Stop Losing Money! Ryan Shank of ShareWillow on Using KPIs to Reward Field Teams

Welcome to Business Success Tips, where you learn to make more money in less time and have a lot more fun. I'm your host, Paul Sandeman. I'm founder of Contractor Staffing Source, where we help contractors build great teams. My guest today is Ryan Shank, um, from Share Willow, and I guess you're good at building great teams too, huh? Share us— you share that with us, right? So you employ incentives. So explain to me what employee incentives for a contractor are how a contractor could use them. I think they're a good idea, but I'm not sure I understand them either. So go for it.

Yeah. So, so firstly, thank you so much for having me on. And yeah, so ShareWillow, we help contractors create and manage employee incentive plans. And what that means is it can, it can range anywhere from a profit sharing plan, just like a global company profit sharing plan. But mostly most of our customers are creating incentive plans. So if I'm a contractor, an HVAC contractor, I want to create incentives based on number of callbacks, based on, you know, number of hours per job, materials used per job. There's a bunch of different KPIs that I care about as a business owner, and I want to then incentivize my, my technicians, my employees, on those same KPIs. So that's what we do is we— and we'll pull them directly out of ServiceTitan, Housecall Pro, you you know, BuilderTrend, whatever software platforms they're using. But we're creating incentives so that you don't just have these hourly, you know, workers that don't care about the success of the business and then don't ultimately deliver a great customer experience.

Okay, now that sounds like a good idea, but it sounds really complicated because I'm thinking about this. I mean, everybody says, oh, I'd love to do that. And usually they give a $100 bill when they do something cash. They have no, you know, they've really not figured out very well. So can you explain to me Let's say I'm a small roofing contractor, just pick one, right? I'm doing $3 million a year and I want to incentivize my employees to get the job done quicker, you know, at least within the budget I've given them, right? I want not many callbacks and I'm getting a 5-star Google review. All right. So how could I have incentivized my employees to do that performance?

So the first thing that I actually want to focus on is the callbacks. So I just want to emphasize how much or how important callbacks are to a business. Let's say you go— let's say you live in Charlotte, North Carolina, and you service up to an hour away as your radius, right? Your service area. Imagine you complete a job, you think it's done, you're going to dispatch, you know, your crews for the next job. But oh no, you get a phone call. Hey, uh, if it's a roofing, hey, I'm getting a leak right here. Or, you know, oh, this wasn't done. You have to go back out to the job. That means instead of going to a new paying job, paying thousands of dollars in new revenue, you have to drive an hour away, stop for gas, stop at, uh, Chick-fil-A. If it's not a Sunday, you know, get some food. You have to go fix the job, then drive an hour back, stop at Chick-fil-A again. That's going to be a 4 or 5 hour day. Just to go back to the job. That is the deadly part of callbacks. Okay, so, so the first thing that a lot of these contractors are doing is they want a specific callback percentage. Most of them want it under 10%. Okay, under 5% is great. So the first thing you're going to do is say if your callback percentage in this month or this quarter is under 10%, you're going to get a bonus. You're going to get another $500. You're going to get another $1,000. Right. So So there's going to be a—

how, how do they actually get— how do they actually get the money, Ryan? I mean, they get it in their paycheck. They get—

how do they get in their paycheck? They get in their paycheck. Yeah, direct deposit paycheck, um, just the same way that they get paid, uh, typically.

Um, and how does that show up on their paycheck? Just curious. What is it, your bonuses, or how does that show up?

Yeah, so it's going to be, uh, it's going to be— it's going to be paid out as taxable income, uh, it's a bonus or commission, uh, as the category. And yeah, so it's, it's basically it's incentive pay. So it's the variable pay, just like sales guys get commission. This is the variable pay, but more for the whole team. Okay. So, so callbacks is a massive component. And so a lot of times maybe that could be half of it, then the other half could be, all right, I know that this job is— if it's a roofing, you know, job, 2,000 square feet, whatever it is, I know it should take 8 hours, right? So if they come in 8 hours or under, they get another piece. Right? If they come in over, they get clawed back, right? So there's going to be duration, then there's going to be callbacks, and then there's going— and it could be average of all of your roofing jobs, right? And then it's going to be, let's say you want reviews as your last piece, right? So there's 3 components, 3 KPIs in this particular plan that we're talking about. So I'm going to take all the jobs for that month or that quarter. I'm going to say, what was my callback percentage? What was my average number of hours per job? But again, you don't just want them to do a quick job and do a poor job. So then you also have the customer reviews as the piece that ensures customer happiness. So did I get 5-star reviews? I want 100% of my jobs to have a review and I want 100% of them to have a 5-star review. So if I only got 80% of my jobs and an average of a 4-star review, I get a little piece called back as well, or I get less, I get less of the possible max bonus. So that is a way that you can do it. And all of that data, by the way, is already getting tracked in ServiceTitan, in Housecall Pro, in Jobber. So what we're doing is we're taking the data that you already have and we're creating incentive plans around it to help you optimize and improve those metrics.

