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Host Scott Lollar is a 35-year veteran of the painting industry and founder of Consulting4Contractors. The 'Success Beyond The Brush' Podcast serves as a touchpoint to painting contractors who have hustled, sacrificed, and worked hard to get their business to where it is today. Now, you need the guidance, expertise, experience, and team to make it into the multi-million-dollar company of your dreams. You'll hear stories and interviews from "Brothers of the Brush" and "Sisters of the Sprayer" who have been where you are and are charting a new course for their company's success. Listen in and go beyond $1,000,000!
SBTB Ep 15 | Salary vs Incentives: The Comp Plan Most Contractors Get Wrong
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[00:00:00]
Hunters Not Order Takers
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Scott: I want hunters. I want people that want to go kill things, because that's how we eat, okay? So I do not want them to violate your culture. I don't want them to be jerks. I don't want them to write crappy scope of work.
I don't want them to give stuff away. I want them to be held to our standard, but I want them to be motivated to close deals. I want them to ask the question: will you move forward with us today? Can I have this job? What am I missing? We used to have our sales goal by month, right?
I remember making dials on the last day of the month just so I could hit the number right? It mattered to me. And if it doesn't matter to you, then you're not going to be good at estimating your sales. You're just not. If I just get paid X amount of dollars, whether I do well or I don't do well, you're going to be a terrible salesperson.
I'm just straight up saying it. Tell me I'm wrong.
Welcome to Success Beyond The Brush
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Running a successful contracting business requires more than just great craftsmanship. It requires the right people in the right roles motivated to drive [00:01:00] results. In this episode of Success Beyond the Brush, Mark Black and Scott Lollar dive into one of the most misunderstood topics in the industry: Compensation plans.
From salespeople to production managers, they explore how tying compensation to performance can dramatically improve motivation, profitability, and your company's growth. So if you've ever struggled with how to pay your leadership team, this conversation will challenge the way you think about incentives, your culture and their performance. And remember, you can find additional resources and links related to this episode in the show notes or video description.
Let's jump into it.
Mark: Hey everybody. Welcome again to another podcast with Beyond the Brush. I'm your host, Mark Black here today again with Scott Lollar with Consulting4Contractors. Welcome, Scott.
Scott: Hey, Mark. Good to chat with you as always.
Mark: I'm really excited about our topic today. So many of us business owners have lots of [00:02:00] employees at various pay ranges. The topic today is about comp plans. This is beyond the idea of the hourly employee, and there's a lot of noise out there about what do you pay your guys, what do you pay your guys? What kind of benefits do they have? So now we're kind of brushing all that aside and we're leaping into the deep waters of how would you, Scott Lollar compose, and are there various ways to compose comp plans for overhead positions?
Scott: We do a lot of this with our clients, a lot of job descriptions, job ads and hiring. And of this always comes down to how are we going to compensate people?
Sales Pay Philosophy
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Scott: And my philosophy is that anyone that's associated with revenue or production should have a significant part of their compensation tied to the success of those two activities.
Now, there's two paths that we could go as far as talking about this. One is I want to incentivize people to win. Now I do get some people [00:03:00] saying, well, our culture is, we win together, lose together. And I know, that's great. And I think it's very challenging to keep this in line with your culture.
And I want to respect culture. I value culture, but I want to reward those that are charged with driving both production and sales. There needs to be a direct correlation to them doing that activity well and the and their compensation for it. So in a perfect world, let's take sales first. My preference is a hundred percent commission. Now a lot of people, if not most, are super uncomfortable with that, and I understand that. But the point here is that the significant part of their compensation should be tied to their sales.
Mark: Well, that's interesting, because it, I guess we think in terms of, all right, I hire a new guy, I'm paying him hourly, and then, you know, their skill grows and I start to pay them more. And then in our minds, as owners, the only next step is, well, a salaried [00:04:00] position. And so we go from the hourly to, alright, I'm going to give you $80,000 per year.
And to us, to, to many business owners, that is a comp plan. You're suggesting however, that we go even beyond that and tie the performance to the pay. Sometimes a hundred percent, in the event of a salesperson, as you just referenced.
Scott: No question. So in your comments, were you suggesting that someone that came up through the production ranks as an hourly, we would then promote into a management position? Or was that what you're talking about in your example?
