hours down, because you want those to be accurate. Correct. I'm also gonna be raising prices. And so when you raise prices, you effectively are giving everyone a raise. So when we went from $80 per hour to $100 per hour, we were essentially giving our crew a 25% raise because they make a percentage of all the labor revenue. And so, you know, you always want your budget hours to be accurate in terms of estimating and if over the course of time they're getting more efficient, you're like, oh man, I'm bringing the budget hours down kind of like over time because they're more efficient. Great. You should also be raising your prices.

Also with callouts and ever changing hurdles in the day where crews are constantly changing. How can you effectively track that specific employees P4P when crews are constantly being changed? Yeah, so this is where the software kind of helps because otherwise it gets a little complicated. The software you would simply do is put the crew out. So let's say they're by themselves for half the day and they switch to me. With a crew of two, you just use two separate entries on the time card. One with as a solo, one as with two crew. And then it would break up all the math itself. Like if you're doing the soft, like the reason the software is made is because I want it to be. Whereas like every day you simply put in how much labor revenue they earned and it does all the rest of the math. If you sync it with Copilot CRM, it'll pull the budget hours, it'll pull the rate, it'll pull their clock in and clock out time. If you don't use Copilot, totally fine. You're just going to have to do a little bit more manual entry. But. But it will take you less than 1 minute per day per employee. All right. That was the goal from the onset of starting the software. Since labor efficiency is based off budget hours divided by clocked hours, how can we add manual adjustments without it negatively impacting labor efficiency? So manual adjustments don't impact efficiency. Labor efficiency at all. Because we're still going to look at efficiency score as budget hours divided by clocked hours. Even if you add a manual adjustment, it does not affect their efficiency score. The reason I did that because I don't want your efficiency score to look inflated. Because guys are doing a bunch of like maintenance tasks on your, on your equipment or doing a bunch of non revenue producing tasks like cleaning up the shop. So the manual adjustment is going to be made. It will make sure it impacts their paycheck, but it's not going to impact the fact that budget hours were not completed and clocked hours were going up. Therefore their efficiency score actually was going down. But we're going to manually adjust their paycheck for like non revenue producing tasks like like sharpening blades, changing the oil, cleaning up the shop. That's when the manual adjustment is going to take place. Why? Why do we need a manual Adjustment. Well, this is the fact. Look at this. So if we look at the fact of what's happening when we are doing shop work, well, base pay is going up because they're clocked in all the time. So this number is slowly going up. Okay, well, we need to manually adjust P4P up as well because it's not moving because there's no labor revenue being produced. So that's when manual adjustments come into play, is when someone's on base pay. They're. They're clocked in, but they're not generating labor revenue. So that's what we call, what we call a manual adjustment to the time card.

And those can be negative or positive. Negative would be like a yellow slip or damage case, etc. How do you adjust P4P for multiple person mowing crews? For example, a lawn takes 18 minutes solo, but 11 to 12 minutes with two workers. Do you charge a higher price to the client? No. The inherent inefficiencies of having multiple crews on a maintenance job is the fact that they're never going to finish at the exact same time. So when the person's finished mowing, it's never going to fit exactly where the other person weed whacking finished at the exact same moment. So that's why when you add more people to a crew, the more stops you have, the less efficient they are, because they're hopping in and out of the truck, which always adds waste. But also they never finish at the exact same time. And so when it comes to labor revenue, the same amount of labor revenue is going to be, you know, created no matter what. And it's going to be divided equally among the crew. Some people on P4P inside our software will put different rates, like percentages. So like 30% or 33% percentage going to the crew based upon if they're solo or the multiple person crew. I don't do that. I like to keep it really simple. So the crew always knows how much they're making. If you're synced with Copilot, we, when they open up the P4P app, they can see how much money they're going to earn for the day based upon how many jobs are assigned to them. So before they even start the day, they see a thermometer with all their jobs and they can see, oh, today I'm going to make $321 if it takes me 10 hours, if it takes me 12 hours, it takes me eight hours. I'm making $321. And then as they complete jobs in copilot on the dispatch board, it fills up that thermometer and they can see exactly how much they're making for the day. Which is super helpful for like getting them to complete the last few jobs, their route. Convincing them that's like, hey, don't come back to the shop when there's one more job on your schedule and it's next door of your current job. That always boiled my blood when someone would literally, their last job of the day was next to the last. Like, their last job of the day was next door. And they didn't do it because, like, oh man, I'm just so tired. On P4P, they understand that driving back 30 minutes the next morning is going to crash crush their pay for performance. So they get the job done.

We have over seven crews, and although we try to keep the same people together, this changes daily. Do you track the P4P daily or weekly per crew or job? Seems it would have to be daily to adjust for changing crew members on a daily basis. Yeah, you gotta chart, you gotta do P4P daily. And then what you do in the software, just click send reports and they actually get a report every day. Every single day. They get a report of what their base pay was and then what their P4P was and they're like, oh man, I'm in an extra 50 bucks. I made extra $20. Oh man, I had a negative day because I was spending half my day fixing a mistake from the day before. So these are very positive reporting for the crew every single day to know where they're at and then be able to see a leaderboard of who's the top performers in the company and then emulate that, that sort of behavior.

