Unlocking Six Figure Earnings!
How We Revolutionized Employee Compensation
MacFarland Painting | 09.26.2023
Today, most painting companies follow conventional compensation norms, but our CEO, John MacFarland, developed a groundbreaking compensation approach that ensures fair pay for painters in all circumstances, revolutionizing the industry. In discussions on the Painter Marketing Mastermind Podcast with Brandon Pierpont, CEO of Painter Marketing Pros, MacFarland explores this innovative approach’s benefits for both employees and employers, offering valuable insights applicable across industries. Read on or click the button below to listen!
A. The Backstory: A Traditional Compensation Model
Before we (John) developed our innovative compensation system, we operated just like all the other painting companies.
One of the more significant challenges we faced was managing overtime effectively, especially in Michigan, where exterior painting is restricted to a four or five-month season. Balancing the need to pay overtime while preventing burnout among the field workers was essential. We also have to be cautious not to book up too early in the season, which could negatively impact our business.
The Philosophy: Extreme Ownership Motivated by Compensation Innovation
Rather than having a fixed hourly rate that rarely motivates an employee, our compensation method entails a fixed payment for each job. This new system shifts the responsibility to the worker to complete the task efficiently and flawlessly, eliminating the need for callbacks or touch-ups. While the ultimate earnings for employees would likely remain consistent, the proposal promises heightened motivation.
Testing the Waters: Beta Testing & Data Analysis
To validate this concept, it’s better not to rush into it blindly. Instead, conduct extensive beta testing on various numerical scenarios. This can involve a deep dive into your payroll data and paint material expenditures from the previous years.
Payroll with a Twist
This payroll system is not your average one-size-fits-all approach. It rewards success, and that includes paying employees generously. The salaried workforce operates on a flexible basis, with salaries adjusted based on performance. When they succeed, the entire team succeeds. It’s a mindset that promotes teamwork and ensures that the paychecks are consistent and expected.
This unconventional approach doesn’t just put the onus of success on the employees; it shares the responsibility between the ownership and the field staff.
The real-life success of this approach is right in front of you! The field personnel, primarily painters, at MacFarland Painting experienced a significant shift in their earning potential. What was once an average annual income of $30,000 to $40,000 saw a transformation into six-figure salaries for a team of seven to eight members. The average painter’s annual income soared to $60,000, with an average experience level of four years.
Extreme Ownership: A New Paradigm
What sets this compensation philosophy apart is the level of ownership it instills in employees. They don’t just work for a paycheck; they work for the success of the company as a whole. In this system, the potential to earn more money isn’t just a pipe dream; it’s a reality.
In fact, MacFarland Painting employees now find themselves making more money than their counterparts in traditional setups. This stark difference in compensation not only motivates them but also fosters a sense of loyalty and job satisfaction that is unparalleled.
The Transition: From Optional to Standard
To introduce the idea of a lump sum payment system, you can offer this way of payment as an optional choice. For new hires, new employees can be compensated conventionally. This transitional phase allows them to acclimate to the work environment and gradually integrate into the lump sum system. Therefore, hourly pay is still applied to newly hired employees during their initial period.
Your new team members may join with a healthy dose of skepticism. However, they will become enthusiastic believers within just one pay period as they witness the outcomes firsthand. This quick transition from skepticism to eagerness will align you with individuals who seek growth and progression beyond hourly constraints.
How is the Lump Sum Amount Per Project Divided Among the Crew?
To ensure fairness, it is best to establish fixed percentage allocations for compensation. For example, the crew lead might receive 40%, while the other two team members receive 30% each. This standardized approach can exclude constant reevaluation and remain consistent for a considerable period.
In cases where two-person teams have varying skill levels, the percentages can be adjusted accordingly. This way the lesser skilled employees are motivated to perform better in order to score a higher share!
How does this Method Apply Project Managers?
For project managers, this compensation model can be centered around a percentage-based system. Their ability to motivate their team and make strategic decisions, like selecting the right equipment for the job, directly impacts project efficiency and their compensation. Successful decision-making leads to additional compensation and raises, encouraging the project managers to excel.
What About Estimators?
In this case, the compensation structure can be a blend of traditional sales models and customized incentives to suit your unique needs. Estimators can be allotted a combination of a base salary and commission, aligning their success with the efficiency of the entire workflow. This setup not only motivates the estimators to work diligently but also creates indirect incentives for the field crew to operate more efficiently, benefiting the overall productivity of the team.
