The Truth About P4P [Pay for Performance]

Hey, everyone, I'm Mike Andes. I'm the founder of Augusta Lawn Care. We have over 150 locations around North America, as well as Copilot CRM, where we have dozens of different home service industries that are using the software. Now, today we are talking about pay for performance. I believe that hourly wages is a really horrible way to pay frontline team members that are doing labor. And I believe that the number one way to make a business more profitable in home services is, is make their labor more efficient. So today I want to talk about pay for performance, or what we call P for P. And I'm going to talk about it from the perspective of the employee and the owner. So if you might be on a team that's actually watching this, the frontline team members, and you say, okay, this P for P thing, how does it help me? I can see how this makes more money for the business owner. What about me? All right, let's talk about why P4P, my opinion is better for the employee. And then we're going to talk about why it's better for the business and for the owner. So as an employee, if you're a high performer, the last thing you want is an owner always looking over your shoulder, inspecting what you're doing and judging you. And like, why are you on your phone? Why are you not working harder? Why are you not doing this? The last thing you want to be doing as a high performer is your boss rolling up on the job site and just like checking in. Really what they're doing is they're babysitting you and they're micromanaging you and they're like, are you working hard still? And like, they always think you could work harder. And you're like, just let me do my job. And that's annoying. And on paper, performance, where the harder you work, the more money you make. You don't have to worry about your boss micromanaging you, looking over your shoulder, questioning every stop at the gas station, tracking your truck, because they know that if you don't work hard, you'll make less money. Another thing that's really, really frustrating as a high performing, high performing employee is working with other team members that don't pull their weight. You're working, like, crazy hard. It's hot, might be raining outside. Whatever it is, you're working your brains out. And yet Billy Bob next to you in the truck is taking a snooze and 15 smoke breaks and went and walked down to the gas station three times throughout the day on the projects like literally hardly doing any work. You're doing all the grunt labor you're doing. You're talking to the customer. You're doing everything, and he's hardly doing anything. And yet you make like two or three dollars more per hour. That makes no sense. The fact of the matter is, when it comes to home services, a high performer can make two to three times as much profit for the business, and yet they're only making like 10 or 20% more in wages. If I'm paying, you know, Billy Bob's making 20 bucks an hour, and the crew leader, that's crushing it. Working crazy hard is making like 22 or 23 an hour. That is not fair in my opinion. It's not fair that just because someone knows the boss, just because someone, you know goes hunting with the boss on the weekend and goes to church with them or has been around for a long time, makes a whole bunch of money or makes more per hour than everyone else, that's not fair to me. I think that if someone shows up at the job and they're hungry and they're willing to work hard, be efficient and show up on time, come prepared, look at the job notes before they even come to work, get. Get all their, their equip, their equipment set up really quickly throughout the day, and then they're out like they're. They're off the job site as quickly as possible. That person, in my opinion, if they're making the business more money, they should be making more money. Why do they have to be there for 10 years just to say that they've been there for 10 years when they're making more money for the business from day one than the people have been around for a long time and are now lazy, taking longer breaks, showing up a little bit late, equipment doesn't look as clean on their trucks anymore, they leave the trucks a disaster. In my opinion. It's like, look, if you can perform at a high level and make the customers happy, have a high quality standard, you should be paid more money. You're getting paid what you're worth. The same way the business tries to get paid what they're worth, employees should be trying to look, how could I get paid what I'm worth? So that's really frustrating. As a frontline team member, you work crazy hard and you make the same, if not just a little bit more than someone else who hardly works at all. Like, they, they literally just do the very bare minimum. They're always on their phone. It's annoying as I'll get out to do jobs with them because they just simply don't care. They're simply doing, trying to do as little as possible to not get fired. That's their goal. They're. They're literally a job. If you're getting paid by the hour, by the way, it makes no sense. Because look, the longer the job takes, if you're getting paid by the hour, the more money you make. Yet the boss wants you to go faster. And that's why they're always looking over your shoulder. Because the shorter the job takes, the more money they make. It doesn't make any sense. And that's why so many employer and employee relationships are so much against each other. Because the employee wants it to go slower because they make more money that way. And the boss wants them to go faster because they make more money that way. So instead of being always against each other, let's just create an incentive program to where everyone wants the same thing and we're all going in the same direction. And