NOT FAIR!! Paying Employees $/HR is a FAILING FORMULA!

Hey everyone, my name is Mike Andes. I'm the founder of Augusta Lawn Care. We have over 80 locations around North America. And today I'm talking about why dollars per hour and paying employees on the front lines, your laborers. Dollars per hour is a failing formula and in my opinion over the next five to 10 years will become extinct in the businesses that are doing very well and are having good margins, being profitable and creating opportunities and creating more jobs in their local community. So I'm going to talk about three reasons why today you should from paying people by the hour and you switch to a system I call P4P or pay for performance. You can learn more about this@p4psoftware.com or just order this book that I just recently made. It's on Amazon. You can get it for like $18 for the hard copy. You can also get it on audible. But today I want to break down the three reasons why you should not be paying by the hour and why it is a broken system. It's a broken model. And in my opinion, the reason people will negate the three things I'm going to go ahead and write here. The primary reason is because they are if you actually it down, lazy. And the reason I say that, and it seems somewhat arrogant to say is because that's the realization I had when I for so long wanted to implement a pay for performance model. But it always came back to like, man, it's gonna take a lot of work and I'm gonna have to change the business model and I'm gonna have to like educate all the employees on this. I'm have to calculate every single day at the end of the day. Paying someone by the hour is extremely lazy because it's very simple to do. How many hours did you work times by an hourly wage? Here's how much money you make. It has nothing. How hard they work has nothing to do with how much they earned for the company, how profitable they were, or what they contributed to the customer or to the business pay for performance. P4P is going to be a pure meritocracy, which means it doesn't matter who knows the boss who's been with the company the longest. Whoever produces the most profit for the company and is both efficient and has a high quality service is going to make more money. I'm going to talk about three reasons why the dollar per hour method that equation is broken. The first is the fact that in dollars per hour environment you have this tension that is created between the employer and the employee. This tension is created because at the end of the day, the employee makes more money the longer the job takes. And the boss, the business makes less money the longer the job takes. Because if I'm getting paid by the hour, why would I not want this job to, like, take longer? Why would I not want to take a longer lunch break and get into overtime? Because I'm getting paid more money the longer the job takes since I'm getting paid by the hour. Whereas on the flip side, the employer, the business is making less money the longer the job takes and their profit margins begin to shrink as the employees SAP the clock and make more money. In my opinion, with P4P, it solves this problem because now both parties make more money the more efficiently the job is done. And this allows the employee to make more money if they're going to work. If they want to work hard, they can make a lot more money on P4P. It also allows the business to make more money and be more profitable. And I hope that owners that use P4P implement profit sharing and actually give a piece of that back to the employees to create that culture of care for the bottom line. At the end of the day, when I get on a job, you and I have employees, they make more money, I make more money. As long as the job gets done more efficiently and the customer is happy with no callbacks. That is how the system should work. It should not be based upon how long the job takes. All right? The second thing is the fact that the dollar per hour method versus P4P is really about micromanagement versus a culture of accountability.

All right? The reason some people will also not do P4P. And I've seen in the comments people say there's no way you should do P4P. Because now employees are going to go as fast as possible and they're going to damage things. They're going to ruin a customer property, they're going to damage equipment for the company. And all of that is true unless you have a culture of accountability. Because with P4P, if they make damage cases that is damaging customer or company property due to negligence, any sort of bonus that comes as a form of performance dollars is going to be on the T. If they make damage cases, they're going too fast, they have callbacks or yellow slips, we call them, we have to go back to the property. All of that can be taken out of their performance dollars. So there's a level of accountability instead of you as the boss micromanaging them. Because if you're on a dollar per hour basis and you're paying employees by the hour, guess what you're doing? You're always micromanaging them, wondering where they're at, why they're on their phone, why are they taking such a long break, why do they stop at the gas station? Even if you're a good boss, that's still going through your mind to some extent. Even if they're not. For all, they have a very important emergency that's happening in their family and you would actually be okay with them being on their phone. But because you are micromanaging them and the fact that like, well, maybe they're burning the clock and maybe they took a really long break, maybe they stopped at the gas station, they didn't really need to. Maybe they took the long way home because they just wanted to be in the AC vehicle all day long. That's what goes through your mind even for a good boss. If you're struggling financially, if you are using a dollar per hour system because you know the longer the job takes, the longer it takes them to drive home, the more money they make on a dollar per. They would very happily go back to the job tomorrow and spend 30 minutes wrapping it up because they can