Mark: Yeah, exactly, and I've done that several times in my company. Someone was very good. They kind of rolled through the ranks of crew leader and they were running crews in the field and then either graduated to a sales position or a project manager position and their reward for that is, okay, you're no longer hourly.
You've hit the big time. Now we're just going to pay you X, where your paycheck is always the same and you make this no matter what. But I got to be honest, we have not often tied it [00:05:00] directly to performance.
Scott: Well, I'm not going to put you on the spot, Mark, and ask you how many of those people were successfully promoted to management. So let's talk generically and not specifically, but there's going to be a lot of people that are going to be like yelling at the, you know, at yelling at me here.
Promoting Techs Pitfalls
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Scott: The first thing is, it is very rare that a technician, whether you're an electrician, a painter, HVAC, it's very rare in my world, in my experience, and I've done this a long time, that someone that gets paid by the hour to be a technician is going to be good at management. I mean, that is the philosophy of the E-Myth, quite frankly. I love this idea that we have opportunities and it's really one of the main things today's workforce is looking for. Is there an opportunity here?
Unfortunately, in a service business, mostly what we need are technicians. We need a lot of technicians and a few management and sales positions, so we don't typically have enough opportunity for all [00:06:00] of our technicians.
It's not typical that we promote technicians into management roles. Now, if you have a system and really clear SOPs and you have the time to train them and make them into something they're not, then I would say I love the concept. I love the idea that you can rise up through the ranks, and there are plenty of examples, especially in corporate America, where someone started as a janitor and became the CEO.
I'm not saying it can't happen, I'm just saying it's rare because if I was good at sales and I had a passion for sales, I was a professional salesperson, I don't think I would've ever been a roofer or a painter or a landscaper or electrician. I would be in sales. So the fact that if I was good at that, the chances are I would never have started at your company as a technician.
Now, if you're saying, I have a diamond in the rough, I'll take a flyer with you. I'm just saying it's rare. I'm talking like, I don't know, probably not even 5% of the times we find it [00:07:00] work out, what we find is owners say, I like this person and I think they have my back, and they're really good in the field, so therefore they will be good at sales, or they will be good at project management, or they'll be good at whatever.
And the fact is they're simply not. So, you know, you need to get clear about the components there and the risk of that it doesn't work out, and how much money it's going to cost you to promote the wrong person.
Mark: I hear what you're saying. I don't like anything you just said because I'm a very emotional person and the fact that it's only happened once out of the 12 times I've tried it successfully does not mean you're right.
Scott: You're very close to my 5%, Mark and I can start naming names, but I think we should move on.
Mark: Well, and it's a great point in that I think when technicians are promoted up in my mind, you know, you've been climbing through the ranks financially, and so when you move up to a management position as I'm creating and crafting your comp plan, I need to make [00:08:00] this nice. Like there has to be incentive, you're going up into management, so I want to make sure you have an easier life.
And so I generally just create a salaried position. I would be worried whether I'm promoting somebody from within or hiring somebody from without, talk to my nervousness. When you talk about their compensation being tied to their performance, how am I attracting anybody to this position when they're not guaranteed this big base that's going to cover their financial needs?
Scott: It's complicated and you have to be careful about how you present it in, for instance, your ad if you have a hiring ad going somewhere. But let me circle back to something you said about the salary versus the hourly. You have to double check with your HR and your employment law as far as positions that are ok to have a salary and some that aren't, but a person that is accustomed to working hourly and then getting paid overtime or never working a minute over 40 and then saying, [00:09:00] I'm going to promote you and I'm going to pay you the same amount no matter what. I could tell you almost a hundred percent of the time when someone does that, you never get 40 out of them because they're like, oh, this is great.
I get paid the same or more as I did before. I don't even have to work 40 hours. I can go home early and I don't have to work on Saturday. Why are some people attracted to overtime? They're attracted to overtime because it's a way they can increase their gross pay and that's the only other way they can do it.
So if they want to make more money and they're at a certain hourly wage, you have to work more than 40 hours to make more money. So, it's very difficult and you have to be really careful about helping them understand their mandates. And the benefit to them is they will still have a steady paycheck during all sorts of other seasons that we might not be as crazy as we are in the summer or during the holidays, you know, we're going to take a whole week off or it'll be soft or you know, there's some benefits or you have some flexibility, right?
So there's some other benefits, but I [00:10:00] think just the idea of transitioning someone from today, their hourly, to now they're salaried, I think you have to be really careful and I rarely see that one work as well.
