Painting Profits: How Performance Pay Can Transform Your Business

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I'm really focused on the idea if I give your painter your painter's budget of 100 hours and they beat the hours , let's say they get it down to 80 hours now they've made a potential kind of bonus of 20 hours that you can kind of split with the workers and also redistribute them . I'm really focused on creating alignment with companies and hourly workers .

So I'm super excited to dig into that . Before we get into that , could you tell me a little bit about your background ? Where did you come up with this idea and , kind of where did you get your start from ?

be . I eventually sold that business and moved into multi-family painting and renovations and that business was scaling really quite a bit . I went from like 15 employees to 150 employees and I always thought that the hourly pay market system was just broken .

As a contractor I get paid by the job , then I have to turn around and pay people by the hour and I just felt like that incentive that there's just a misalignment there so there had to be a better way . So I used to do like a very . I learned from a painting company I used to work for early in my career .

They had like an incentive program so I took whatever I learned at that current job and he did it on a very janky software .

But I implemented that similar system in my company but I built software to kind of reinforce that thesis , like if I can take a budget and present it to my workers , they'll stop thinking about how many hours I can work on a given week or a given day and they'll start more focused on like what can I get done ?

And that creates a win-win environment for the worker and for the company right , so they can share in the profits . The single most impactful thing that I did in my business is increase worker engagement because it has a trickle down effect . If my workers are more engaged , they're communicating better . Their teamwork is up right .

If they're much more productive and they're more engaged , then I'm spending less on management per dollar . My OPEX expenses are down right . So it's like it's such a vital thing to get alignment from your workforce . And once I've nailed that in my own company , I was like you know what ?

There are a lot of other companies that can use this type of software because it didn't exist in the marketplace . So then I took Prodiv and I made it into software company and now we have thousands and thousands of workers all over the country using it .

So that's like you know right now , like just any way to give them disposable income is going to make a dramatic impact . But as contractors we don't just want to take that from profit , right ?

So why don't you figure out a take disposal , give them disposable income by getting them to change their behavior and come and the lift comes from their ability to take more ownership on the job .

And it starts with the incentive , right . I do want to point out , like this is , you know , produce a great tool and like in pay performance , a great tool . You know , to kind of start an incentive . But it also , like it opens the idea of , like , how do I improve my culture ?

Right , because it has to be in parallel to communication and competition and reinforcing , you know , recognition and accountability . Right , and that's , that is the most powerful thing , that what implementing a paper performance solution ? It's about improving the culture of the business more than anything .

So for us , you know we we implemented , we help companies integrate to their existing software . So we integrate with all these different time and attendant solutions , whether it be QuickBooks time or Java . We have about 12 right now . We're adding about two to three a month and so integrating directly , and we also have a file import as well .

So we want to keep them doing what they're doing , right . And the second thing is like not changing their wage , right , that's important . Like don't make it , don't make it , don't create .

You know there should be no reason they won't buy in , right , and saying that , hey , we're not going to change the wage , all we're going to do is , if you beat the budgets , now you have this opportunity to earn a bonus , right . So keep it really really simple , nothing too complicated . It should be very obvious . That's that's one .

Number two is is start communicating now about you know , like the budgets , talk about like what's going on . There should be a weekly meeting or a touch point with the team , with the crew around , like the overall performance .

So if you're doing that now , even before you start implementing , the pay performance is only going to add and benefit you , because you're already talking about the budget , you're already talking about debrief . Now they're going to be incentivized to communicate with in a weekly meeting and a touch point . I think those are some of the most you know .

By having some kind of touch point at weekly meeting , integrating with your existing software and then keeping it really like basic . I think that's the easiest way to kind of get this off the ground fairly quickly .

I did a podcast with John Bryant , the CEO of paint scout , which we talked about in depth about that . So if you're listening and you don't know what production rates are , definitely listen to that .

So get those production rates to generate the work order that have the budgeted hours and start , like , like you just said , david , start communicating with your team about that . You know each week . And then the other thing you said was make it easy . So not changing . You know most folks in the painting space for our track , hourly tracking .

They're using QuickBooks , time and clock shark and busy , busy which all those time trackers , yeah , integrate with ProTiv that that plug right in for the incentive program and then so you're not really changing their workflow , you're just kind of making it easy to implement . They're just getting an opportunity to make that bonus . So that's exactly .

