Why Less Than 1% Implement P4P (Pay For Performance)

What's up P4 peers? Hope you're doing super well. Happy Saturday. Hope you're having a great weekend. We're going to get things kicked off today. We are going to be talking about pay for performance and I'm going to go through some of the questions that came in on the Facebook group as well as if you have questions comments in here, feel free to jump in.

I'll open up the Facebook group and start answering those in just a second. I want to address a couple things. We are trying to improve the training for P4P currently right now, if you go to P4Psoftware.com training there's a whole bunch of training videos. Highly recommend you watch every single one of those, honestly. However, we are going to create a teachable course that takes those videos and just puts them in a better sequential order. So you can start kind of from the beginning all the way to the end and just watch it in a very systematic way and make sure you get all the training in. Because I'm consistently seeing is people are failing in certain areas of P4P because simply have not watched the training. So we're gonna make that available. It'll be a free course for everyone and you can just watch it from start to finish. It's easier to track it, mark things completed, make downloads, et cetera. So it should be really good. Probably in a couple of weeks we'll have that rolled out. I know right now it's been a little bit difficult to get calls scheduled. We've been super busy and there's probably a couple weeks booked out right now to where you can't schedule a call with support. So I apologize for that. That's why I wanted to hop on and answer any questions that you might be having. If you're trying to implement P4P and hitting in roadblocks. We are trying to improve that. It's just that P4P is a very nich and we don't have enough users really to sustain having a full time support person. All the money is really just being spent on development. That's the goal. We're still trying to build the product out a lot and it's just a very niche product for P4P because unfortunately, even though it's in my opinion the best thing for a business, it takes quite a bit of effort, it's quite a bit of a lift to change your business model to where you can do P4P. You have to have budget hours in every job. You have to really have culture in your company. To where you can switch over and be open and transparent about the numbers and have open book management and profit sharing in order to be able to have P4P implemented. It's not just like that easy, like, oh, like we'll just do this tomorrow. It's not like a CRM like when we're launching Copilot, we already have hundreds of people pre registered. The reason for that is because everyone needs it regardless of what your business model is. Whereas with P4P, you literally have to change the way you're doing business. How you do your estimates, how your guys are clocking in and out. It changes every aspect of the company. And so therefore the adoption rate on P4P is extremely low. We have a massive amount of churn after the first month because people realize like, oh, this means I have to change everything. How I'm doing my pricing, how I am getting my guys to work, how I do my team meetings. Because now guys don't want to stand around for an hour, they want to get out and get work done. So it changes every single aspect of the business. Which in my opinion is all very positive, but it's a huge lift. And that's one of the things that I have learned is that when it came to building the software, this is not a mass appeal product. Because most people are not willing to do the hard work on their company to make P4P a reality in the company once we actually fully implement it. That includes P4P, open book management and profit sharing. And they actually have that culture buy in from their employees. Very few if any of I seen actually go back. The people that say they try it, they almost always leave little bits and pieces out. Like they don't share the numbers with their team. They pay a certain amount for drive time instead of just doing it strictly based on a percentage of revenue. They start to tack on different rates and different base pays for every single person, which basically is an hourly wage now. And it doesn't make any sense in terms of meritocracy. So there's a lot of times when people say it doesn't work. I just consistently am like these things were not met. That's why it didn't work. And so unfortunately because of that it requires a lot of changes to the business model, a lot of changes to the mentality of the owner and a lot of changes to the culture which ultimately leads. We don't get a lot of subscription, honestly. So I'm trying to improve that. I'm trying to make it better, trying to make it over the next couple of years where people can get onboarded in a way that's a little simpler terms of P4P. And it's not as daunting in terms of changing so many things because I really do believe this is extremely important and I just right now I'm trying to focus much of the revenue towards going towards development. We are still cash flow negative on Beaver P, but that's the reasoning kind of behind why there's not as much support as I would like. And that's why I want to do these calls occasionally when we are falling behind on zoom calls for you to be able to book. So the chat's always there. Even sometimes I'll jump in there in the middle of the night and help someone if needs be for the P4P chat. So if you need support, hop into the support in the bottom right hand corner and we'll always be there to help. Let's go ahead and jump into the Facebook group. I know this is really small, unfortunately for you, I can't zoom in on this. But let's go into some of the questions that came in from last night when I posted that we'd have this live stream. So how would P4P work? Alongside of doing quarterly profit sharing distributions for my three sons, we currently put 50% of the profit back into the company and 50% split among equity owners. We just started out business the last quarter of 2022, so this would be my personal opinion, especially because they're your sons, is have it where you have a percentage of revenue that you require as your.