Training Period And Ramp
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Scott: But help someone understand their earning capability and also help them pay their bills while they scale their book of business, right? Because you hire an estimator today, say for instance and you start training them, it's going to be, what, three months before they really start selling a lot of work. And it might take a while for their work to get into production. So when they're on a commission, I mean their first six months, they're going to be eating ramen noodles, right?
So I do advocate a training period salary that is sufficient for your marketplace. I think you are trying to hire the creme, and so you need to be prepared to pay them. But I think that training period is sort of a, Hey I'm going to pay you an amount that will sustain your family or, or your bills but not make you rich.
The getting rich part is up to you, and this is how we structure that. So a three to six month [00:11:00] training period, I'm all for, and then onboard them fully and, then they're off to the races. We typically are open with people that it's going to take probably a full year for them to start making the money that they really want to make, but we'll help them get there.
So that's really the reality. Now, I've never met a true salesperson that wasn't okay betting on themselves. So they understand that path. And a person that says, no, I just want to make six figures, starting today is not going to be the right fit for you.
Mark: Got it. So I'll throw myself under the bus. Let's stay on the topic of salesperson. We've hired three outside salespeople in our company to date. I believe all of them had a base of $52,000. So basically a thousand dollars a week, and then commission on top of
that. You want to roast me there?
Scott: No, '
Mark: Because that's very different than what you just suggested.
Scott: I like that kind of format. The only thing I would just add is maybe there's a [00:12:00] three to six month training period, like I said, where maybe they make a little more than the thousand. But the thing that you didn't state was what's the top end revenue.
So I always ask the question is, in your market, what is this estimator going to sell for you? What do you think they can do? Now, I usually think around 2 million in a residential repaint is a pretty good salesperson or estimator, whatever you call them in your company. I think a $1.5M is adequate. So we're really trying to get someone between one five and 2 million at the, minimum.
I do have some clients with 3 million and $4 million estimators. Now, these are not really estimators, they're order takers and they've got fantastic lead flow with all sorts of past customers, and they're just writing orders all day long. It's really like shooting fish in a barrel, so it's a little disingenuous to call them true estimators. But if you're someone that has got four to six appointments a day, four to five days a week, you know, I think 2 million you're pretty good at [00:13:00] your job. And so the question I would ask the client and those listening is if I would come to your company and sell you.
$2 million if that was a number that's appropriate for your company at your appropriate margin. If you're a 50% person or 45% GP person, if I could sell $2 million at your stated margin, how much do you think I should earn? And that's the question. And then from there, we can work backwards to the base and the commission structure.
So to your point, I don't know if 52 is good or bad and I think some people will say that are listening will say, have an opinion about that. I don't think it really matters, the number. if you're saying, I could make 120 or 130 or 150,000 a year, then I don't really care what the base is.
The base is simply to keep me in the game until I can start really hitting some good singles, doubles and triples.
Mark: Right. I think some people would argue that if your base is higher, it disincentivizes them to go perform, [00:14:00] because I've got a pretty good base and I'll make a little bit more commission on top of that and I'm good.
Scott: No question.
Base Vs Commission Draws
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Scott: Now, another way to do this and I have had clients that have had a lower base, and let me just explain a little bit about the base. Now, this isn't legal advice on any, any stretch, but I'm of the belief that if I'm on commission to sell and that's how I make my money, then I'm going to be very careful about jumping in when there's a fire in your company, because my compensation and my job is to go sell stuff. So you, if you say, can you go drop this ladder off or take this paint there, or Mrs. Smith's unhappy, can you stop by there? I'm going to be like no, I don't, I'm very busy today doing my job, and I don't get paid to do that.
So why don't you have Joe, who's paid to do that, go do that. You know? So we don't want to create that friction because that gets, it gets into your culture. There's a piece that we do things because we're a [00:15:00] team, not because you get paid for it. So, my thinking about this base, whatever it is, is it's something that we pay you because we're going to ask you to do some things for which you're not going to be directly compensated. We're going to ask you to do, you know, some team meetings and some training, and some this, and some that. And I don't want you to look at me weird because, hey, I don't get paid to do that.
That's the last thing I want to hear. And I, you know, so, but we have had people pay lower base than even what you stated. I think the base is irrelevant. Now, what you can do you can use the concept of a draw against future commissions without question.
Let's just take an extreme example where it's a hundred percent commission, so that's zero, right?
