Mike Andes explains how an Australian roofing company uses pay-for-performance to align crew incentives with profit. The model charges customers roughly four times the employee base hourly rate, then crews earn a percentage of labor revenue on each job.
March 30, 2024
I'm looking to start pay for P and my roofing company. Okay. In Australia. And I was running. You've obviously got Augusta one over here. And how did you go about setting up and who'd you speak to? Yeah, like the Australian laws and stuff because obviously it'd be different to the U.S. yeah.
So the big difference with Australia when it comes to pay for performance is you guys have a very, very high base pay that is required by the government. And so. But you also have a very high price per hour labor rate that you can charge. Like you over there charge like 100 to $200 per man hour. But you also, your base pays sometimes 25, $30 per hour. And so as long as, in my opinion, as long as you're charging the customer at least four times more than what you're charging on you're paying your employees on base pay. P4P will work. And really for something like roofing, it just comes down to the matter of a can you do a job in budget hours or at least break the job down into labor revenue? Because ultimately they get a percentage of the labor revenue. And so what of that seems complicated or do you have a question on that? Specifically, if I was going to do.
Marriage rate on like another labor. I've got the vapor price for the per meter to give to the boys for the pixie. But I was running like the law side of it and tax. Is it different to the American because obviously we're in Australia. And who did you speak to to find out that kind of questions?
Yeah, so I give the answer the same as I would in the US and that is essentially talk to your labor department. And so we have not seen this be an issue in this in Australian market or the European markets that are using it in terms of legally. But because I'm not in your country, every single day I just say, go talk to your labor department. Say, hey, here's my compensation plan. I am guaranteeing they pay this much per hour. And if they work really hard and they do really good job, I'm going to give them bonuses. And is that legal? Right? That's basically what you're doing. Just make sure you don't pitch it to employees like applicants as like you're making all this money. Like, you got to say, this is your base pay. This is what I'm guaranteeing you. And based upon performance, you can make more money as on as bonuses on top of that. That's how you want to pitch it. And so talk to your local labor department. But in Australia, you charge a lot more per hour. You also have to pay more per hour. And the bottom line, if you're using like per meter pricing for roofing, you're simply going to say, okay, if I'm charging, let's just call it $200 per square per square meter. Great. I'm giving one third of that now to my team members, which means I'm going to be giving $66 in P4P wages to my team. Out of every, for every cubic, every square meter now, 7, 10 meters, $660 in wages is going to be dispersed. And again, you can use the software, P4P software. Go there and go to the training tab and you can. It'll literally show you how to do this without the software. The software just saves you a little bit of time to make sure that the projects are calculated correctly on a daily basis, etc.