Working capital. So for example, let's assume that you're doing 400,000 in revenue. Say, look, we need to have at least 10% of our revenue in the bank for working capital, which means anything above $40,000 is going to be considered profit that we can split and distribute back to the owners. And then you, you split that some percentage wise, right? So let's say for example, you're doing 400,000. You say we need $40,000 in the bank account for working capital to be able to pay our bills, feel comfortable. You can make that more or less, it doesn't matter. I'm just using numbers. So 40,000 needs to be in the bank. Let's say you have 60,000 at the end of the quarter. Great. That means that 20,000 is going to be distributed back to the owners. The percentage of which that is distributed back to the owners is potentially what you could play with because of your sons. Like, okay, if there's three of us, we do 30, 33 or we split. 50% goes to use is that. And then the other 50%, in this case 10,000 is distributed amongst the three sons. That's how I like to do it. It's just really straightforward. And then as a company, as the company grows, the amount of working capital in the business is predetermined. It's not like, oh, I think we need to keep more money in the company because we need more trucks. Okay, well if you need more trucks and you all agree on that, that's going to put a damper on the cash that's in the bank account and that lead to less distributions. But that's already been predetermined. So that would be my recommendation. Especially if you not you don't have equal ownership of the company and it's more a matter of just profit sharing. Because profit sharing is really the way to be able to incentivize. Outside of P4P. William Kelly how do you have the crews manage manual adjustments? Do you have a sheet of paper they enter their manual adjustments on at the end of the day, end of the week, these get added or end of each day or does the manager have to remember and add them individually each day? I feel like with three or four guys, the manager remembering it is doable. But once summer comes and they are managing nine to 10 people, this could be difficult. I find that sometime our team forgets to write it down the sheet the next day. Is there a way the field crews could request a manual adjustment from their time clock the same day? That would be amazing. Yes. So in I'm going to say before March, hopefully. So let's just say in March we should have this feature done. And, and that is where from their app they can request manual adjustments, both positive and negative. So this could be like things like bonuses. This can also be adding in non billable hours for things like blade sharpening or things that you've designated as non billable tasks that you still want to pay them for. All right, so that's the first thing. Second thing I would say is for now in the time cards, once they clock in, once they clock in, the time cards have already been created on the time cards page. You can go in there and add manual adjustments right then and there. So if they text you or if you know that they did an hour's worth of work in the morning, just go into the time card even though they haven't clocked out and just add the manual adjustment live. This is what they do at The Bellingham shop, they have, you know, 15 plus members during the spring rush they'll have. And yeah, once everyone's clocked in, you can still add manual adjustments and then they can clock out the end of the day. So that's what I would do.