So I started my first week or my first two weeks, and I'm in training and I didn't sell anything. Or, I came to you and I'm already well seasoned and I don't need any training, but it takes six weeks for my first job to get into production, so there's no commission. Well, I need to pay my bills, so you pay me a draw against the Future commission, and that can work too.
So [00:16:00] even if you cut your 52 in half, and said, I'll pay you 26. I'll pay you 500 bucks a week. Well, there's nobody here that could live on $500 a week. So you could say, I could pay you $500 and I'll give you a thousand against Future Commission. That's 1500 bucks a week. You know, and that's, you know, 76,000 a year as a base plus draw and that might be appropriate for your situation.
And I think everyone's slightly different. Now, the question is, you know what's appropriate for the draw? Well, I tell people that it's going to take close to six months for a new estimator salesperson to get off the ground, and that you'd need to be prepared to flush that money right down the toilet because if you pay someone X amount of money, whether it's on salary or as a draw against future commission, and they don't last, they're not going to write you a check.
They're not going to say, okay, Mark, sorry this didn't work out, here's a check for $52,000. I mean, not going to happen. So, you know, you're putting the risk and this is your investment. And so there's lots of ways to structure it and I would say instead of being critical about some of the ideas, [00:17:00] think about what's appropriate for you. You know, would you rather have a low or no base and a bigger percentage commission, or would you rather have a higher base and a lower, you know, it's whatever you want.
Midshow Breakx
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If you're enjoying this conversation and finding it helpful, please take a moment to subscribe or follow the podcast so you don't miss any future episodes of Success Beyond the Brush. Our goal with this show really is pretty simple. It's to bring practical business insights to contractors like you who want to grow stronger companies, better teams, and more profitable operations.
So if you know another contractor who might benefit from conversations like this one, please go ahead and share this episode with them. You can also check out our show notes or video description for additional resources and links related to today's discussion, or visit us online at www.consulting4contractors.com.
Let's dive in to the rest of the episode.
Scott: Let me go [00:18:00] a step deeper into why I'm an advocate for this. And man, we've really struggled. I personally struggled with this over the last 10 to 15 years.
As we talk about wanting people that fit our culture in the position of estimator sales, I really want, I want hunters. I want people that want to go kill things, because that's how we eat, okay? So I do not want them to violate your culture. I don't want them to be jerks. I don't want them to write crappy scope of work.
I don't want them to give stuff away. I want them to be held to our standard, but I want them to be motivated to close deals. I want them to ask the question will you move forward with us today? Can I have this job? What am I missing? We used to have our sales goal by month, right?
I remember making dials on the last day of the month just so I could hit the number, right? It was, it mattered to me. And if it doesn't matter to you, then you're not going to be good at estimating your sales. You're just not. If I just get [00:19:00] paid X amount of dollars, whether I do well or I don't do well, you're going to be a terrible salesperson. I'm just up saying it. Tell me I'm wrong. So that's where I'm headed with this. I want the comp plan to incentivize people to be aggressive and be excellent within the framework of your company so that we can drive sales.
Mark: This is almost an easy conversation. I think most of our listeners, like, we get it and when we're talking about sales and various comp plans, because it's the easiest position to imagine that has direct impact on both revenue and gross profit.
Comp Plans For Ops Leaders
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Mark: But let's turn the conversation away from sales for a minute.
What other types of positions might you be crafting comp plans for? What other positions in our company have a direct impact on revenue and GP?
Scott: Yeah, absolutely. Your production people should be on the same type of plan. I want anyone that has a direct correlation with production to have a [00:20:00] significant piece of their compensation tied to that gross profit pie. I need them to be efficient. I need them to have hard conversations.
I need them to lead people. I need them to manage clients. I need them to really be hitting on all cylinders because their paycheck is tied to those results. I'm on record saying this, that production people need to have that pedal to the metal mentality without everyone knowing it's pedal to the metal, right?
We've talked about it in many podcasts. We're working in full days, 40 hours. You know, we need full days out of our whole team for our metrics to work. So I want production people to understand that as well. And there's a piece of their compensation that's going to be tied to them successfully doing that.
And depending on your world, what the job description is, we have talked about before that we don't have enough painters sometimes or technicians to hit our revenue [00:21:00] goals. Well, to me, that's your operations department's problem, right? So how can they meet their goals if they don't have enough people or if they haven't made the right projections or if they're not on top of that. Same token, we're hitting numbers by, do we have enough revenue? I don't count jobs, it doesn't matter if you only have one job for a million dollars it's fine with me. As long as million dollars was our number, but are we producing enough jobs, enough revenue to hit our targets, and that needs to be tied to that person.