And then you're tracking every day. So that way, you know, like, there's going to be some days they don't make as much on P4P compared to base pay, but it doesn't matter. At the end of the paycheck, I'm looking at the total sum of P4P versus base pay and giving the higher of the two. Yeah, it's daily.

What happens when you have someone leave during the day and you grab a guy from another crew in return handicaps both crews, which is out of their control, and then what happens? So if this person does this consistently, the crew is going to hate them, they're not going to want to work with them, and they'll eventually get pushed out of the organization. If that happens one time inside their time card, you're just going to be able to switch you know who they are working with. But like if you're synced with Copilot does it automatically because it can see who they're working with inside Copilot and the number of crew that's assigned to the job. If you're not synced with Copilot on the time card inside PVP software, you would just need to make one more entry in the time card which with a different crew size, that's all you'd have to do.

Good question.

You break down the total job cost and divide hours worked gives the total gives the dollar per hour earned for each employee. You break down the total job cost and divide hours worked gives the okay, all right. Right. But you have a five man crew. A guy fell out making them technically handicapped all day. Because the job called for a five man crew. The.

Finish the day with four. These employees take that as a negative hit on their P4Pmay not be fair in their eyes. So this would not affect anyone's P4P. So if having the going from five to four people, yes, they're going to generate less revenue. However, on most of the jobs for the day, their labor revenue is going to be divided by four, not five. And so it would actually not make a massive impact. What would actually impact their pay is the fact they probably like drive back to the shop and drop off the guy or someone has to come pick them up and all of that waste that would affect their pay.

What if we need to lower base pay? So the balance with P4P when it comes to base pay is you need to be high enough in order to be able to attract talent, but you want to be low enough to where the difference between base pay and what they're making on P4P is, is large. Like if their base pay is 20 and they're only making 21 or 22, they're not going to be incentivized to move faster. You need that to be at least four or five dollars per hour for for them to actually change their behavior and actually motivate them. Drive time doesn't matter because drive time is not producing revenue. All I'm looking for is how much revenue is produced for the day. Which means drive time is nothing. Like nothing's happening. There's no labor revenue being produced. So it has nothing to do with like, oh, you're not paying them during drive time. Not true. They're clocked in and I'm making sure they're at least making base pay. But I'm also tracking what percentage of their, the, the P4P like the labor revenue that are generating for the day and they start to figure out that when they're driving, they're not making labor revenue.

Yeah. Okay. How often would you recommend raising your prices in order to maintain solid wages for the guys? This really comes down to like what your, your market can bear. And I don't think raising prices has anything to do with this as much as are you at capacity? If you're at capacity, like you need to buy more trucks or hire more people in order to get more customers because you're at capacity, that's when you would raise prices. And then you know, this would be a side benefit of raising prices that a percentage of it's going to the team. And if you're like, well, I need to raise prices and make more money, but my crew is already crushing it on P4P. In that case, I would lower the percentage that you're paying them on P4P when you raise prices.

Question. I have a company that does commercial maintenance. Our average total hourly cost for an employee is $25 per hour, which includes taxes and benefits. The going rate for commercial maintenance is $45 per man hour. So it's low margin but high volume. We deal with the same issue talked about with motivation. How can we use P4P when we get paid 8 hours no matter what for the day, there's never an opportunity to increase the daily budgeted hours. So if you're getting paid eight hours no matter what, like.

The company is basically paying you to be on site for eight hours no matter what, you've now robbed your guys of being able to do PvP. Right. Because they can't. Like making them work faster is irrelevant if someone's paying you to be there for a certain amount of time. First off, kind of a weird contract because they, they want the job done. They don't really care how long it takes you to do it. And so I would just really, really push for the fact that like you probably know if you switch to P4P, the guys could get it done in six hours instead of eight. And so try to convince them that hey, we can lower your price by 10% if we just are held to the standard of getting the job done instead of how long we were there. And what you could how you pitch this them is like, hey, we don't want it to ever be when we drive out of the property, that stuff is left half done because we didn't hit eight hours. We just want it to be that when These are the tasks that you expect us to complete at these times of the year and we're going to get them done. And then you create budget hours, assigned each of those and then let your crew beat them.

