Thursday 1 February 2018

Don't Pay Your Construction Workers Hourly

Posted by at 10:02 AM in

Many contractors pay construction workers hourly, and most find this arrangement to be not only counter productive but also unprofitable. How often do you hear contractors bemoan the excessive amount of time it takes to get work done, or complain about how slow their workers are? Contractors are upset with how their workers milk the clock, but don’t know how to put an end to this abuse. How workers milk the clock and bilk your profits:

  • By making multiple trips to the store each day rather than only one. This is a favorite of workers who want to build in multiple breaks throughout the day – they say “I'll be back in 20, I have to go to the store for supplies.”
  • By having to “run home” to get a tool they “forgot.”
  • By spending too much time on their cell phones making personal calls and texting. Early on I monitored this activity and found one worker made 11 calls to his wife in a single day, and another sent over 5,000 text messages in a single month. “Unbelievable,” you say? I nearly dropped dead in my tracks over these discoveries and that is when I said, “no more!”
  • By spending an excessive amount of time talking to the customer. Some workers just love to talk and every time they speak, they stop working. Have you ever noticed this? They seem incapable of multi-tasking and doing anything productive while they are talking. Some customers just love to talk too and that is a bad combination for your business.
  • By doing “favors” for the customer like painting an extra door or repairing something outside of the scope “since they were already on site.”
  • By too many smoke breaks! How many smoke breaks is too many – 1 is too many. Why do you permit your workers to smoke on the job site? How do you think your customers feel about seeing your workers standing at the side of their house smoking a cigarette let alone finding butts on the ground or the smell of smoke that permeates the worker’s clothing upon their return? Under NO circumstances should workers smoke on the job site.
  • By taking too long to get to the job site. Do you have a problem with your workers just hanging around in the morning drinking coffee, smoking outside, and talking with their friends? One would almost think nobody really wants to get to work – the truth is, they probably don’t so they use as much time at the office as possible.
  • By too short of a work day. If your workers don’t get to the job site until 9 am or later and are back at the office at 3:30 or 4 pm, how much productive time is actually spent on the job site? Nobody seems to care about that but you (and the customer)!

Do any of these time wasters resonate with you? These aren’t the only time wasters but you clearly get the point. How do you bring about change and better results? You can implement new policies, beg for better results, threaten workers with replacement, give incentives to “buy” better performance, or use technology to improve accountability. You’ve probably done all of this – and with what results – NONE.

Change starts with a simple decision – DO NOT pay construction workers hourly, or you will be sorry. This is the single most impacting decision you can make to improve your construction performance and profit results. While workers may be willing to waste your time most are unwilling to waste their own. If they are working for themselves their work efficiency automatically improves in order to maximize their hourly potential. If you assign a worker drywall, texture, and paint in 4 rooms of a home they are going to calculate in their minds how quickly they could get that done. They will divide your labor number by those hours and if the result is attractive they will take the job and complete the work on time.

It works nearly every time. For example, if your worker calculates that they can earn $30 per hour for job “A” and once finished they could move on to the next job and make $30 an hour on that job, or take an $20 hourly guaranteed day after day after day, what do you think most would do? They would take the $30 an hour most every time. The change agent in this scenario is that the worker becomes accountable to himself and not simply to the employer. The worker self imposes work efficiencies that lead to better performance and faster results. Workers show self-discipline and work smarter when they are working for themselves in an effort to make more money and improve their financial position.

You won’t have to coddle, coax, or threaten. The worker will work more efficiently and stay later for themselves and they will do it gladly if it means they will make more money for themselves. I think you believe this is true too, so why don’t you do it? Most contractors don’t know how to assess an appropriate wage per job. “If only I knew how to figure out how much to pay for those 4 rooms of drywall, texture and paint I would gladly go to a per job wage and drop the hourly pay in a heartbeat,” I can anticipate some contractors musing to themselves. Everything you need to know to lock in 50% profit on your labor and material charges and enable your workers to earn $30 an hour per job is available to you right inside Xactimate just waiting for you to uncover it and apply it. NEVER EVER pay hourly again – pay by the job each and every time and you will see your job performance surge and profits soar.

Reference: 6 Month Coaching Plan – The Profit Maker - Make More Money Than Ever Before Managing Your Business Like a Pro! You can subscribe and receive our blogs in your email inbox at - scroll to bottom of the page.