Now I'm assuming, Ryan, you really can't take away from their base pay, but you can take away from their bonus, right? So let's say, I'm assuming here that they got less than 10% callbacks and they were getting the jobs done in a reasonable time, but they got like no Google reviews. So they would, that would kill their bonus. It wouldn't take anything away from them.

Of course not. Of course not. It's not so, so exactly. So you start with a potential max bonus. So it's like, all right, you, you have a potential max bonus of, let's say, $2,000 for this quarter. And then based on those 3 different things, if I did my less than 10% callbacks, I got the 5-star reviews, I could get 100% of it. But if I, if one of those I didn't reach 100%, then let's say it could only be 90% of my potential max bonus. Right? So I'd get 90% of the $2K. I'd get, uh, you know, 9 times 2, I'd get, you know, $180, uh, or $1,800.

And so they're going to get feedback on where they hit on all these KPIs, right?

Exactly, of course. Yeah, yeah. So with ShareWillow, we provide the dashboard, we provide the visibility, the transparency, so they can see progress towards goal, they can see where they're at, they can see when they're— they've like done it, where, you know, where they're at. So there's no— you know how like at the end of the year a lot of times you're just like, you You thought you were going to get a bonus and then you're like, what the heck? I didn't get it. And you're kind of pissed. Um, that's what we're trying to avoid. And also when that happens, like the behavior wasn't influenced by the bonus, you know, it's sort of found money. It's not, it's not actually like, I mean, I agree.

Annual bonuses do nothing. Cause what happens is sort of like if you give people a turkey every year, stop giving it to them, they're going to be pissed.

They didn't get their turkey.

But yeah, you know, the time between. The event and the reinforcement, if it's longer than about 30 days, it isn't going to matter, right?

Exactly, exactly. We always say that. We always— we want to tie the reward to the behavior so that it actually reinforces it, right?

Because it's— so I use the example, you have a rat running around in a maze, right? And it goes the wrong direction twice, then you shock it the third time. It has no idea how to learn, right? But if you shock it the minute it makes a wrong turn, or give it a you know, whatever, a carrot, the man makes a right turn, then you're going to train it a lot faster. I mean, I hate to kill people's rats, but you know what I mean. It's just basically behavioral training, right? The faster you get the reinforcement, the more positive reinforcement, the easier it is to change behavior. And this is all about changing employee behavior from my understanding, right?

It's about changing employee— it's about aligning employee behavior, to be honest, right? Because your employees, that do really, really great work, they deserve and they want an upside. A lot of, a lot of times people just want to be in a system that actually rewards them. So that's what this is doing. And by the way, we're not, we're not— we—

this isn't—

we didn't come up with this, right? This is what all the top contractors are doing. I was at a trade show called ACCA. It's Air Conditioning Contractors of America. And Tommy Mello, he runs a $220 million top-line garage door company, $60 million EBITDA. He's talking about how his business completely transformed when he introduced performance pay and employee incentives that were tied to KPIs. I was talking to another guy that has a massive HVAC company outside of Washington, D.C., another 220 trucks. I forget how much revenue they're doing, but he was saying like, this is the only way to pay the, the actual employees and the technicians, right? Because otherwise, you know, They're going to show up late. They're going to just, you know, they're going to not do the job. I was talking to this one guy and he said it was taking him like 2 to 3 days to do a new install for like a multifamily heat, heating, air and air conditioning unit. And then once he introduced performance pay and employee incentives, took him half a day, right? So the time is getting reduced. And ultimately, at the end of the day, what happens with that is the customers get a better experience. The customers don't have to stay home for 2 to 3 days. They get it done quickly. They get it done right. They don't want to call you back and have callbacks, you know what I mean? I mean, they don't want that. They want it done.