So yeah, if you're, if you're, if you're getting basically paid hourly from your contract or from a customer, you've now robbed P4P. Like you can't do P4P because you're just. Now the guys, the faster they work, the less money they make. Do you still do this with hourly work? Mowing is flat rate, but fall cleanups are hourly for us. Meaning if the guys are efficient with their time, we're not billing the client much and they don't make as much. This seems to truly only work with flat rate work with a budget hours goal to beat. Yeah. So in this case I would really recommend if you're doing a one time leaf cleanup, I would have a budget hour assigned. I'd give the customer a price. I would argue customers are more willing to pay a higher price if it's fixed from the onset. So if you're like, hey, we're going to charge 50 bucks an hour, you know it's going to take 10 hours. So about 10 hours. Right. You know, $50 an hour to customers seems like a lot. However, you could literally charge $80 per hour, but then say, hey, it's going to cost 500 bucks. It's going to exact same price. They're happier to pay that. They might even pay 600 because they now have a fixed price. There's not this random dollar like they're paying for the leaves to get cleaned up. They're not paying for you to be on their property. Like the problem gets solved when the leaves are gone, not when you're on their property. So I really recommend like you can have a much more premium price if you actually assign budget hours and give a fixed price. I would also say if it's not a one time product and it's a recurring basis, you can kind of average out how many budget hours going to take per week per bi weekly that you're being there. And yes, sometimes it'll be higher, sometimes it'll be lower, but give the guys a target to go after because I genuinely believe people can literally get twice as much work done if they're incentivized to do so.

We have an improvement crew which makes $100 per man hour, but is fed by our maintenance crews because it's not fair. If only the improvements crew makes the dollars so first off, I would, I would want to know if that a hundred dollar per hour includes the improvements like the flowers or whatever, you know, bush trimming. Like if there's other material costs we, we, we take out of that hundred dollars per hour, some of it would be considered like material cost. So let me, I'm going to assume though you're charging more per hour for the improvements. There's probably a higher likelihood that the improvement crew is going to have yellow slips, damage cases and is higher margin. So it's okay to sometimes have a service that they make more per hour, but there's also more risk of yellow slips. They have to do walkthroughs with the customer. They have to be able to speak English. They have to be able to coordinate projects like they have to be able to figure out whole like delivery of material, delivery of rental equipment, management of a job site. And so I'm okay with having the higher rate because usually it's high risk, high reward.

Mike, we are in your region in Washington with similar cost of living. We are paying hourly now. What do you expect to pay base rate for P4P in this area? So in Washington state, depending how close you're to Seattle, it can range. We have locations that have to pay $25 an hour just to get anyone in the door because your base pay needs to be high enough in order to be able to find track good talent. Do you have a recommendation for what percentage of revenue should go towards labor when you include the non revenue producing employees? I have a couple part time, a couple part timers working, doing some of the office work and maintenance tasks. But I'd like to make sure.

But I'd like to make sure that I'm not hiring out more of the work than I should, assuming I want to maintain a 20% profit margin. Okay, I think I froze up there. What happened there? Oh, give me one second. I'm going to switch out my camera. Give me a second. Folks. Present camera settings. Cameras. Giving up the ghost. We're going too long. All right, let's see here. Can I switch back? Oh, and we're live. Let's go. Okay, good question. So if you're wanting to include your office workers in labor in general, I don't want to be spending more than 50% of my total revenue on direct labor. If you're spending more than 50% of your total revenue on direct labor, that's people out in the field, we've got a problem. If you're gonna throw your office and admin into that it's probably going to go over 50% in terms of the overhead expenses.

What about equipment issues? Can you take problems that are out of their control, not negatively affect them? Look, there's positive and negative things that can happen every single day to their route. There's going to be jobs that they show up to and it's going to take them way shorter because it was dry. And when you did the estimate, it was super wet. Like there's going to be pros and cons and things that speed them up and slow them down. The thing is we, when you now take that out as a variable that they can just use an excuse. Guess what? They check their oil, they check their tires. They actually make sure that of these little preventative things before the day starts, they take an extra belt with them. So if one breaks, they have one to fix. And they don't have to drive an hour round trip to get the belt fixed because otherwise on hourly they are thrilled when the belt breaks because they get an extra hour of being in an AC truck driving around.

Josh Bell at what point to do you determine a manual adjustment needs made? Like the mornings they sharpen blades? Yes, but just an ordinary day. P4P should cover there getting out of the shop and right back. Right? No manual adjustment needed that ordinary day. Yeah, no manual adjustment is needed unless there was work being done that was not producing labor revenue. Right. So drive time is part of the job. Fueling up part of the job. Unloading at the end of the day and loading up at the beginning part of the job all of a sudden though, because they're not getting extra revenue, there's no labor revenue being produced, they quickly find out that shrinking that time.

Is in their best interest. And so that's where the incentive garners the best results.

