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Thinking about paying drivers a flat rate

Discussion in 'Commercial Snow Removal' started by Plowtoy, Sep 18, 2003.

  1. Plowtoy

    Plowtoy Senior Member
    Messages: 929

    Hi there!
    I am just wondering if anyone has tried to use a flat rate pay scale for there drivers/contracted labor? I am thinking about trying this but would like any input (good or bad) if you have tried this.
    Thanks,
    David C. Kortman
     
  2. Santo

    Santo Banned
    Messages: 255

    Flat rate hour or inch?
     
  3. BRL

    BRL PlowSite.com - Veteran
    Messages: 1,277

    I have payed subs a flat rate for a specific route & it worked out fine for both of us. Might work with drivers as well, kinda like they are salaried employees maybe?
     
  4. wxmn6

    wxmn6 PlowSite.com Addict
    Messages: 1,037

    I would be a little skeptical in paying sub a flat rate for a specific plowing job. It could affect the quality control because the sub know that he is going to get paid no matter how long it take him to do it. So he may be rushing, trying to get the job done faster and get out of place for his other jobs. So the account(s) may not be plowed as well as if they were paid by the hour.

    But one of downside about paying by the hour is if it took them unexpectly longer time to do the job, you would end up paying them more than a flat rate.

    Probably not easy decision to make, but if I were to choose, I probably would go with per hour rate.
     
  5. BWhite

    BWhite Senior Member
    Messages: 496

    Unless you rule with an IRON FIST, flat rate will be a huge quality control concern .
     
  6. nsmilligan

    nsmilligan PlowSite.com Veteran
    Messages: 704

    I started with a flat rate for my drivers last year, that is I pay them a set salary/per week whether it snows or not. It was the best way to get reliable help. Most guys who don't work other jobs here in the winter are on employment insurance, so they get paid by the Government. If they are getting paid by the hour and only work 8 hours in 1 week it comes off their EI, so why work?
    I did pay a bonus last year because in January and Feb we went over 30 days straight, but no one complained, as they only worked about 20 hours in 6 weeks in march and april. This also helps me cost my year, I know exactly what my wage expense will be.

    Bill
     
  7. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I wrote about this the other day from the perspective of the one being contracted. Like I've said we don't use subcontractors in this area but I had a guy ask me if I'd be willing to help him out this winter so I got to thinking about it. Now, I'm thinking of asking for a flat rate per account. For me, this would not be a quality control issue because people see me out there, not him. If I do a halfaxx job, it's me and my truck people associate with it, not him. Also, supposing that I want to do this again (if not, why did I take it in the first place?), why would I do a sloppy job. It would be real easy for him to just not call me back. Again, I lose, not him - he just goes and cleans up my mess and salvages the account by blaming me and telling the homeowner it won't happen again. It seems to me it would less record keeping and easy figuring how much I'm supposed to get paid - no quibbling over what time get paid and what doesn't.

    I just think the advantages of a flat rate far outweigh any disadvantage.
     
  8. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    Variable or fixed. Pros and cons to both. The variable part of it you stand to make more money or loose money depending on how the chips fall and how well you manage your jobs. Fixed costs you have a known profit assuming you manage the quality, and so does the sub.

    One guy I met in Kansas only pays a flat rate for subs for both plowing and salting. They manage the contracts and the jobs while making a known margin. The contractors like it since they know how much they will make and they have the opportunity to make more per hour if they are more productive.

    I think the notion has merit... just don't know if I'd do it (yet).
     
  9. Mike Nelson

    Mike Nelson Senior Member
    Messages: 637

    Just heard of a contractor around me paying a sub $2000. a month for a pickup no matter how much or little it snows. The sub must be available to him at all times.

    Worked out great for the contractor last year, lets see if he comes back this year to him!
     
  10. BRL

    BRL PlowSite.com - Veteran
    Messages: 1,277

    I can only think of one quality issue that ever came up with any of the subs I paid a flat rate to. When it was pointed out, it never happened again after that, and wasn't a big deal. Thinking about that issue, in the cases of the flat rate subs, they were all fellow contractors, so maybe that made them do the work with quality in mind? I'm thinking the quality problems people are posting about might arise from subs that are not contractors possibly, and who may not understand what quality is & why it has to be done a certain way? Also, maybe the subs people are having quality issues with need a little more training? Your agreement should stipulate that if the SRP is not followed, the pay won't follow.

    What Lawn Lad posted here was exactly my experience (except it's not the "only" way I do it, and I managed the contracts):
    "One guy I met in Kansas only pays a flat rate for subs for both plowing and salting. They manage the contracts and the jobs while making a known margin. The contractors like it since they know how much they will make and they have the opportunity to make more per hour if they are more productive. "
    We were all happy.
    payup
     
  11. wyldman

    wyldman Member
    Messages: 3,265

    We pay our drivers a set amount for the winter season.It does include a maximum number of hours for the season,so if they are really busy,they get paid for the extra.They get the money if it snows or not.Guys like to work if they know they are going to make good money.It gives me a fixed cost for the season too.