drive an hour there and back in an AC vehicle and get paid for it versus just working an extra 30 minutes at the end of the day, the first day and finishing the job. That is what the kind of mindset someone on P4P will have. They take accountability to the job and think about how do I get this job done efficiently instead of how many hours can I SAP out of this job to get to overtime and just SAP the. SAP the company dry at the end of the day. This is not about the company making more money. This is about how do we make the company more money so that the employees can make more money. Our employees make significantly more on P4P. How? Because the company can afford those higher wages due to the increased efficiency gained by using P4P and having accountability. Where now the employee, if they make a damaged case, it's on them. If they make a yellow slip, they're going back to the customer's house, they're talking to the customer, they're resolving the issue, not you. Running back to this job and fixing this problem and running around. Now it's more about the accountability on the team. And this is the third and final that I know people will not actually get to this part of the video because they're going to already be in the comments saying this is all about a money grabbing scheme and it's just about making business owners money. And this is the bottom line and this is actually the most important thing to me. And that is the employee future. If you actually want to be real with yourself. For most businesses in the labor industry, most of them, not all of them, but most of them, are entry level. Which means you just need to have a good work ethic and good hands and a decent head on your shoulders and you can do the job. Lawn care, landscaping, cleaning, janitorial, some construction jobs, painting. These sort of things can be taught very easily. It's a matter of do you have work ethic. Now when it comes to number three, the employee's future, I have to ask myself who's going to have a better possibility and opportunity to get a better job after they work at my lawn care and lion landscaping business, who's going to have the best opportunity? It's gonna be the person that has skills. And how are they gonna set themselves apart from every other laborer that's going for the next position, Maybe a manager's position. The fact of the matter is they've been accountable for their actions. They've actually thought about efficiency, they've thought about how to cut out waste out of their day, they've thought about how to do a project management and manage a job from start to finish very efficiently and cut out waste and do it as quickly as possible, make a customer happy. They learn how to sell to customers because on P4P they get incentivized to actually get referrals. These are the type of systems that is going to allow them to get very valuable skills that will set them up for the next spot in their career. And I'm not naive to think that they're going to stay with me at an entry level labor position for the next 10 years. I want them in the next three years to go get something better. And I hope that by staying a year, two years, three years at my company at an entry level, it sets them up for a much better position in the next stage of their career. Hopefully it's internally they can move inside the company, but if they go move someplace else, that's fantastic. The bottom line, if they can go to another company and go get an interview and they know about cutting waste, they know how to think lean, they know how to do time management and manage other team members and train other team members efficiently, they know what a profit and loss statement is because we share those numbers in open book management inside of P4P, this is the type of thing that are going to set your employees up for success in their next career position. It is naive to think that they're going to stay with you forever. In this labor market, most laborers are sticking around two or three months. How can you make a meaningful impact on their life? It is not changing their wage by a dollar or $2 per hour. It is how do I give them the skills and the knowledge and invest back in them the time required so they understand numbers. They understand where the sales come from and how to sell to a customer, how to do a walkthrough and how to manage other team members. Those skills will set them up for a lot. Much more of a promotion down the road. These are the three reasons why $per hour is a broken formula. And I'll keep pounding this message until one day it is common place for employees to walk into an interview. High performers. They'll walk into interviews and ask, do you pay P4P or do you pay hourly? Because that person that asked that question is the grade A talent. They want to make more money. They do not want to work with a bunch of people that sit in their truck, sleep on the clock, are lazy. They don't want to work with them. That's the most demotivating thing for an A player, is to work with C players. And they want to be in an environment where the harder they work, the more money they make. That's why I wrote this book. That's why P4P software exists to help you calculate all of this. And if you go to p4psoftware.com training, all of the videos required to implement P4P are there for free and you have to book a call with a CPA that's on our team for free to help you implement P4P. I highly recommend you do this. It's changed my relationship with my business, my employees, and the profitability of the company has astronomically gone higher while at the same time I've been able to delegate a lot of my daily operations because of the accountability that is inherent inside of the system of P4P. I highly recommend you check it out. At least get the book. Check out p4pssoftware.com training completely free. Watch all the videos and book a call with our team here and they can help you implement P4P. I thank you for your time and your attention and I hope that P4P is something that you do before we get started this year and we start to get really busy.