Let's go, Liam. For businesses with multiple crews, how do you address fairness on routes? For example, if one crew has two large jobs that take all day and another has 12 jobs in the same day with far more drive time, the first crew could make great money, which more easily, much more easily than the crew who are spending a large chunk of their day driving. This could upset some crews. Great P4P really. Also make sure you have disciplined businesses business practices. For example, if you have a really dispersed route and your drive time is crazy, they won't be able to make P4P and they will get mad at you. So either A, you have to raise prices on these jobs that are really spread out or B, you will cut them because it's bad Business in general, like hourly wages, hides a lot of problems in the business. When you now give people a piece of the revenue, they will complain when there's bad performing employees, they will complain if jobs are underpriced. Like you can have a job to go underpriced for a long time simply because the crew doesn't care. They're not going to get paid based upon the revenue being generated. They're getting paid how long the job takes. And so you might literally like it'll flush out all these bad things in the business simply because now they're thinking the same way an owner does. And so if there's a ton of drive time, yes, they will be mad. So you will have to correct the pricing or correct the route and get rid of a massive service area and where people are driving way far away. And then you also will mix up your routes and then if there are times you're like, hey guys, we're going to this area, it's going to be a little bit dispersed, there's a lot more drive time. We need to do it this year. And I will correct the pricing at the end of this year and I will mix up who's going in the area because I know it's tough to make P4P on that specific route, just communication with them. In Alaska, we tend to have five and a half months of snow removal. We currently offer a hybrid version of P4P system for employees with a base salary equals a 33% of monthly clients and a per visit bonus equal to 33% of visit revenue they service. The second problem is winter pays less than summer work. How do you deal with paying a lot more in summer than winter?

Okay, first off, typically the people that say that PvP does not work, they do some sort of hybrid where they do some sort of percentage based pay, but they don't have things like manual adjustments, project management, bonuses, yellow slips, profit sharing or open book management. These are the type of things that the whole system has to be implemented. Right. I just say that as an asterisk. Not saying you're not doing that, Reggie. In terms of times of the year where there's more or less revenue being generated, just make sure it's tied to what the business is making. Right. Like if the business makes less money in the winter, they're going to make less money. So either A, you raise prices on the winter work or B, you cut out that work because not profitable and you focus on another service that you can make money on and can be profitable in so the crew makes an appropriate amount on P4P.

If we pay P4P for the mowing department, but not the landscaping department, what happens if we have to grab a landscape guy to fill on a mo crew? If someone called out, now there's one hourly guy and one on P4P. This is a big issue to solve for us. You're 100% right. And that's what people do. They'll try to do this hybrid stuff, and then they'll. This will mess you up. Because now all of a sudden, your mowing guys are like, go, go, go. Landscape guy shows up, not super skilled, and no urgency whatsoever to get the jobs done quickly. So, like, P4P will flush out these bad practices and like having an even playing field for everyone on hourly base. And then everything above that is incentive. Like, for projects, you can absolutely do P4P and like, well, they're not making enough. Great. Give them 40% if you have to, and then give your mowing crew 30% of labor revenue. You can just. It's a. Is a. Literally a setting inside of their user account inside P4P software. And then for the project guys, you're setting up a project, and every day they show up to the project, you just assign their hours to the project. At the end of the project, you click complete, and it splits all the labor revenue between who was there and how long they were there for. Really simple.

So, yeah. For projects where our costly repairs normally make. Okay, let me try this. For projects where our costly repairs normally come six to 12 months later, what could you do to deduct from workers incentive pay over a much longer period of time? So we do not affect their. We do not take away from their paycheck more than one pay period. And we do it based upon when it was reported and when we paid that invoice out. So if they do a damage case and then three weeks later we hear about it, yes, it's gonna be on a different paycheck. We do it one time only. We do not follow them. So, for example, they break a $5,000 window. They have $500 on this paycheck for a bonus. I'm only taking the 500. I'm showing them the invoice. They're usually very sorry. It also stinks for them. They lost $500. But if they were willing to take the full extent of $5,000 of risk, two things. One, they'd be a business owner if they were willing to take that much risk. And two, if you tell them for the next three months, you're basically not able to make P4P. They're going to be super slow, they're going to be super unmotivated, and they're going to drag the rest of the crew down.

Do you have a generic video that introduces pay for performance and explains to my independent contractors exactly how it works and gets them excited about the big changes that are coming to Richard Lawn Services? Yeah. So in the mikeandys.com P4P it's free training in there is a couple sections for your employees and you could share those videos with them. I'd be very careful about using independent contractors with this model. This is for W2 employees because you're having them clock in and out. I'm assuming they're wearing your uniform, they're driving your trucks and using your tools. If they're doing any of those things, they're W2 employees. And typically on independent contractors, you're already running a version of P4P which like, I'm going to give you a percentage and if you do a bad job, I'm going to hold you accountable. But if they're actual independent contractors, they're not clocking into your service, they are not responsible to show up at a certain time, they don't wear your uniform, they don't drive your trucks or use your equipment. So just be careful.