But yeah, like in the past what we would do is any sort of time that they would spend on equipment, they would have to put up on the whiteboard or the clipboard and then it'd be signed off by a manager that that's going to be automated here next six to week, six to eight weeks. And that is where from the app they request that non billable time or they ask for a bonus if they for example, do an upsell, they can ask for it, request it and then you can approve or reject it from the time card at the end of the day. I would highly recommend doing it daily. Do not do it weekly, always daily. If you do it daily, it takes way less time because you remember what happened that day. How do you handle a project with three men and a certain number of budget hours? But one of the guys only worked for a short period of time on the job where the others two stayed the whole time and worked. I know this gets complicated and I find myself a lot of math conversions from decimal back to percentage back to decimals. Should I create something on Excel spreadsheet to make it easier? I know the short answer would be to not have that happen. Would be to not have that happen. But it doesn't always play out that way. I always tell our guys either commit the entire time and finish the job or don't. I'd prefer that instead of them starting and having to leave halfway through and force another team member to finish that job. Yeah, so I understand you can keep it squeaky clean by having everyone on the same job throughout the entire project. However, that doesn't happen. It's not reality. That's why we created the software. One of the biggest reasons why is it does that math for you in the back end. All you need to do at the end of a on a daily basis on someone's time card when they're on a project is allocate their hours towards a project when that job is marked complete. It then takes the total number of worked hours in that project, figures out all the math that you're trying to do manually right now, and then distributes the money correctly. For example, let's say that there are 50 budget hours on a project. Someone worked 10 hours, someone else worked 10 hours and someone else worked 15 hours. So that's they, they, they complete the job. There's only 35 worked hours and there was 50 budgeted hours. All right, what it's going to do in the back and what the math is doing is it's taking, okay, how much total labor revenue is on the board. Let's say 50 times $52,500. Great. Divide that out by three. Oh man, I was bad, bad math here. A third of 25 is eight. $833 is going to be what is the wages going to the team members. That is now going to be split based upon the amount of hours they worked on the job. All right, so if someone worked 10 and someone else works 15, the guy over here is going to get 50% more than this guy of the labor revenue. We all get wrapped up in these percentages and all this stuff. At the end of the day we've got to remember that they're getting a third of labor revenue or whatever percentage of labor revenue you're giving to them. That's a dollar amount. That dollar amount is split based upon how many hours they work on that project when you mark a job completed. Okay. So keep that in mind. And that's why when you, if you accidentally mark a job completed, if you, if you are going to go back and make it uncomplete again like and put people back on the project, you got to go rerun those time cards because and you'll see it's very rare that this happens. Literally it hardly ever happens. But one out of a thousand times when you need to go back to a job site because of something, you will need to rerun the time cards from those other days because it locks in. Once you complete a job that's going really in the weeds. But all that to say the software does the math for you. You just need to make sure on a daily basis you allocate the hours on their time card towards that project. At the end of the project, when you mark the project complete, it will run the math on the back end in terms of who gets what percentage.

I still don't quite get how to use a function of multi day jobs. Okay, so that's probably why you asked number two there. So definitely recommend watching P4P software.com training. Go to the projects part and watch that. I understand the concept. That is for a job that doesn't get done that day, but I've just been running their P4P that day as zero budget hours completed and then pushing out the total budget hours the following day once it complete. Yeah, I don't recommend this. That's why you're trying to do all the math in your head in from number two that your question number two is because you're not making it a project. So let's keep reading. So generally on the second day they are making great P4P. Yeah, you don't want to do this. This is not good. It's so mess up the guys they won't understand the Math here because two days worth. However on the first day it shows they made 0p 4p. Does me doing it manually like this make a difference? Is the multi day function easier to use and manage 100% yes. If so, maybe a walkthrough would be nice. Or I can check out a training video under the help tab on the software. Yes. So go to the training page. Go to the projects part. Very very specific. There's a simple mode and a advanced mode. If you don't use budgeted hours you can still use the simple mode. I highly recommend if you've been able to switch your and convert your business to where you use budget hours and your estimates, make sure that you're using the advanced mode. It'll walk you through both of those options on the training. But the whole premise here of why we started the software is around this. Exactly. Doing all this manually makes the crew they don't understand and furthermore it's complicated. It's hard to explain to them. So you've got to make sure you have the projects what it does then on the daily reports they get back to them because we don't know what how much they actually made on P4P throughout the project each day. We don't know that until the job is completed. That's when P4P is ran is the when the job is marked complete because of that their daily report when they're assigned to a project only shows the amount of hours that are on the job versus the budgeted hours. So like project completion percentage that's all it shows because we don't know what they made that day until the end of the project when the math is actually ran. All right.

