Good employees want to be measured. What could be more disheartening than shooting a hole in one while playing golf by yourself! Not only do good employees want to be measured, they also want to be rewarded fairly for what they do. As simple and basic as all that sounds, we still have thousands of contractors who are not doing this. Why would any employee continue to go the extra mile when nobody even notices?

Unfortunately, someone actually does notice above-average performance — all the others on the jobsite who for whatever reason don’t do more than they need to. The most effective demotivator is peer pressure. Brown nose, rate buster, suck up, butt kisser, company man, goody-goody two shoes and golden boy are just some epitaphs fit to print. It’s not hard to understand why a proud, hard-working craftsman would slow down just to be accepted by his peers.

Merit Pay: There can be no pride without respect! Your only option for maintaining jobsite respect for a top performer is called merit reward. When top performers cannot only outshine his or her peers, but brag about a bigger paycheck than peer pressure is totally reversed to admiration and envy along with the ever so critical respect.

When a human heart slows down you can go to a heart surgeon who will install a pacemaker. Fortunately, we contractors can install a “pacemaker” in each and every crew by simply rewarding the best producer in that crew with true merit pay.

This month starts my 58th year in this construction industry, and I still believe in and practice merit rewards. If the best don’t make the most, who would ever strive to be the best? I have used it personally while I ran our family company and have been writing about how to do it for the past 25 years. But if merit rewards are so effective, why doesn’t everyone do it? Let me share some of the common reasons for resistance:

  • “Merit pay kills quality.” Your slower employees will claim that when you work fast you can’t do quality work. As most of you have already learned, there are exceptional craftsmen who can produce both quality and quantity. If you don’t believe it try paying your crew with piecework! If it’s not quality workmanship, you simply don’t accept it and they must redo it at their own expense.
  • “Pricing quality work is too hard.” How did you bid the job? If you estimated how much labor you would need to install your pipe, fittings, hangers, fixtures, equipment, etc., you already have the labor units that you can afford to pay an employee. Most contractors will mathematically deduct 15-25 percent of that estimated labor budget depending on the status of each employee. In addition, some employees work as “labor only” subcontractors and provide their own truck, tools, workman’s compensation, etc., which naturally increases their fair share of that labor budget.
  • “Measuring quality work is too hard.” Keeping score does take time. I highly recommend letting each employee color off the drawings what they installed that day and date it. Naturally each employee has a different color. This not only keeps track of their quantity, it also puts their name on the quality. You also benefit from their learning to relate their work to your blueprint.

You can also cut down counting every little piece by lumping the labor units into systems. For example, the underground rough-in can be one single labor unit and the roof drain another. You should always discuss the sublabor piecework items with your installer before they begin working on them to eliminate any unfairness or misunderstandings.

4. “It’s just not fair to others.” Some contractors will establish a labor unit and then lower it if one of their superstars makes too much money. You need to use your average labor estimates so that above-average performance produces above-average wages! That is the message that you want to send to all of your employees, as well as potential future employees.

No-Risk Gamble: Probably the greatest side benefit of using piecework is the attraction for apprentices and green helpers. Contractors offering career opportunities for craftsmen who limit their first four or five years to a minimum percentage of a journeyman’s wage are desperately searching for average or below-average performers. Stop and think about which opportunity you would personally choose if you were about to enter this great industry.

The nicest part of piecework is the no-risk gamble on your labor budgets. Regardless of how long it takes that employee to perform those units, you will pay only for what is done and not for how long it took to do it. If it is not completed properly, they must repair or replace it on their own time, unlike having you pay them to fix what they screwed up while being paid an hourly wage.

You will also enjoy the built-in discipline and cost control that become automatic when you are paying by piecework. You no longer need concern yourself about starting on time, too long lunch periods and coffee breaks or wasted hours socializing with other employees. You will also enjoy the feedback or “empowerment” of your crews asking for more efficient tools, equipment and methods. They now have a vested interest in controlling your job costs.

As you may have guessed, piecework will not work with every employee, nor under every situation. When your employees are on a “cost plus” or “time and material” work site you will need a merit-based hourly wage. You will also face some complications with how much you should pay the helpers when your piecework is measured only by what the entire crew performs.

Next month we will take a closer look at these exceptions and share some viable options that will assure you that “the best make the most.”