Where can we go learn more about P4Pmikeandys.com P4P it's all free training. If we're paying an average of 33% revenue on P4P to something like mowing, how do we have enough remaining budget for manager and admin pay if the goal is to keep total payrolls at or below 35%. So if your goal is to keep all payrolls under 35%, it's likely you're going to not be able to pay 33% of labor revenue to to your employees. Now, keep in mind, labor revenue is different than total revenue. So you're comparing two different things. Right now, 33% of labor revenue going to P4P. Great. But 35% of total revenue is totally different because now total revenue includes estimate fees, dump fees, material markup, all those other things. So you could actually hit this number. And even though 33% of labor revenue is going to the employee, really maybe only 25% of total revenue is going to the frontline team members. So this could take place. But simply if you're battling this is you might have to raise prices so you can pay your employees less a percentage of P4P. I'm not saying you must be 33%. I'm saying try to do a number that the employees can do the math in their head, right? So the software will show them how much they're making if they're integrated with copilot, right? It'll say, hey, here's how much you're making for the day. But I want them to be like, okay, there's 10 budget hours on the day. Multiply that by 100. That's $1,000. I'm making one third of that. That means I can make $330 today. I like them to be able to do the math really simply. So I like 20%, 25%, 30% and 33%. Those are like my favorite numbers.

Do you have any interior exterior painting companies using pay for performance? A lot of different skill levels can be on a crew. How would you structure base pay? Pay for performance? Thanks. So you can either a. So inside of P4P software, you can have every user have a different base pay and you have every user have a different percentage of revenue that they get. So if you wanted to do tiers, you could have different base pays based upon experience level 10 or whatever. And you could also, if you wanted to have different percentages for the same thing, I would tend to probably want to do it more percentage based. But like, hey, I can't attract a crew leader for the same base pay. And it's like very different skill levels. You could do that and just have a different base pay inside the software and it'll track that accordingly.

When it comes to open book management, do you allow access to see the job, full pricing and all in their copilot count? Yes, I let them see everything. Like they're eventually going to see an invoice, they're eventually going to see an estimate. They're eventually going to talk to a customer. The customer is going to print it out. So just show them the information and don't hide anything from them. Here's a news alert. All right.

If people like you, they will work harder for you. How do I know that? Because if they don't like you, they look for ways to tear down your business. Siphon off gas, make you look bad, slash your tires, all the rest of it. If they don't like you. So if they do like you, they'll work harder. Now how is. What's the number one way to get someone to not like you? Hide things from them. Why? Because they don't trust you. So if they don't trust you and you hide things from them. They will not like you. And if they do not like you, they will not work as hard for you.

All right, so show them everything. In my opinion. What about hiring inexperienced employees? And they are training. They obviously will not be very efficient. In summer season, we could have a easy 15 plus guys without experience. We have to move around and cruise. This will be a hit to the good guys. So we have trainer bonuses inside of P4P software. So if someone's doing training, they will get an extra bonus per hour. In order to be able to compensate for the fact that they're going to get slowed down. We personally tie that trainer bonus to them actually having to fill out at the end of each day a performance report on their trainee. So they get an extra. I think it's $6 now per hour as a trainer. But that is tied to making sure they have a performance report at the end of each day for their trainee.

Sometimes all we can find is inexperienced. That is all. There's walking through the door at hiring time. Mowing has no materials and is a labor service. Labor only service. You're correct, Ted. Yeah. If you're. If you don't have any material cost being added for mowing, it's just all straight labor and it's easier to keep track of. Usually I didn't list my message appropriately. We utilize P4P as you describe in the summer and in the winter they are responsible for their list. So it gives them. So is giving them their 33% for monthly.33% per visits that they handle. My main question, is this the best way to handle this under PvP or would you recommend being just pure budget hours like summer, since we have months, but some months we can work 10 hours and others 100. All right. Yeah. So I don't like giving a percentage of their percent of. If you have a monthly contract that's a level billing, I don't want to give them a percentage of that. I want to give them a percentage of the labor revenue which is going to be the budget hours multiplied by the hourly rate. So what I would do is break that contract down and be like, okay, there's going to be some time. It takes 100. The other times it takes 10. Let's figure out every visit when that's supposed to be. So I'm going to use Copilot as an example. Inside of your CRM though, what you want to do is create the level billing and inside of it have all these visits. Each of those visits have budget hours. Attached to it and a separate schedule. And then when they show up to the job, they're only going to see the, the job notes and the budget hours assigned that's supposed to be completed today. And then I'm gonna be able to run P4P based upon that instead of getting a percentage of a level billing. And the billing is level, but the work spikes throughout the year. I don't want to be giving them a percentage of flat amount. Cause sometimes for example, they'll show up and they just need to blow off the sidewalks. And the next week they need to show up and do a 20 hour property cleanup. It's not fair to the person, to either of them. And so you're going to have to figure out budget hours per visit.

So would we include the full mowing price inside the PVP model for their route completed base pay? Yes. Or do like 10% of the mowing is related to cost of insurance, gas, et cetera. Then their budget hours is based on their 90%. No. So for mowing I just consider all labor revenue and if you're like, well they're making too much money, bring down the percentage that's going to them on P4P. When you said include no revenue producing in two employees, labor revenue should be less than 50 of revenue. Is that 50 of labor revenue or total revenue margins are much better on labor than materials. For us.

