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Piecework - does it pay?
1 Feb, 2007 By: Charles Simon Landscape ManagementWould you like to increase productivity by 30%? Would you like your workers to make smarter decisions? How about controlling labor costs at the same time?
A piecework pay system may be the answer. Piecework pay is also called standard hour pay, incentive pay, variable pay, pay for results or pay for performance. Regardless of its name, though, it's based on work completed instead of actual hours worked.
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A standard amount of time is set to complete a specific job, and the employee is paid that set time — even if the work is completed in less time. For example, auto repair shops might set the standard time for a brake job on an F-350 at 1.5 hours. If the mechanic completes the work in less time, he still gets 1.5 hours of pay. If it takes more time, the mechanic is paid the normal hourly rate for the time spent.
Using a piecework pay system for landscaping is straightforward. You charge a customer 50 minutes in labor to mow, trim and blow a property. You pay the workers 50 minutes even if they finish early. It's possible for a worker to complete 40 hours of billable time in 35. The worker still gets 40 hours of pay even though he actually worked 35.
The workers are happy because they get to go home early, but still get a full 40-hour paycheck. Employers are happy because the work was completed efficiently without paying overtime.
Real-world results
Here's what happened when we tried it:
It was our practice to send three-man crews out on many days. The drivers would say they could not complete the work without the extra help. Once the new system was in place and they had to split the pay with the third worker, they decided they didn't want any extra help. Two-man crews ruled.
We were amazed by how quickly the work was completed. One crew achieved savings of 30%, another about 25% and the rest between 5% and 10%.
We knew we had some slow workers. Now drivers would not accept these men on their crews. We had to let to workers go because no crew wanted them. Our efficiency improved dramatically.
Drawbacks, too
It did not take long, however, for the complaints to start coming in. "Your driver cut me off," complained one caller. "Why aren't they mowing my whole yard?" asked a customer. "Stop racing your mowers," demanded another.
We found our best workers worked a little faster than normal and did a good job as always, no matter what the pay system. Other workers, though, were a little too highly motivated. They finished quickly by mowing at the highest speed, cut only areas that really needed it, skipped string trimming and raced back to the shop.
Our solution was to send the crew back to a job when we received a complaint. They didn't get any billable time credits for the return visit. If they messed up, they had to go back on their time. Unfortunately, many customers either called days later or didn't call at all. In the end, quality issues cost us four good customers.
We found out later that some of the workers believed their piecework pay rate would be cut if they mowed too many lawns in a day. Others were afraid they would be fired if they were not as fast as the best crews. One driver believed we were trying to get more than a fair day's work and that we were just trying to speed up production.
Bad feelings arise
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