Yeah, right. I totally agree with the principle. And I've been doing coaching for, I don't know, 50 years. My problem in smaller companies was even to get them to have KPIs for the employees. They just, you know, show up and do a good job. So, how do you get the smaller contractor, let's say under 20 employees, not a big guy, to actually develop KPIs? Because a lot of these guys don't even have them, right? You ask them, do you have KPIs for your employee? And they say, what's a KPI? Key performance indicator. Oh, they just do a good job. We're good.

Yeah. So look, I, to be honest, I think a lot of these guys, and I'm sure you're seeing this, are starting to get more sophisticated as there's a whole ecosystem of coaches and, you know, online communities. And there's kind of like the home service influencers that are sort of preaching stuff. So I do think that the industry is sort of progressing into getting a little bit more sophisticated in terms of that. I think at the end of the day, it's like you don't have to overengineer it, right? It could literally be revenue. It could be revenue, it could be profit margin, and it could be like callbacks or it could be like number of reviews. You could literally manually just look at your Google listing. How many reviews do you have? You know what I mean? How many jobs did you have to go back to versus the total number of jobs? Like, it could be so, so, so simple. But I think, you know, a lot of these guys are, you know, they're buying or subscribing to pricing books and they start to look at margin, whether even if it's just in QuickBooks, right? So I think, you know, having some type of KPI and goal or threshold of like a margin percentage and then understanding— I think a lot of, you know, I'm in a lot of these Facebook groups where a lot of contractors are sort of talking about their business and a lot of them understand that, you know, labor is a big lever to increasing margin. Right. And, you know, number of hours—

basically you can control your cost of your materials, but it's all about the labor.

Right, exactly.

Credibility.

Exactly. And I think a lot of them too, you know, hey, can I attach a service plan or a maintenance plan onto these jobs? Right. So it's like if you can understand, you know, just a few things, you don't have to go crazy KPI and be super, you know, in the weeds. But I think, you know, at the end of the day, like, is your revenue going up? You're, you know, and then what kind of factors into that? How do you get more revenue? Well, it's more jobs. And it's like, do I need leads? You know, so you can kind of look at the funnel to really understand what happens. And what we say is like, look, don't overengineer it, especially with your incentive, with your incentive plans. Don't overengineer it, right? A couple different things that you know are big levers for your business. And if you build incentives around them, they will improve.

Okay. So also, I mean, usually salespeople are incentivized. That's easy. Get some percentage of what you do is commission. And that's— most companies understand how to, you know, incentivize salespeople, but they don't understand how to incentivize the rest of the workers. That is an issue for them. So exactly, with a company, and I don't care, let's take a different— a remodeling company. How do you incentivize a remodeling company?

Yeah, so a lot of times with a remodeling company, they, they bid out the job. So firstly, there's a project, so there's an estimator, there's a project manager, and then typically there's like the carpenter and the technicians and the crews. So a lot of times there's different departments that have different KPIs that they're, they're bonused on or they're incentivized on. So firstly, if I'm an estimator or, um, you know, salesperson, how many jobs did I win? How many estimates did I have to submit to actually win a paying job? Um, so that could be, you know, one, one KPI right there. Also the CSR, like what is my booking rate to even book an estimate, right? Is it 80%? Is it 60%? The project managers then, right? So they, they bidded the job based on a certain margin. So a lot of times the project managers will have a margin threshold that they need to hit. Like, guys, we bid this job at 22% margin. We have to come in at 22% or else you're not going to get anything right. And then a lot of times the labor, it's— it could be anything. It could just be like attendance. It could be, you know, and a lot of times with a remodeling job, it's a job-based bonus. So a lot of times with you know, plumbing, electrical, HVAC, it's rolled up monthly or quarterly for all the jobs. But if it's a bigger job, let's say it's a $300,000, you know, beautiful kitchen remodel in Greenwich, Connecticut, right? And it's going to take, you know, 4 to 6 weeks. That's going to be— you're going to get an incentive on that particular job. And each, and each person is probably going to have different KPIs that they're responsible for. Again, not over-engineering it. Project manager, come in at 18%, come in at 22%. If I'm a technician, let's say, how do you—

I mean, the problem is subcontractors are by definition have KPIs because they got a fixed budget, right? That's not a problem. The problem is everybody who's not a subcontractor and it's your self-performed stuff that gets you in trouble because, you know, the framer is supposed to frame a door in 4 hours and it takes him 5 or frame windows or what, you know, on the self-performance on, in my opinion, when it comes to remodeling contractors, you run in trouble. Because they got no way to judge. They just say, go out there and get it done as fast as you can. And it generally doesn't work out great. So you can put KPIs, like the project manager, what the margin would be. Let's say they're self-performing the carpentry, or they're self-performing, you know, any part of the, like, the framing or something. Then you can put a KPI on it's supposed to be framed in X amount of days, it's supposed to pay X dollars a foot. I mean, you can put some kind of key performance indicator on the actual, you know, your labor cost that you bid versus what it actually cost you. Is that true?