I would increase your, your material markup because typically. Okay, I see your gross margin. I see what you're saying. Okay, like typically we, we, we increase our material markup by 100. Right. So if I'm charged, getting charged $30 per yard for something, I'm going to charge the customer $60 per yard. And so yes, you're right though typically you're gonna mark up labor by like 4x typically. So yeah. What is a rule of thumb though? I'm looking at total wages, total revenue under 50% is like a very general rule of thumb that I want to be beating. So.

Do you also add profit sharing or no. So profit sharing is completely separate from P4P4P gives them the incentive to be able to make more money based upon their efficiency and quality of work. Profit sharing is usually going to incentivize them showing up on time and not calling out. And so we track that inside of P4P software and then in the quarter you can just see any dates that they called out, were late, etc. And then dock them for that on their profit sharing. But again the book goes through that PVP University Mike andy.com P4P goes through that highly recommend. If you want to get the book for free, I'll give you the hard copy like the hardcover mikeandys.com freebook I will send it to you. There's no shipping, there's no handling, nothing. It's completely free. Because I know what this will do for your business. It'll completely change it, I promise. Labor revenue is based on their flat hourly rate, not labor burden, correct? Yes, you are correct. Labor revenue is based on their flat hourly rate, what you're charging the customer. And as a general rule of thumb, if you look read inside of the turnaround book. As a general rule of thumb when it comes to base pay, another metric to calculate is in general, I don't want my base pay being more than 25% of what my rate to the customer is. So if I am charging the customer $80 per hour, I don't want my base pay on P4P to be more than $20 per hour. That way I have plenty of room for my crew to make more bonuses on P4P.

So I understand this clearly. Our project manager, I sometimes have work on the office, so I should do a manual adjustment on those office days when he's putting together estimates so that he still gets his bonuses from efficiently completed projects. Yes, exactly. You do a manual adjustment at his base pay for the hours worked in the office. So that way as he's making, he's in the office and he's making more and more base pay, we need to manually adjust P4P because there's no labor revenue being produced. You nailed it. All right, folks, the call to action today is twofold. Number one, freebie mikeandys.com freebook. I'll give you the book for free. I'll ship it to you. No other cost. Number two, call to action mikeandys.com P4P it's video training, walking through how to do all this stuff and all the details, many of which we've kind of talked about in the Q and A. I just promise you honestly, it'll save you so much on like headache. We've recently made it now where you can use support calls with video. So zoom calls with the support team. You can do it for free. You know, just go to p4psoftware.com and there's a book a call and you can book a 15 minute Zoom call and ask questions. They're like, oh man, I've got to show this. I don't want to do it publicly for whatever reason. Whatever reason you are not implementing pay for Performance, I implore you book a call with the team. We're not going to try to sell you. I'm just simply going to show you everything about pay for performance and answer any objection you have to it. And in my opinion, me selling you on P4P is the best thing I could possibly do for you because I know what it did to me, my business, my life, and my employees. And so please, if you have any objection that has not been addressed in this webinar in the book, in P4P University, please, please book a Zoom call. All right? We don't make money on P4P software. No one uses it because it's very, very niche. I know what it did for my business and I implore the people that follow me to keep to use it. And I will continue to invest in making the software better, having a support person to be able to answer Zoom calls and answer chats, because I know how it changed my life. And I beg you, if you follow my content, if you trust anything I've ever said to implement pay for Performance, and if there's anything that has been not addressed today or in the book or in the training, please book a zoom call and we'll just address directly what your problem is and we'll go through your numbers. And I want to make sure no objection is there. The only reason to not implement pay for Performance is because you are lazy. That's the bottom line. You're not. You're not willing to do the hard work of changing contracts into budget hours. You're not willing to have the hard conversation with employees that are overpaid about having a lower base. You're not willing to go through the transitionary period of everyone having either base pay that they're currently at or P4P. You're not willing to do the math on the back end. You're not willing to do the one minute per employee per day, which if you have 15 employees, will take you extra 15 or 20 minutes per day to calculate, but then they'll get daily reports and they'll be able to very quickly see how much money they make when they work harder.

Just please, if there's any credit to my name, please institute pay for performance for your business. It'll completely change the way your business operates, the way you treat your employees, and the way that you interact with your company. I love you all. I hope you have a fantastic rest of your weekend. Check out P4P University. It's completely free. Mikeandys.com P4P book a call from the website P4Psoftware.com and we'd love to talk to you. Make sure we get your questions answered directly. Love you all and you can share those videos with them. I'd be very careful about using independent contractors with this model. This is for W2 employees because you're having them clock in and out. I'm assuming they're wearing your uniform, they're driving your trucks, and using your tools. If they're, if they're doing any of those things, they're W2 employees. And typically on independent contractors, you're already running a version of P4P which, like, I'm going to give you a percentage, and if you do a bad job, I'm going to hold you accountable. But if they're actual independent contractors, they're not clocking into your service. They are not responsible to show up at a certain time, they don't wear your uniform, they don't drive your trucks or use your equipment. So just be careful.

