Piecework: A Nightmare Or A Dream Come True?
When I recommend using piecework to help with the skilled labor shortage, I'm always amazed at the number of reasons contractors claim it won't work:
1. Employees are in a hurry to get a lot done but sacrifice quality doing it.
2. Many employees prefer an hourly wage to guarantee they will get a full paycheck to take home.
3. Pieceworkers complain when the job is not ready because of poor scheduling or nonperformance by the other involved trades.
4. Pieceworkers also complain when they don't have enough material or the proper tools to do the job efficiently.
5. It's too difficult to develop a piecework rate for every task our employees perform that is fair to them and profitable for us.
6. We waste too much time counting parts and pieces to establish how much to pay each pieceworker.
7. The government's wage and hour laws require paying time and a half for all hours above 40 in one week. This gets too complicated for our payroll clerk.
8. We are a signatory union contractor and our work rules prohibit piecework.
I would never recommend something that was not fair to your employees or prohibited for you. All my advice produces the three P's in a Pod - pride, productivity and profit - and attracts those employees who are looking for the best job in town.
The most amazing part of all these negatives is that all of them are actually very positive reasons for using piecework. Let's look at them again:
1. Poor quality. Too many jobsite foremen, unfortunately, do not carefully inspect each craftsman's work at the end of each day. That's why we get poor workmanship and embarrassing punch lists.
Any work that does not stand up to your standard of quality does not get approved as piecework! In addition, any pieceworker must remove and replace any shoddy work at his or her own expense. An hourly worker can remove and replace any nonquality workmanship at your expense.
2. Hourly wage. Some hourly employees want the guarantee of a hourly take-home paycheck. Just think about that. Wouldn't you rather have an employee who knows that the more he or she gets done, the more he or she takes home? You can visit any jobsite and immediately know which employees are pieceworkers and which ones are satisfied with a guaranteed hourly wage. This is true of all trades.
3-4. Pieceworker complaints. Pieceworkers complain when the job is not ready. How can they possibly make a good wage if they cannot work? Shouldn't your project manager or traveling superintendent make certain that the job is ready before he or she schedules your employees to go there, whether they are hourly workers or pieceworkers? Did you ever wonder why your hourly employees never complain when it happens to them?
Pieceworkers also complain when the job is not stocked with adequate materials and the proper tools and equipment. How much could you install if the “stuff” you need is not there? How much do your hourly employees install when they don't have what they need? Don't you ever wonder why they don't complain? Stop and think how much money that costs your company. You definitely should compensate pieceworkers when your inefficiency inter-feres with their take-home pay.
I highly recommend observing how the masonry contractors get all the necessary materials to their masons. They use “tenders” to build safe scaffolding, stock it with ample material within reach of each mason, then move the scaffold and restock it for the next location. Just imagine how much brick a bricklayer could lay if he did not have the help of the tenders. Are your employees not the same?
These are not apprentices doing grunt work. They are skilled laborers or helpers whom we call tenders. (Also, you need to treat your apprentices as interns working with a professional to learn and practice their trade. That truly would be on-the-job training.)
5. Too difficult to establish pieceworker rates. While I don't entirely disagree, you must know how much your labor costs to bid a project; that is called estimating. You can use published estimating manuals, flat rate pricing books, or monitor your own actual labor cost and use cost-coding documentation for specific tasks. You can adjust these piecework prices when they are unfair to your employees or your company's profit picture.
6. Wasted time counting parts and pieces. The response to poor quality in item No. 1 recommended that your foreman or jobsite supervisor should inspect each worker's quality at the end of each day's shift. The same amount of time allows them to count and keep score.
7. Government regulations. U.S. wage and hour laws require time and half for overtime. Keep in mind that piecework is not new or experimental. Millions of contractors in all trades have been using it successfully for years on jobsites, as well as flat rate pricing on service work. The automobile industry also provides piecework opportunities for its mechanics.
Your certified public accountant can give you several feasible options to remain fair to your employees and comply with state and federal regulations.
8. Union contractor. If you are a union contractor whose work rules prohibit piecework, there is a small chance that your good employees can convince your local's elected officials to negotiate a piecework clause into their work rules. Union wages have not kept up with inflation rates, especially for construction materials and home prices.
It's easy to see why I recommend piecework to “make your dreams come true.” Your employees can take home bragging wages that will attract other potential hardworking, skilled craftsmen. You should give every employee the option to do piecework; the ones who resist will join the ranks when they realize how much money your pieceworkers are taking home. This opportunity is especially effective for new help and apprentices.
Always keep in mind that, the more your pieceworkers produce, the more your company profits!
Next month we will expand on the benefits of offering flex-time options to satisfy employees' personal lives and commitments and also attract those good employees you dream about.