that's what P4P is. Because now, because the employee is paid more the faster the job goes, everyone wants the job to be done as efficiently as possible and to a high quality standard so they don't have to come back again. You don't have to be, there's no complaints and the customer's happy. That's. It makes a lot of sense that the harder you work, the more money you make and that the employer and the employee both want the same thing instead of being against each other all the time. And because of that, there's micromanaging and there's people looking over each other's shoulders and there's no trust in the organization. No one wants to work there. Now why is it better for the business owner? Okay, so we've talked about from the employee perspective, why it's. Why it's so much better. P4P compared to hourly. Don't deal with people playing politics and working hard in front of the boss. So they get an extra bonus. And just because they, you know, asked for a bonus, they got a bonus. Like that makes no sense from an employee's perspective, from a business's perspective, why is it better for the business? Here's the bottom line, and I've only recently kind of encapsulated this fact with pay for performance P4P, you'll be able to make more money on every job because your labor will be so much more efficient. They'll get the jobs done faster. So therefore you'll make more, make more money on every job. Because you won't have people doing nothing, sapping off the clock, waiting for overtime if they're getting a percentage of the labor revenue. That's what P4P is. You make a percentage of the labor revenue. Therefore, you are going to make more money on every single job. You know, don't have people sapping the clock. Moreover, you'll be able to put more jobs on the schedule because the jobs get done faster. And this is the avalanche. This is the momentum that is created with P4P. Not only do you get the singular job.

You make more money on the job. You get more jobs done with the same amount of crew, the same number of trucks, and the same amount of equipment. That's the real power of P4P is the fact that I'm able to make more money on the job because my crew gets the job done in half the amount of time. And so I don't have to spend gobs of overtime and a whole bunch of extra hours on the job. But moreover, because they get the job done faster, I can get more jobs on the schedule. And this is. Is truly the compounding effect of P4P. Higher profits, more jobs that are profitable. And so now for me as a boss, I don't have to micromanage my team. I don't have to worry if they're on the phone, whether they're on TikTok or on Facebook or doing something, I don't care. They might be looking at the job for all I care. They are on TikTok, but I don't care because I simply am paying them a percentage of all the revenue they make for the business, and we get a share in the profits. Because when a job gets com gets accepted, there's material cost, there's, you know, fuel and all this other stuff. Ultimately, take the revenue you earn from the job, you take away all the material costs. The hard cost of the business is incurred, and everything left over is what we split. And the employees get a percentage of that, and the rest goes to the business. And so, for the business's perspective, I now am able to take what is usually a variable cost, which is labor. And when I mean variable, it means if the weather's bad, well, now, the jobs take twice as long. If it's hot outside, the jobs take twice as long. If it's a nice day, it's medium weather, jobs go really fast. A variable cost, the labor, the variable cost. Now I'm able to say, hey, look, regardless of rain, sun, slow season, doesn't matter. You're Getting a percentage of all the revenue you make for the business. It's up to you as the frontline team member to be able to figure out how to be more efficient and make sure you make more money. The business, but also for yourself. And again, we're going the same direction. So you don't have to micromanage your team as much. You don't have to be looking over their shoulder tracking their trucks. We used to track their trucks and always be looking where they're at now. It's like, look, if you're making good money on P4P and you want to take an extra break, go for it. That's on you. You're making a percentage of all the revenue you make for the business. If you want to stop making revenue and be a little bit, take an extra break or you're not feeling well or you want whatever, like that's up to you. It's completely on you. I don't have to micromanage you. Here's the part that no one really talks about when it comes to P4P and this is the part that may or may not apply to you based upon how you look at your team members. I personally, for my frontline team members, don't want them to be pushing a lawnmower. And if you're in a different industry, cleaning or painting decks or tree trimming or whatever industry you're in around home services. I personally don't want my frontline team members to be doing the same job in five years. I don't. I want them to get skills, experience and be able to move on to another stage of their career. Hopefully internally, if I have a big enough company, I'm growing quickly enough, but if not, fine, like, move on to something else and make more money someplace else. And I tell them at off site meetings and team meetings, like, look, I don't want you to be pushing a lawnmower for the next five or 10 years. That'd be crazy. And I don't want you to be doing that. I want to get you skills that you either make more money and can grow inside this organization or, or move on. And in my opinion, PVP is a valuable skill that your frontline team members can learn. And if they actually digest and understand, it puts them in a much better place to make more money down the road at some other employer or inside of your business if you can continue to grow and create positions to move up into. And the reason it does that is because ultimately P4P is looking for a way to Reduce waste in their day. Anytime they're not actually producing revenue is waste. Drive time, load time, unload time. Walking around the shop in the morning, having a coffee. 