Where can we go? Learn more about P4Pmikeandys.com P4P it's all free training. If we're paying an average of 33% revenue on P4P to something like mowing, how do we have enough remaining budget for manager and admin pay if the goal is to keep total payrolls at or below 35%. So if your goal is to keep all payrolls under 35%, it's likely you're going to not be able to pay 33% of labor revenue to your employees. Now, keep in mind, labor revenue is different than total revenue. So you're, you're comparing two different things right now. 33% of. Of. Of labor revenue going to P4P. Great. But 35 of total revenue is totally different because now total revenue includes estimate fees, dump fees, material markup, all those other things. So you could actually hit this number. And even though 33% of labor revenue is going to the employee, really maybe only 25% of total revenue is going to the frontline team members. So this could take place. But simply if you're battling this is you might have to raise prices so you can pay your employees less a percentage of P4P. I'm not saying you must be 33%. I'm saying try to do a number that the employees can do the math in their head, right? So the software will show them how much they're making if they're integrated with Copilot. Right? It'll show. Hey, here's how much you're making for the day. But I want them to be like okay, there's 10 budget hours on the day. Multiply that by 100, that's $1,000. I'm making one third of that. That means I can make $330 today. I like them to be able to do the math very simply. So I like like 20, 20%, 25%, 30% and 33%. Those are like my favorite numbers.

Do you have any interior exterior painting companies using pay for performance? A lot of different skill levels can be on a crew. How would you structure base pay pay for performance? Thanks. So you can either a so inside of P4P software you can have every user have a different base pay and you have every user have a different percentage of revenue that they get. So if you wanted to do tiers you could have different base pays based upon experience level 10 or whatever. And you could also, if you wanted to have different percentages for the same thing, I would tend to probably want to do it more percentage based. But like hey, I can attract a crew leader for the same base pay. And it's like very different skill levels. You could do that and just have a different base pay inside the software and it'll track that accordingly.

When it comes to open book management, do you allow access to see the job, full pricing and all in their copilot account? Yes, I let them see everything. Like they're eventually going to see an invoice, they're eventually going to see an estimate, they're eventually going to talk to a customer, the customer is going to print it out. So just show them the information and don't hide anything from them. Here's a news alert. Alright.

If people like you, they will work harder for you. How do I know that? Because if they don't like you, they'll look for ways to tear down your business. Siphon off gas, make you look bad, slash your tires, all the rest of it. If they don't like you. So if they do like you, they'll work harder. Now how is what's the number one way to get someone to not like you? Hide things from them. Why? Because they don't trust you. So if you they don't trust you and you hide things from them, they will not like you. And if they do not like you, they will not work as hard for you.

All right, so show them everything. In my opinion. What about hiring inexperienced employees and they are training, they obviously will not be very efficient. In summer season we could have a easy 15 plus, guys without experience, we have to move around and cruise. This will be a hit to the good guys. So we have trainer bonuses inside of P4P software. So if someone's doing training, they will get an extra bonus per hour in order to be able to compensate for the fact that they're going to get slowed down. We personally tie that trainer bonus to them actually having to fill out at the end of each day a performance report on their trainee. So they get an extra. I think it's $6 now per hour as a trainer. But that is tied to making sure they have a performance report at the end of each day for their training. Sometimes all we can find is inexperience. That is all. There's walking through the door at hiring time. Mowing has no materials and is a labor service. Labor only service. You're correct, Ted. Yeah, if you're. If you don't have any material cost being added for mowing, it's just all straight labor and it's easier to keep track of. Usually I didn't list my message appropriately. We utilize P4P, as you describe in the summer and in the winter, they are responsible for their list. So it gives them. So is giving them their 33% for monthly.33% per visits that they handle. My main question, is this the best way to handle this under PvP or would you recommend being just pure budget hours, like summer, since we have months, but some months we can work 10 hours and others 100. All right. Yeah. So I don't like giving a percentage of their percent of. If you have a monthly contract that's a level billing. I don't want to give them a percentage of that. I want to give them a percentage of the labor revenue, which is going to be the budget hours multiplied by the hourly rate. So what I would do is break that contract down and be like, okay, there's going to be. Sometimes it takes 100, the other times it takes 10. Let's figure out every visit when that's supposed to be. So I'm going to use Copilot as an example. Inside of your CRM though, what you want to do is create the level billing and. And inside of it, have all these visits. Each of those visits have budget hours attached to it and a separate schedule. And then when they show up to the job, they're only going to see the job notes and the budget hours assigned. That's supposed to be completed today. And then I'm gonna be able to run P4P based upon that instead of getting A percentage of a level billing and the level, the billing is level, but the work spikes throughout the year. I don't want to be giving them a percentage of flat amount because sometimes, for example, they'll show up and they just need to blow off the sidewalks. And the next week they need to show up and do a 20 hour property cleanup. It's not fair to the person, to either of them. And so you're going to have to figure out budget hours per visit.