Additionally, you can offer quarterly bonuses that double commission rates when certain metrics are exceeded, further encouraging exceptional performance. While this structure shares commonalities with industry standards, you can tailor it to your specific requirements, creating a system that rewards excellence.
Balancing the Scales
So, how exactly does this innovative compensation system balance the scales between ownership and field staff? It’s simple, really. When times are good, everyone benefits. Employees enjoy a substantial paycheck, and so do the owners, as well as the sales and office staff. It’s a win-win arrangement that encourages teamwork and a shared sense of purpose.
The concept here is that when all parties have a vested interest in the company’s success, they’re more likely to make decisions that benefit everyone involved. It’s a collective effort, a synchronized rowing towards a common goal that fosters unity and collaboration.
B. The Secret Behind This Compensation Method’s Success? Cutting Edge Efficiency.
Efficiency Through Responsibility
Empower your crew members to focus on positivity and efficiency, even after a brief absence. Push them to tackle deviations head-on, addressing them in sales meetings to ensure continuous improvement.
The sales process is another crucial piece of the puzzle. It’s no secret that documenting projects can be a bit of a challenge. However, those details are the lifeline of the field staff’s efficiency. Detailed notes, complete with photos and plans, make the crews’ work a breeze. And you know what that translates to? Enhanced productivity and potentially higher compensation for both our field and sales teams. Win-win!
Even the tiniest systems, like sticking to a specific project execution order, play a massive role in the field staff’s efficiency. No more lengthy customer discussions about project details. With well-defined processes in place, the crews can execute tasks smoothly and earn the compensation they truly deserve.
Streamlining for Success
To pave the way for growth, it is imperative that you streamline your offerings and optimize your processes. Gone are the days of accepting every project that came your way, adopting a “never say no” attitude. While it can initially boost your revenue, it can prove to be a roadblock to efficient scaling.
Optimizing Resource Management
Efficient resource management is key to any painting business’s success. Aim to streamline your supply logistics by partnering with local paint stores and vendors. With individual storage cages for each team and real-time inventory management, your painting business can eliminate the burden of managing supplies, while allowing the team members to focus on their craft.
Try starting out with a simple spreadsheet for storage purposes as a quick reference, and fine-tune the system to reduce waste and optimize material usage. It’s all about prioritizing real-time supply management, avoiding excesses and deficits, and ensuring a more efficient operation.
Punctuality & Preparedness
Any business’s success hinges on meticulous planning and execution. Pay special attention to punctuality, arriving on-site promptly, and being well-prepared. Organization is key, from reserving parking lots to arranging necessary equipment. When these aspects are managed efficiently, your team can focus on what they do best.
Handling Mistakes
Don’t sweep your errors under the rug. If errors occur, handle them with a firm yet constructive approach. Whether it’s a measurement discrepancy or a miscalculation, push your crew to communicate openly to rectify the situation without causing disruption. they do best.
C. The Culture That Drives Us Forward
Now, let’s talk about culture. It’s not about the pay system. It’s about something more profound—a commitment to excellence and forward-thinking. Don’t just want employees; look for passionate, dedicated individuals who thrive on challenges.
Think about it: earning $400 for a job isn’t just about the money; it’s about dedication. It’s about going the extra mile, minimizing breaks, and skipping those unnecessary trips to the store. And let’s not forget the magic of a well-organized van setup—turning eight hours into $133 or embracing adaptability for a $400 yield in 12 hours. That, my friends, is the essence of strategic planning and adaptability.
D. Conclusion: The Future of Compensation
In a world where the traditional employee-employer relationship is being questioned and reshaped, this unconventional compensation philosophy is a shining example of innovation. It’s not just about paying well when times are good; it’s about standing together, shoulder to shoulder when the going gets tough.
In the heart of Michigan, where seasons can be challenging and the painting business is competitive, MacFarland Painting has found a way to reward hard work and dedication. Thanks to the innovative compensation (lump-sum) system, we have made it possible for a substantial percentage of our field staff to earn six figures without working themselves into the ground.
Similarly, your painting business can do the same by prioritizing team growth, focusing on profitability, and maintaining operational excellence!