Awesome. We is this from Chuck Birchfield? Awesome. We just started using it this week. I have been bugging Lonnie every day. So budget hours is only for the jobs. Drive time, grass time, dump, etc is not correct. The crew bought up brought up that they see the labor rate at example$80 per hour. At first they thought they that was their pay rate from their app so it caused A bit of confusion at first. I'm still going through the training videos as we get used to the system before busy season kicks off. Yeah, so they don't get quote unquote paid on P4P for drive time, fueling up, dumping their clippings at the end of the day, etc. What they do get paid for is a percentage of the labor revenue when they create revenue. And so there's no revenue being created when they're driving, when they're doing gas, etc. This is why you should expect about 20 to 30% inefficiency every single day. Waste. This is people driving, this is people fueling up. This is the whole premise of why you want to make sure that your hourly rate, your budget, your, your base pay is 25% or less compared to what you are charging the customer. So if you're charging customer 80, you want your base pay to be at or below 20%, 25% of that, which in this case would be $20 per hour. Right. Ideally under 20%, which in that case would be like 17, $18 per hour as your base pay. The reason you need that is because that delta between let's look at 20, 25% and then what percentage you're giving them on budget, a percentage of labor revenue, like let's call it 33% is usually 8 up via waste, drive time, all the other things that are non revenue producing on P4P because of that, they are incentivized to get to the job, produce revenue, go quickly, be efficient, not have callbacks. And so that's really the whole premise of P4P is making sure that they're not being paid for those extra times. Now keep in mind, they are getting paid for it because you're tracking their clocked hours and you're ensuring they're making at least their base pay throughout their entire paycheck. So they are getting paid for it, but they're not going to make any performance dollars if they're actually getting money for their drive time. Because the only reason they would get money for their drive time is if they're hitting base pay.

Next question. Is every job such as a mowing a project as well as a project such as a two day cleanup? Okay, I see you're saying you're questioning whether jobs versus projects. This is the delineation. If a project takes more than one day, it becomes a project. If it can be done in one day, like a five hour cleanup, just use budgeted hours and the hourly rate in the time card and that's all you need to do. You do not need to create the project. The project is for multi day jobs. So that way, as day one and day two and day three are completed on a four day project that you're able to just allocate the hours that they worked on that project towards the project. At the end of the project, P4P gets ran. All right.

Awesome. All right, let me go and close this out.

Question comes in. Will Copilot have a way to sync with P4P and the guys do manual adjustments from the mobile app? Yeah, probably by end of 2023, that's what we're shooting for. For a integration between P4P and Copilot.

I'm having a challenge with trying to fit in training and other shop type work and still showing efficiency. Yeah, so this is a good point. Um, training isn't bringing any revenue, so the guys are going to be at base pay. Typically, if you're doing a bunch of training, that should be incentive for them to figure out training quickly and move on so they can make above base pay. It's also an incentive for your trainers to ensure that their, their training is being done efficiently and it is not being dragged out because they also want to make more money on performance dollars. And it's not going to happen if their trainee is taking forever on every single training task. So it's just again, aligning what the goals of the employee and the owner is and that is efficiency, cutting out waste and making sure we're producing revenue in an efficient manner and we're not having callbacks and quality is high. So. Awesome. All right, well, that was all the questions I had that came in today. I'll try to do these once in a blue moon, especially if we're behind on calls. But in the meantime, if you have any questions, check out the chat. Lonnie's in there. I even sometimes hop in there in the middle of night if we're running behind. But come February, March, we'll make sure that there's a little bit more time for 1520 minute Zoom calls. And so that way if you do have a question, you show her something specifically. Definitely feel free to. You can attach pictures in the intercom app. That's the web chat that we use. So definitely feel free. If there's something, a blockade you're hitting in the software, definitely reach out, let us know. And we look forward to the next few months. We have a few things coming down the pipe. Number one, push notifications to the mobile app so that way your employees don't just get an email, they get a push notification of when there is a daily report as well as 3D notifications for the employees telling them ways they can prove become more efficient, who they should ask about, you know, ask questions about and learn from in the team, in the crew, notify them when they're not doing very well comparatively to the rest of the team and potentially reaching out to you as their manager and the owner to get more feedback and how they can improve and become more efficient and make more money as well as then the ability for you have a portal to accept or reject those automated messages to the employees prior to them going out. Because the last thing we want to do is mess up your culture because you know something in the software you did wrong and then now they're getting an email saying like you did a. You know, it's not how it says it like effectively saying you didn't do very well last week and you can improve when in reality you just hadn't ran a time card, for example. So there'll be a way for to be able to make sure that you kind of filter anything before it goes to them personally. I'll probably let all my messages go through. As long as you're running your time cards on a daily basis, those automations should be pretty, pretty effective. So how do you all handle washing trucks with a location without running water? I would then just make a habit of like on the weekend having somebody come in, maybe it's someone that's from the high school or something and they take it down to a place where they could wash the trucks, potentially one of the ones that you have a spray gun, et cetera. So all right guys, have a great rest of your weekend. Take care.