I noticed that the subject of how to pay HVACR technicians came up again (likely for about the 1,000th time or so in a recent history) on an Internet thread. It’s always a discussion about the best way to pay technicians for the work they do so they will be fairly compensated, while at the same time allowing for the company to make a profit on their activity. And, of course, the two schools of thought are to either pay an hourly wage or pay them on a commission basis according to the amount of labor they bill, along with some compensation for add-on sales and other revenue-generating activities…often referred to as a “spiff”.
On one hand, some of those who advocate an hourly wage system may decide to follow that path because they’re concerned that technicians might wind up selling customers something they don’t need, replacing more parts than necessary during a repair, or selling them something in regard to add-on products or services that they’ll later regret buying, all in the interest of nothing more than a bigger paycheck or bonus. In other words, out-and-out greed; customer service and ethics be damned.
Those on the other side of the compensation fence advocate a commission system that pays a technician a certain percentage of the labor they bill on a given service call, along with other possibilities for earning more income from the sales of products and services the company offers. Of course, one element of a commission-only system is that if a technician only completes and bills a couple of service calls on a given day rather than the five or six that would be considered the norm, it means a lower-than-desired income for that day. Also, if a technician has to go back because something isn’t right (or is perceived to be wrong even if everything is OK) and there is no billing for that activity, then the technician receives no income from that re-call.
So, from a company perspective, a commission-based compensation system seems to have its advantages when it comes to minimizing labor expenses and maximizing profit. And, from a technician’s perspective an other than hourly wage system could come with some risk if things are slow, or if they miss something, or if a customer is being difficult, or if a part fails within a warranty period and no labor is billed.
And, of course, also from a company perspective, an hourly wage system presents some challenges. One of those being the technician’s perception that the company is billing a whopping amount of dough on every service call while paying what appears to be a comparatively tiny hourly wage to the person who is doing the work. This leads some technicians to think, “Well, heck, why am I working my butt off to make somebody else rich when I can just go on my own and make more money by noon than I do in a whole day now”, and, sometimes, they actually follow through with the idea….(they may have no idea about the actual reality of things, but that’s a subject for another day)…., quit their job, and wind up being, on some level, competition for the company that used to employ them.
From a technician’s perspective, the hourly wage system offers a sense of security. It’s pretty much a given that they’ll be taking home a guaranteed amount of money unless their work situation is drastically affected by things beyond their control. But, once they feel secure, a technician sometimes, as I mentioned above, winds up thinking about what they perceive as a disparity between what they’re being paid and what their employer is collecting from a customer. All of which leads them either to ‘going out on their own’ or pretty much constantly on the hunt for a wage increase, which has a lot of effect on them and their workplace.
My, my, my…lot’s of things to consider here. And, like everyone else, I’ve got my opinions (not always popular with technicians or employers) on the subject, and I’ll be sharing them in upcoming segments here. In the meantime, if you have an opinion on the subject, feel free to express your thoughts either by using the reply form you find on this page or getting in touch with me directly at my email.
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