So would we include the full mowing price inside the PVP model for their route completed base pay? Yes. Or do like 10% of the mowing is related to cost of insurance, gas, et cetera. Then their budget hours is based on their 90%? No. So for mowing I just consider all labor revenue and if you're like, well, they're making too much money, bring down the percentage that's going to them. On, on P4P. When you said include no revenue producing in two employees, labor revenue should be less than 50% of revenue. Is that 50% of labor revenue or total revenue margins are much better on labor than materials. For us.

I would increase your, your material markup because typically, okay, I see your gross margin. I see you're saying okay, like typically we, we, we increase our material markup by 100%. Right. So if I'm charged, getting charged $30 per yard for something, I'm going to charge the customer $60 per yard. And so yes, you're, you're right though. Typically you're going to mark up labor by like 4x typically. So yeah. What is a rule of thumb though? I'm looking at total wages, total revenue under 50% is like a very general rule of thumb that I want to be beating. So.

Do you also add profit sharing or no. So profit sharing is completely separate from P4P. P4P gives them the incentive to be able to make more money based upon their efficiency and quality of work. Profit sharing is usually going to incentivize them showing up on time and not calling out. And so we track that inside of P4P software and at the end of the quarter you can just see any dates that they called out, were late, et cetera, and then dock them for that on their profit sharing. But again, the book goes through that P4P university mikeandys.com P4P goes through that. Highly recommend. If you want to get the book for free, I'll give you the hard copy like the hardcover mikeandys.com freebook. I will send it to you. There's no shipping, there's no handling, nothing. It's completely free. Because I know what this will do for your business. It'll completely change it. I promise. Labor revenue is based on their flat hourly rate, not labor burden, correct? Yes, you are correct. Labor revenue is based on their flat hourly rate, what you're charging the customer. And as a general rule of thumb, if you look read inside of the turnaround book, as a general rule of thumb when it comes to base pay, another metric to calculate is in general, I don't want my base pay being more than 25% of what my rate to the customer is. So if I am charging the customer $80 per hour, I don't want my base pay on P4P to be more than $20 per hour. That way I have plenty of room for my crew to make more bonuses on P4P.

So I understand this clearly. Our project manager, I sometimes have work on the office, so I should do a manual adjustment on those office days when he's putting together estimates so that he still gets his bonuses from efficiently complete projects. Yes.

Exactly. You're gonna do a manual adjustment at his base pay for the hours worked in the office. So that way as he's making. He's in the office and he's making more and more base pay, we need to manually adjust P4P because there's no labor revenue being produced. You nailed it. All right, folks, the call to action today is twofold. Number one, freebie mikeandys.com freebook. I'll give you the book for free. I'll ship it to you. No other cost. Number two, call to action mikeandy.com P4P it's video training, walking through how to do all this stuff and all the details, many of which we've kind of talked about in the Q and A. I just, just promise you, honestly, it'll save you so much on, like headache. We've recently made it now where you can do support calls with the video. So zoom calls with the support team. You can do it for free. You know, just go to p4psoftware.com and there's a book, a call and you can book a 15 minute Zoom call and ask questions. They're like, oh man, I've got to show this. I don't want to do it publicly. For whatever reason, whatever reason, you are not implementing pay for performance. I implore you, book a call with the team. We're not going to try to sell you. I'm just simply going to show you everything about Pay for Performance and answer any objection you have to it. And in my opinion, me selling you on P4P is the best thing I could possibly do for you because I know what it did to me, my business, my life and my employees. And so please, if you have any objection that has not been addressed in this webinar, in the book, in P4P University, please book a zoom call. Alright? We don't make money on P4P software, right? No one uses it because it's very, very niche. I know what it did for my business and I implore the people that follow me to keep to use it. And I will continue to invest in making the software better, having a support person to be able to answer zoom calls and answer chats because I, I know how it changed my life. And I beg you, if you follow my content, if you trust anything I've ever said to implement pay for performance and if there's anything that has been not addressed today or in the book or in the training, please book a zoom call and we'll just address directly what your problem is and we'll go through your numbers and I want to make sure no objection is there. The only reason to not implement Pay for Performance is because you are lazy. That's the bottom line. You're not willing to do the hard work of changing contracts into budget hours. You're not willing to have the hard conversation with employees that are overpai about having a lower base. You're not willing to go through the transitionary period of everyone having either base pay that they're currently at or P4P. You're not willing to do the math on the back end. You're not willing to do the one minute per employee per day, which if you have 15 employees will take you extra 15 or 20 minutes per day to calculate, but then they'll get daily reports and they'll be able to very quickly see how much money they make when they work harder.

Just please, if you if there's any credit to my name, please institute Pay for Performance for your business. It'll completely change the way your business operates, the way you treat your employees, and the way that you interact with your company. I love you all. I hope you have a fantastic rest of your weekend. Check out P4P University. It's completely free. Mikeandys.com P4P book a call from the website P4Psoftware.com and we'd love to talk to you. Make sure we get your questions answered directly. Love you all.