The other thing that we bring this conversation back into is growth. And I just had this conversation with a client on Friday, which is, at what point are the current estimator and production person going to need support, and what support are we going to give them? It matters to them because they're hoping to do $2.5M this year.
So at the $2 million mark, we've kind of identified that the sales person is going to start having a problem keeping up and in, in this particular case, the project [00:22:00] manager is thinking at about $1.5M to $1.75M. He's going to need some support. So it matters if we're going to hit our $2.5M, or if we're going to get stuck at $1.75M, or $2M.
It matters because at the higher number, we need to add people at the lower number, we don't need to add people. So it really matters this correlation between what they can do and what their goals are so that we can plan for the next level of hiring.
Mark: And I got to be honest, again, I'll throw myself yet again under the bus in that all of my Ops people have always just been paid a salary, just a base salary. I've never tied it directly. There's a few kind of profit sharing bonus type things but their performance on a day-to-day or month to month basis is not impacted financially.
Scott: Yeah.
Mark: I've never taken your advice and tied that together.
Scott: Yeah. Well, this is where I, this is a really slippery slope between your culture and your high functioning people. But, we have to do [00:23:00] some math in management and we need to hit some KPIs and it matters a lot and you know it does.
And so I, I need these people to like literally be like hunting their food. If I don't do this, if we don't get here, if we don't get to the top of this hill, if we don't accomplish these things, I won't eat, right? That's the caveman type of mentality. That's really what I personally am looking for.
Now, it also is my temperament. Okay. So I definitely am biased here because that's who I am. I want a challenge, I want to be part of a team that we're going to, you know, charge and go hard and accomplish big things. But I'm not the kind of person that says, and we're going to do that at all costs. I've been part of those kinds of teams.
We did do a lot of great things, but there was some collateral damage too, and I, and I can see that now as I matured that was a consequence. But, our management, whether it's production or sales, has to be focused on [00:24:00] achieving the goals we set, because that's the foundation of all else.
Hiring Ads And Right Fit
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Mark: I can't think of another business owner that wouldn't agree with the fact that we want hunters, we want people who are hungry and they're going to go out there and get it because they want to make more money. I guess I question the likelihood of attracting that person in the job market that we all exist in right now. Human nature is I want to make as much money for as little effort as possible, and yet we're putting out a hiring ad saying, Hey, this is either a hundred percent commission or it's a low base, and then you work hard, you'll earn a lot. That's going to attract a very specific personality, and I'm questioning how easy that would be to find.
Scott: Well, it's not easy to find, but if it was easy, then of course... No, and I think that goes back to being very careful about how we craft that message, Mark. So we do not want to be dishonest on our ad, but we craft [00:25:00] that ad with this understanding that it's a base plus incentives, then we range what the compensation expectations are. and then we do kind of state what the second or third year projections will be. We want them to see that we're going to take care of them in the short term and in the long term, they can really make a good income if they put the work in.
So we're being very careful about that in our ad and going deeper into it when we interview them, but seasoned salespeople or people that are looking for an opportunity to excel and be compensated for it are looking for the nuances of a good job ad where they can see opportunity.
And opportunity is really what we have. We don't have always a guarantee, but if you're the right person for my position and you're willing to work for it, sky's the limit opportunity for you, and that's what I'm conveying. And true salespeople, and we've talked about this on podcasts [00:26:00] before, we use in our industry painting specifically, but other trades as well.
We use the word estimators and I just hate, I get it, but I don't like it. Salespeople take numbers and connect it to a person's need. So, crafting a careful ad will really help attract the people that are looking for what you have to offer.
Pay On Gross Profit KPIs
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Scott: in both these cases, I'm going to tie that compensation into gross profit.
I hear a lot of contractors giving compensation or commission based on top line revenue. I would never do that. First of all, it is very easy for those people to just sell stuff short or do whatever and not have any consequence to missing things, or I'll give you a discount, or what will it take for you to sign today?