So can you go through some of the features of how ProTiv actually works , because I think a lot of folks they may be looked at performance pay in the past or that maybe they've tried it or they're doing it now .

They often I've seen folks use spreadsheets which you know , have the formulas kind of plugged in there on and they're tracking the job costing for each project , which it can work . It's just it has some limitations . Can you go through why this is different than something like a spreadsheet ?

So the budget could be created by the number of hours on the project or a percentage of the contract price . Let's say you want to say 30% of every dollar becomes the budget in ProDip , so automatically it gets synced up right there .

And then , on top of that , if you're using QuickBooks Time , as your workers are clocking into those job IDs , right , we then pair

that job ID with the job ID that's coming in from PaintScout , right , and by doing that we're merging the budget and the time to now allow us to see how they're performing automatically . And then , every day , your workers are given a text notified on all the jobs they worked on the previous day and how many hours they have remaining on each budget .

Right , by providing some kind of notice , they can then every day have a scoreboard to really see how they're performing and what do they need to pivot to if they're slightly going over budget or they're going over a budget on certain jobs . They have that kind of notice right away From there . We have an app that they can access all the data .

Right , I think , a really good program . When we think about a good incentive program , it comes down to a couple key features . Number one it has to be really simple . That we discuss , right . So , on the app you're going to be able to see like this is my budget , this is how many hours we've already consumed on the budget , this is how much is left .

Right , you can explain that in 20 seconds and 90% of employees are going to get it . The second piece that's super important is transparency , and this is actually how using spreadsheets really fails , because workers want to believe in the numbers . They need to believe it .

They don't trust in the numbers they won't buy in right , but by having a software that's on their phone , they can physically see how much money they made , how much money they have coming on , how much is over budget , how much is not . It creates that buy-in .

And then the next piece of it for us another feature is quality control right , so you're going to be able to kind of manage what jobs get approved when they're done right or when you get paid by the customer and that is actually what generates the bonus . Okay , and all those bonuses sit on a statement .

So every , let's say , semi-monthly or monthly , they get to see which jobs they earned bonus and which jobs they didn't . We have various different options as well . To make it even simpler for you guys , for our customers , the thing we have is the ability to actually merge over budget jobs and bonus jobs .

So if you had 10 jobs and seven of them actually made profit and three of them didn't I'm sorry bonus , we're able to show that on the statement to offset it from those jobs . So they take the wins and the losses , if you want . Okay , we also have a way . Let's say you pay out the bonus 100% and then a month later there's a callback .

We're able to track the cost on that job and then roll that callback cost to the next statement to kind of pay back from future bonuses . Okay . And so when we talk about good bonus program , we have making it simple , transparent , right ? Is number two . And number three is frequency . Okay , frequency , paying them in a cadence , they mean something .

If you're paying bonuses every quarter , every year , they can't connect to that job and you're not going to get the level of engagement that you want . Right ? And the last piece is super important it has to be a win-win for everybody , right ? If you're paying out a bunch of bonuses and then you're not seeing any results , right ?

You're not seeing an increase in your bottom line , increased production rates , then what's the point ? Right ? And vice versa , if they're really pulling , pushing themselves and they're changing the behavior but they're not actually getting rewarded , guess what ? They're going to stop doing it . Right , it has to be a win-win to a successful pay performance program .

Like you said , if you're using PayneScout in , like QuipLux Time or Clock Shark or Busy , busy , whatever you connect your PayneScout to Protiv , it's going to pull in your budget hours and then when they start logging their time in QuipLux Time or Busy , busy , clock Shark , whatever you connect that to Protiv , that will link up the work order in the budget hours

and the actual hours that they're clocking against , and so that right there , that takes out a lot of administrative hassle with tracking and so if you've ever run a performance-based system trying to do in a spreadsheet , it can be kind of crazy . So that one thing right there . That's really awesome and amazing . Just to make things so much more simple .

But if it's just pulling in the one job , we have a very different ways to do that to kind of make it a seamless connection .

You know , what do they need to hit to , you know , to get a certain hourly rate right ? That's something they can just check on on their phone at any point in time , exactly .

in this product , you're able to hide people's wages . They can see only their stuff , but they can see overall how the overall budget is performing , but they see on their level . They could say , hey , I'm making $25 an hour and now , with this bonus , I'm now making $29 an hour . Right , and how that projects for the future , you know , which is key .

