Profitability and Morale

If you own or run a business right now you know from experience: there is a worker shortage. Finding and retaining quality employees may be harder now than ever before. The cost of hourly pay has risen out of necessity to entice people into the workforce, and the restoration space has followed suit. In a Washington Post story, business owners have looked at raising the hourly wages for new hires in an effort to attract applicants, and it worked. However, it hasn’t erased the other labor issues that have been plaguing these businesses prior to the global economic crisis or the onset of the worker shortage, such as the quality of work delivered or increasing labor costs. (Rosenberg, 2021) Despite raising hourly wages, you may have workers who go through the motions and have a lack of care on the job.

Employers are so concerned with having manpower to keep the business running right now that quality may be overlooked. This is a huge problem for a service industry job such as water damage restoration.

The success of your water damage restoration business is dependent on the quality of work your production staff puts out and the feeling the water damage victim is left with after the fact. As you know, most of these water-damage victims have never dealt with water damage before and often don’t know what next steps they should take when they come across the problem. No matter the cause, there are significant impacts resulting from water damage in a building, both structurally and health-wise, which should be addressed. In addition, water damage can impact property values; the effects are more drastic than it appears initially. It can be extremely overwhelming.

This is when the service turns into customer service. Your first responder must have empathy and act with urgency all while providing a calm and professional atmosphere. That’s a lot of responsibility for an hourly employee who may not feel the immediate effects of poor performance and customer service. You want the job to matter to the employee and hourly pay may not motivate them financially enough to give their best effort. However, one way to financially motivate your production employee is to offer commission-based pay. According to the Corporate Finance Institute, “highly talented professionals in sales and marketing get more out of commission-based pay since their income relies on how hard they work.” (Corporate Finance Institute, 2022) Your first responder is usually the one closing the sale before work is able to begin; incentivizing them to provide excellent service by offering commission-based pay will help drive quality work.

This financial motivation must start with the job ad, be carried through the interview process, training and finally through the job. Capture financially motivated workers by talking about earning potential in the hiring ad versus an hourly wage. During the interview, dive into their aspirations, are they looking to punch the clock or are they looking for a career with higher earning potential? During training, discuss how to ethically maximize line items and perform the job at peak level. On the job, ensure they utilize the training and act efficiently though systems. Time is money.

The quicker they complete the job, the more jobs they can take, which equates to more money in their pocket, and yours. You may then wonder if they complete jobs quicker might the quality on the job diminish? The short answer is yes, but the way to prevent this from happening is to have systems in place. If you systemize the job, there is less room for error and more room for efficiency. Inc. Magazine has provided a detailed list on how to improve and maintain quality in performance among employees. (Greenblatt, 2014) You can use it as a guideline, but the essential idea is to make sure you have quality management systems in place at every stage of production or work. It also makes it easier to track down where your employees have stumbled in terms of quality so you can identify specific areas to improve on, in case you see a decline in performance and quality. You will start to see the production employee is invested in the job if they have a financial gain and a system to keep them on track and most efficient.

If you are helping your employee attain their financial goals, you will see their morale improve, and a happier, healthier employee is more likely to be productive. This will no longer be an hourly job but rather a career with exponential earning potential and a source of pride. Not only is your employee benefiting financially, but you would also. A commission-based pay structure motivates your employee to complete more jobs with a higher job average. The more jobs they do, the more they earn. The higher the job average, the more they earn. It is advantageous to them because employees can control how much they make rather than just clocking in time to qualify for minimum wage. As a result, you also benefit financially.

The commission-based pay structure can increase your profitability. Effectively, your production staff is already working on commission, you just may not have control of it. Look at your total production payroll and compare that to the gross revenue to get your baseline. If you are aware of what it currently is, you can evaluate how much it can be improved upon. If you pay on a commission-based structure you can better control that payroll percentage by implementing a number that makes sense for your company. We have seen this with our sister company, Power Dry. They were able to reduce their overall production payroll by 30% when they switched to commission-based pay, while their production staff made more money than before. This pay structure also enables your company to be more efficient and effective with less production staff at a higher pay, and they are more satisfied.

Additionally, this type of pay structure exposes the lower producing production staff. This either propels them to produce more or allows for changes to be made. The Corporate Finance Institute states, “As for employers, compensating employees based on commission enables them to manage their payroll expenses. Since the amount they give their employees depends on the sales or income they generate, employers can keep costs down, particularly for employees who do not perform well. It’s also a great way to develop a workforce that is proactive and motivated.” (Corporate Finance Institute, 2022)

In summary, systemize the job for better efficiency while financially motivating your production staff. This will boost morale while increasing profitability within the company. This higher morale will drive more care and empathy on the job because your production staff has a financial gain from providing quality work.