When the company loses, they need to also take a haircut and the company wins, they're going to, they're going to make more. I also think that you have to be careful about if there's a threshold. So some people say under a certain [00:27:00] amount, you're going to get nothing. Again, you're going to need to talk to someone that knows more about employment law.
if their compensation's tied to their activity, I'm not sure you can pay them nothing. We've had times where we've maybe said, Hey, below a certain threshold, we're just going to pay you a set fee for the appointment, but there'll be no commission because the job is below the threshold. But again, talk with your employment official your lawyer in your area just to make sure you're compliant. But there's lots of ways to structure. That's my point. My point is we can say a lot of things. We could pay someone minimum wage, you know, so there's lots of ways you can structure it. But I would always pay on gross profit.
The other thing I'll say is I don't want to ever create a plan that disincentivizes any behavior. I don't want there to be a way for them to gamify anything. So, I'm not going to go there because it's not worth it for me. And so you got to be careful about all of those, you know, all of those ways that they're going to figure out that they're going to only do the high value activity.
They're not going to do the other stuff. So, you know, you know, there's things like okay, so say you do [00:28:00] a trade show or home show or a community event and they're like, well, you know, I don't get paid to do that. You say, well, you actually will benefit from that activity because you're the one that's going to go do some of these appointments.
And, we would always say that some effort like that or some evenings or weekends or some community events, we'd always put that in our employment agreement. And just let them understand. We do those activities on occasion, you know, not every day, not every weekend, but, you know, and that does directly benefit them.
Mark: To your point, I think that right there is exactly why I always chose to just pay a large salary so that I had control, you know, whether I need you to go to this event or go shake hands or kiss babies here, just do what I need you to do. I never tied it directly. However, the dark side of that is, my company pays a lot of money to a lot of people, whether it's good or bad, whether their performance is indicative of earning that or not, and a lot of times we get the shaft on that end of [00:29:00] the deal.
Scott: Yeah, I was actually thinking if I maybe fill an application because I'd like to do some, I'd like to do no work and still get paid for it. So I was wondering if you had any openings for that. I'd like to apply.
Mark: No, I love the topic and we all know that this is the best way, even human nature wise that if I work harder, it is worth it and I will see more money. This is how it should be. But a lot of us either lack the understanding to know that we need to do it or we're not sure how to change our structure,
C4C Help And Role Clarity
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Mark: how to even start this. You started the podcast by saying something about hiring. Is that something that C4C like you would not only help advertise and process and hire this person, but might also help create a comp plan around it?
Scott: Yeah, we definitely have some tools and we can help talk you through it and help you understand how it might work. So we do that a lot with our clients and we've done a ton of ads. And like I said, there's just little nuances. We have people that are trying to connect all sorts [00:30:00] of different types of people. Commercial estimators with a small piece of high level project management.
And in that case, project management is not day-to-day, it's more managing the owner or the GC or whatever. So, we craft things carefully to be in alignment with whatever you want. I'll tell you if I think it's stupid, you know, and I do that sometimes.
A good example of that is we do a lot of work with people getting them into the commercial sector versus a residential repaint sector. And so you're not going to put an ad, a Google ad necessarily and go get a big, you know, property manager.
You're going to do that more relationally. So those are business development people and that's a different position. It's a different person. It's a different everything. So we say a lot of different things than we would do if we were going to hire a residential repaint estimator.
The other thing I see is people try to mix them both like, well, if we don't have any bids, I want you to go knock on doors. I'm like uh, you, you want a farmer to do your res repaint and you want a hunter to do your knock on doors? They're totally different people, so whoever you have [00:31:00] is going to be terrible and hate doing the other thing.
And we get people frustrated about that. I said, well, why would you think they would be a good hunter? You hired them to be a farmer. When they go knock on the door and Mrs. Smith loves them and their bonding rapport is excellent. They're not going to be good at cold calling. And so that's really important to understand.
If you're going to put your fish in the water, you got to make sure you have the right bait on it. You're clear about, you know, what you're looking for and who that right candidate is. And it's not uncommon that we don't always get everything we want, but I, I say this a lot is look at the bullseye.
Let's define the bullseye and then let's look at the concentric rings that is the target. If we can get on the target even if we're not on the bullseye, we're probably going to be pretty successful. What we're trying to avoid is that we're not even, on the target. Like there are arrows shot way off in the distance.
That's what we're trying to avoid.
Profit Sharing For Everyone
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Scott: So, one more thing I wanted to just bring up sort of in this conversation is what about the people that don't have the opportunity to make all this money and stuff [00:32:00] that contribute to these people's success. And I think that's where I would really advocate that companies should have or consider a profit sharing plan that covers everybody.