10. Can you go from 10 breaks a day down to one or two? Can you fuel up all of your equipment, your trucks, everything at the same one time a day instead of three? Three times a day. These are the type of things that if they're not on pay for performance, they don't even think about because they want the jobs to take longer, they want their brakes to be longer, they want the drive time to be longer because they make more money on hourly wages. So when they're actually paid to be efficient, guess what they do? They actually start having an eye for where all the waste is at in the business. Like, oh, like we could actually take out that fence panel and instead of having to do wheelbarrows around the fence and through the backyard gate and up the steps was go directly to the fence now. And I was like, oh, that was crazy. I didn't even think about that. They would not ever think about that in the past because they are not incentivized to make the job get done more efficiently and so incentivize them and then unlock their creativity. And instead of just hiring their hands, like, go, do this, use their heads, hire their heads to come with more creative ways to be efficient in the business. That skill, using their head instead of just their hands allows them to be able to get the next stage of their career. Because the ability to be able to look at any process, whether it be manufacturing, home services, retail, any sector of the economy. If you're able to look at a process and see waste, identify it and see how to fix it and make it more efficient, you will make more money than a frontline team member will. And it's likely that you potentially are training your frontline team members to be the managers at other businesses down the road. And some people are afraid of that. Like, oh, well, I don't want them to do that. I want them to stay here forever. Well, if that's your notion, then P4P is not for you. Because pay for performance will allow your team to get the skills required to be able to actually be more efficient themselves and make more money in the short term. And in the long term, be able to then go lead, train and manage other team members and look for an entire business, entire process, an entire sector, and an entire department of an organization and see where the waste is at and fix it and make it more profitable. And if they can do that, they'll make more money. And I truly don't want my team members to be doing the entry level, frontline stuff for 5, 10, 15, 20 years. I want them to get skills like pay for performance, be able to understand waste and how to cut it out of the system, and then train other team members to be more efficient. That is so valuable in the economy. And they might leave my business in a few years because, you know, they get a better job someplace else. And that's awesome. That's awesome. I want them to get to the next stage of their career. I want them, while they're here to make the business as much profit as possible, then make a piece of that pie using Pay for Performance a chunk of that money. And then I want them to take those skills and either move up inside the organization or I want them to go, leave and take those skills and be able to make more money, provide for their families and get to the next stage of their career. I believe that. And that's what P4P does for what otherwise would be considered entry level work. I believe that the work we do every single day, it instills work ethic inside, instills the drive and the work ethic to be able to keep working when you don't feel like it. It's crazy hot and you're in a crawl space and it's just extremely difficult to breathe. And like it's not fun or exciting to be in dirt and sweat all day long. That's not fun, exciting. That develops the work ethic, the brawn, the, the hiring of the hand. But if I could also develop the skill through Pay for performance and even open book management where you share the numbers even more. So I'm able to now develop the skills of their brain to be able to put those two things together and put them in a much better place for them to make more money in the future. And that's the way I talk to my team is like, look, this business exists. Make a bunch of money. And along the way I want you to make a bunch of money. And while doing that, I want you to be able to get skills and experience that if you can make more money someplace else, fantastic. Ideally, I keep growing our business because we're all thinking about efficiencies and we're making a lot of money. Hopefully I can keep growing the business to the point where you can stay on the team. That'd be ideal. But if not, I want you to go make more money someplace else. That's the way I think about my team, and that's why I believe in P4P so much paper. Performance, in my opinion, is the way of the future for frontline team members and for any labor position in the home service industry. It's going to be the thing that allows you to realize the talent and the hidden potential of frontline team members that could potentially become estimators, managers, or even owners of the business. I'm Mike Andes, founder of Augusta Lawn Care and Copilot CRM. I hope that was helpful. If it was, watch this video here where I talk about efficiency scores and how you can use pay for performance to know what who is the most efficient crew or employee inside of your team.