Your— what you bid versus what it actually cost? Yeah, yeah, yeah, yeah.

So for example, I can say, okay, I have got— pick a number, you know, $30, $10 a foot labor and framing this house, whatever number I've got. Right. And so if it costs me $12 a foot, that's bad. If I get in for $9 of it, hooray. Right. And I could tie that to the guys framing the house and come up with a number, right? So I can pay them according to what they're doing. Because unfortunately, if you're on piecework, it's not an issue. It's automatic. But most of, most remodeling companies, nobody's on piecework. Everybody's on hourly, right?

Which is the price. So this is hourly. This is a, a blended, right? So this is going to be hourly plus a variable piece, right?

And I think what's happened is there's a lot of people who are on piecework and people, they don't get it well done. They work too fast. And unfortunately, most, most remodeling contractors are all based on hourly labor. Right. And they don't even have a piecework incentive. So lots of times I've seen this happen before. You sure have too, is as work slows down, people take longer to get it done, right? Yeah.

Yeah.

You know, well, we don't know where the next job is. Maybe we can take a couple of weeks on this one so we can stall until the next one starts, right? I'm sure.

And that's why, that's why I think, you know, what we see is that like there's a certain number of hours by category, like the door framer should take this many hours and then you try to incentivize them based on those number of hours or, or by the way, if someone, if you bid it out based on hours of all of these different functions of that project and it's different, like then maybe you misbid it. So that's why it also then will come back to the person that actually bid, bid out for the job, the estimator. It's like, was there a difference in cost? Like maybe you bid it wrong, right? Maybe you thought that that's what was happening, but it wasn't happening.

Now I'm assuming this would work just as well for some subcontractors like electricians and plumbers and framers that aren't on piecework, which most of them aren't, at least electricians.

And most of our customers are what you're calling the sub, like are the subs. It is like the HVAC, the electrical. So think of a company that's using ServiceTitan, you know, for their work. Like, you know, we have 100 employee or 100 technician HVAC companies, big plumbing companies, electrical companies, you know, garage door, pool cleaners, pest control. Like, those companies are most of our customers, not like the GCs, right?

But I can see it would apply. I think it's just a mindset that's getting invoked because you look at the software I mean, obviously, you know, there's a lot of software for technical companies like you mentioned, but new ones like BuilderTrend, JobTread, and it's now becoming more prevalent in project management for like remodeling companies and building companies. So they can— I think if you can, you know, have an API that ties into that, then you can also use those kind of software, right?

Exactly. And that's where I think the most value of ShareWillow comes, is when, you know, you're pulling the data automatically from those software platforms that you're already using, and then we're basically building and creating all all of the logic and the formulas and then basically giving your technicians and all of your employees, you know, a beautiful dashboard to have visibility and transparency into these plans. But, but it's, it's the data feeding into it is a key component.

All right, now if they have a software that's feeding the data, they're not using it, then what, what does it cost for your service?

It's about $10 per employee per month, right? So if our average customer is 25 employees, $250 a month.

Okay. And so they probably make that up in one day, I would assume, right?

Yes, exactly. If they have one additional job, then, uh, then they're going to be able to make it up.

Okay. So it seems to me that makes a lot of sense. So how do people get in touch with you?

You go to ShareWillow, um, go to ShareWillow, sharewillow.com, um, or ryan@sharewillow.com is, uh, is the best way.

Okay. And so they can get a hold of you and you'll walk them through how they can develop the KPIs, how they can put the dashboard together and put the whole system together for them. Right?

Exactly. Yeah. So we also have an optional plan design service and we basically will almost take a white glove consultative approach. That's $3K. And, you know, we'll basically set up all of the plans for them, all the integrations, and set them up on Sharewell. It's completely optional. But yeah, so we have the option. To do that as well.

Okay, great. So I would think if you're not using some form of employee incentive, this is a great place to start. So give Ryan a call. I think you'll find the money and time well spent. Thanks for being here.

Thanks, Paul. Appreciate you.