Because I want everyone to get a little extra piece of the pie when we meet our goals. So, we, that's a podcast all by itself. Maybe we'll bring Rick Holtz into that because they do that. But before the year begins setting these quotas, these goals and letting people know where we're headed and that if we achieve these things, we're going to share a piece of that and how much of it we're going to share and how do we distribute it?
And, you know, is it everyone gets the same amount or, you know, how do we work that out? But I do want everyone to have a chance to have an incentive or get a reward when the company really hits their numbers and excels. And sometimes, you know, things don't go well, or we have off years, we all got a paycheck.
Mark: No doubt we do something similar in our company. You helped [00:33:00] set that up. I can't speak highly enough for that of how that is fair to the company, but also how all of our team looks forward to sharing in the profitability when they make good decisions in the field.
Scott: Yeah, a hundred percent. This goes back to the question is what's motivating me to make a good plan or have hard conversations with either my coworkers or customer or whatever. The reason why is because that's how the company operates profitably. And when we operate profitably, we all win.
Mark: Right.
Scott: So.
Mark: it's a great discussion. Scott, is just I feel like I speak for the business owners sometimes because I know so many painting business owners all over the country and we often talk about things like this and that we know we can't do it all. We get past the Superman complex. We know we have to hire these high level positions to help us in a scaling company to create a management team, but often we're shortsighted in the fact that we know they need to make good income.
I want to pay them appropriately for the work that they're doing, but we're not [00:34:00] always equipped to make those decisions, to come up with these comp plans that not only make the employee feel valued and their efforts rewarded, but also to protect our company from lack of performance or having some incentive for them to be better.
I know myself, I personally struggle with this very much, and I, I am very thankful to have a partner who helps walk me through that and challenge my thinking constantly. I would encourage anybody out there who's looking to add a position or maybe even recraft the position that you have to have a conversation with Scott or any of the coaches at the C4C organization.
Scott: Before we roll out of here, you know, this idea is not like unheard of, you know, CEOs of major corporations, you know, the Fortune 500, they're incentivized. Their salaries are typically very modest. They don't make a lot of money unless they're successful, right. So, I'm just saying, you know, if I just put out [00:35:00] there, I'm going to pay a $95,000 to be a great estimator.
That's as much as you can make. Whether that's a good number, a bad number, use your own number. But what if I told you, you know what here's what you could make if you hit a grand slam at our company. If you do what we think you can do, here's sort of the top edge and here's where you're starting.
And anywhere in between you can go. It's up to you. I just like that a lot better. In the positions that are critical in the sales and production categories. So I wouldn't probably pay everybody that way. But in those positions I think it's critical. And I would add, I would really just at least advocate that you think about it.
Mark: I agree and I questioned earlier, we all know that those types of people are hard to find. However, I would much rather have that person working for me who is highly motivated to make, you know that, that pot of gold at the end of the rainbow, they want to find that and they're going to do everything they can to help make themselves successful, but also [00:36:00] my company successful in order to make themselves successful.
I would much rather have that type of personality than somebody who just wants to hide and float and make a decent salary and not do a lot.
Scott: Yeah, a hundred percent.
Wrap Up And Next Steps
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Mark: Scott, appreciate the conversation. Thank you for your time. Appreciate your wisdom. If you want to know anything more, you can always reach out to Scott at Consulting4Contractors.
He'd be happy to have a conversation with you about how they might be able to help your business.
Scott: Yeah, thanks Mark.
Thank you again for joining us today on our episode around compensation. If it challenged the way you might think about compensation or incentives, or even leadership roles in your company, that was the goal. Designing the right compensation plan isn't just about paying your people well. It's about aligning incentives so that when your company wins, your team wins too.
So if you'd like help structuring any sort of compensation plans or hiring the right people, maybe building a stronger leadership team inside your contracting business,
the team at [00:37:00] Consulting4Contractors works with contractors across the country to do exactly that. Go ahead and visit us online at www.consulting4contractors.com. There you can sign up for a free discovery call with Scott Lollar to help you determine what kind of compensation plans might actually help your company drive growth.
Be sure to check the show notes or video description for additional resources and links and if you found value in this conversation, go ahead and consider sharing this podcast with somebody else, maybe another contractor who's working to grow their business beyond the brush. Thank you so much again for listening.
We'll see you in the next one.