So now you have a tool that would say , like you know , it's cost them money , right to , you know , do poor work . Right , because contractors are always looking at it this way . You know , when I was running my construction company , it's like how do I get my workers to think that my budgets is their money ? If you can do that , you're winning .

But you already pay them . You know all the bonus out for that . So it sounds like you have some sort of recapture bonus . You can recapture that bonus on their next payout .

We've seen painting companies , you know , reduce their overall kind of net like , increase their overall net profit between , you know , four and seven percent . You know I've had companies that you know 120 days went from 40 , you know , went from , you know , going over budget on 42 percent of all their projects down to 8 percent .

Right , you know we , on average , right now , our workers are seeing about an 18% increase in their pay . So not only are companies making more money but on top of that also , you know , workers are driving , you know , making a lot more money . Right , and how the and that impact has a trickle down effect on recruiting .

Right , on culture , you know it's harder for people to leave when they're making a lot more money . Right , your talent pool . So there's some great things when you really tap into getting the workers just to care more and be more engaged .

And you know , a painting business is owned by a single owner , that's a 70,000 . You made the $70,000 more this year . You know new discretionary earnings , so that's , that's huge .

more efficiently , you know , if you're you're back filled with jobs , that means you can do 25% more revenue . You know which some of my companies they're seasonal , they have seen a you know with they have hard time finding labor in their particular markets . It you know they just care about the revenue .

They're able to increase the revenue by 15% in a given year . That is super impactful to their bottom line ?

You're going to diagnose any issues you might face . Right , because what ? What pay for performance does ? It shines a light on the business and any , any business problems that you might have . They're going to be more prevalent , right , because now your workers are going to say something .

For example , if you have a logistics issue that you never get the work , the materials on time there and the workers are sitting around , sometimes guess what ? Prior , maybe the workers didn't say anything because they're getting paid by the annuler , there was just no incentive . But now that they're going to their pockets are going to be affected .

They're going to say , hey , I can't beat these budgets because the manager never has the materials here , like I never have the right equipment , I never . So now it's like whoa , I have to make they put more pressure on the organization If your salespeople are not writing clear scopes . Guess what ?

You know the workers are going to say something because , like , how are they going to do if there's like like , change orders that are ? You know it's like the , the , the , like your particular salesperson is constantly over budget ? You know it's constantly underbidding jobs and not clear . Guess what Workers are going to say something ?

Right , but you have to be committed to kind of attacking those problems head on and communicating with the team and collaborating right . And if you take that approach , you take that approach . You , you know some pick it up slower than others . It always works right . You might have in certain people that aren't in it .

You're going to have to make decisions that they need to be let go . You know they they are not . If they're , if you you want to be an organization of , of excellence and performance , you know you have to make that decision . And I think , hey , if you take that step , it makes such a drastic impact that it outweighs the time committed to this .

Well , we , you know , is so minuscule compared to kind of the , the , the opportunity of , of improvement of your business and the profit and and just the culture makes your , you know , as a contractor , you know if your people care more . That means you're going to have a lot more time on your hands . You're not to babysit people , right ?

And it's just , it's , it's impacted . So yeah , and it's down . Look , the software will make it easier . I can implement this in 30 minutes with you . You know it's a super simple concept and sexually just , it's your ability to kind of want to put time here and make it a priority .

Once you start with one crew , just make sure that that one crew is on it , and then that actually really kind of cool , because if they are making bonuses , what you want is it's almost like it's like advertisement to the rest of the organization . Oh wow , I want to be part of that .

I want to be part of that , and then , once you get that kind of like talk and communication , you've won , because all they're saying is like boss , I want to be part of a program that allows me to beat your budgets , you know , and that's super powerful .

It's also good because the state governments and federal governments are looking at the subcontractor model coming under more scrutiny .

So if you're thinking of switching over to the employee model , this is a great platform to have the same mentality of paying subs , because usually subs get paid a flat rate and this is a way to do the same thing in compliance with paying people properly through payroll . So it's kind of a good trade-off there . Totally Awesome .

Any parting thoughts on performance payroll or anything that we haven't covered so far ?

And I think that inlining

incentives is such a valuable thing for the organization , yeah , Awesome .

Otherwise , we will see you next week Awesome .