    I have never had a performance problem yet.Most of the guys want to get done,and go home,so production isn't a problem.They do know that if the job is rushed or unfinshed,and I send a sub to go finish it,they get docked to pay the other sub.Never had a problem yet.
     
  12. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    Chris... what do you do when a sub is a no show?
     
  13. wyldman

    wyldman Member
    Messages: 3,265

    If one of my drivers is a no show,they they get docked whatever it takes to have another driver cover his route.The replacement driver now get paid the extra hours above and beyond his seasonal amount.

    With actual subs using their trucks,it's spelled out ahead of time in the sub agreement,if the don't show,it's $500.00 minimum to cover the cost of another sub to do his route.

    In both cases.the monies are deducted off their next monthly check.

    Most of the guys are very happy with it.They make good guaranteed money for the winter season,and very few fail to show up.I will cut them a little slack sometimes,if they are sick,or have a valid reason.I will not tolerate the ones who just don't show up or call.First time they forfeit the pay.Second time they get shown the door.
     
  14. Plowtoy

    Plowtoy Senior Member
    Messages: 929

    Heres the real problem! I pay a subcontractor with a 6'6" plow on an old s10 less money hr than a subcontractor with a newer truck with a 8'6" plow (they're friends). The guy with the 6'6" thinks he should be making as much as the guy with the 8'6".
    I try to explain to him that it takes him longer to do some lots and will make the differance in pay that way. His response to me is that with a smaller plow he can do my smaller lots easyer and driveways with doing less damage to the lawn (that is true).
    My only concern is last year after we had this talk (i was paying hourly) it started taking him approx. 1/2 longer per lot than what it normally took him.
    This is why I am thinking of the FLAT RATE PER LOT system
    What should I do????
    Thanks!! Dave:confused:
     
  15. PINEISLAND1

    PINEISLAND1 PlowSite.com Veteran
    Messages: 664

    I just can't imagine it being profitable to have subs when you are bidding in the $30 per hour range. You are barely making money at that, and to split any of that with a sub takes all incentive away.

    If you go to a flat rate, then you dont even make extra on the light snows, the little lake effect 3/4 inchers, that take 1/2 the time as a real snow. At least hourly, you make more on those days than your typical snows.

    I just dont know if its worth it....
     
  16. EZSnow

    EZSnow Senior Member
    Messages: 205

    Plowtoy, that sounds like good logic. This way, you will be able to effectvely pay less per hour for the smaller blade, which is correct, since it can clear less snow per hour. It will also reward the operator for being efficient and getting the job done quicker. You also don't have to worry about them cheating on their hours. If the lot is clean, they get paid. If they sneak away to do one of their own accounts that's nearby, you don't pay them for it. If they plow twice, they get paid twice, you bill and earn the margin twice (on per-push accounts)

    Is a small truck valuable in certain situations? yep Can it keep up on a big lot? nope.

    I'm on the other end of this as an occasional sub. The danger in this system is a sloppy plow job. But if you follow Wyldman's suggestion of docking pay for cleanup, it should work pretty well. I take pride that the contractor I sub for doesn't even check my lots anymore- and he sends me to check lots the other guys have done. I know he'll use me if he has something that needs to be done right, right now.

    Sounds like a good system: lot X is worth 30, Y is worth 100 and Z is worth 120... go get 'em boys! The only thing you don't want is them fighting over lots... just make the prices right and they should get the money you want to pay.
     
  17. Pickering snow removal

    Pickering snow removal Senior Member
    Messages: 151

    flat rate

    I agree with many on this subject flat rate is a fair system for both owner and sub. When me and my brother first started out we did alot of sub work we were paid x amount of hours per job which was always more than fair for us and the contractor , has far has quailty issues go gee i wouldnt be were iam at today if i had done a bad job has a matter of fact during our sub days i made sure to always check on my sub jobs to make sure they were done the way the contractor wanted them done and we also would go in and do all the touch up work at these places i agree with Mick my name was on that truck i wasnt gonna do a half butt job to make a long story short after about 4yrs of sub contracting the fellow retired and gave me his cust list which is today why i still do some of the very jobs i subcontracted 15yrs ago.

    We plow a little town 15min from midland i have a very dependable retired fellow that i leave a truck with every year he is respon for the all the accounts there i pay him a flat rate fee if he wants to take his time so be it has long has the jobs are done to spec and on time thats all that matters but i dont get milked for it so its worked for me. In midland all of my drivers get a min rate of pay regardless of how long it takes we average about 8hr shifts i pay them for 10 no matter what if we do go over 10hrs of course i pay them but iam just saying the guys are getting better every year at shaving the route time down which hey if they get it down to 6hrs this year then they can pocket the 4hrs diff good for them i still make money no matter what.