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My employee has been with me for 16 months. By now, I would think he should be running at his full potential. At the beginning of this year, I started to seperate his sales from mine. Year to date, he has averaged $41 in gross sales per hour on the clock. This includes his travel time and clean-up time. With selling protector on every job and charging an ave. of .40 + per sqft, I feel he should be at least 50% higher than this. If anyone out there has numbers to share with me, I would greatly appreciate it. I don’t keep track of my hours so I can’t compare him to me.
We have the numbers, but will take Vicki a bit to put together. It’s information we should all keep so this will be a good exercise for us too.
Does he mix his 101 and clean the van and pads too? Are you giving him the smaller/harder jobs? To be honest, if I had an employee, he/she would get all the work I didn’t want to do myself.
As a single truck operator who does all the work himself I’m probably at around $60 an hour gross including drive times, and I run 3 room specials for $99. Given your higher prices I would think your employee could do $60 an hour in his sleep.
There are a lot of variables to take into consideration. Size of jobs, degree of cleaning necessary, travel time to and from which could include traffic, construction, accidents, etc. Are you paying your employee hourly or percentage? An employee, typically, is not going to be as efficient or as profitable as you the owner will be. I pay my guy percentage and that way he works harder to make more money for himself and me. He doesn’t drag his feet against the clock. Also his drive time is now not work time, so his hours reported are less which means less taxes paid making him/me more profitable.
I think that you really need to break down the numbers to figure it out. I would take the total amount that you pay him for a month. How much it cost in product, cell phone, insurance and any other costs. At that point find out what you are really making in profit. I know that for every employee that we hire my profit margin goes down. But if I only make $2500 more profit per employee a month I am happy. We have four full time employees now. In the beginning when I only had one employee my profit margin was down to about $500 a month, but my quality of life went up. I could do more things and build my business. I ask a lot of my employees, and they give me a lot back.
Brian,
It is difficult to improve what you can’t measure. So you’re taking the first step by analyzing your employee’s invoices.Here is one approach you could consider. Keep in mind that these ideas are based on my previous experience managing people, however, I have not managed employess in this career yet.
You probably should have an initial conversation with your employee to explain that you want to track some items and look for ways to improve your operation and that you will have follow up discussions later.
I would continue reviewing his invoices, however, I would measure and record additional information that may help you see what is happening. Some information worth measuring and/or noting about each job:
Mileage at beginning of day
Arrival time
Actual cleaning start time (may differ from arrival for first time customers as square feet measurements are required on the initial visit)
Finish/depart time
Mileage at departure
Mileage at next arrival
Furniture moving yes/no
# pads used
Invoice amount
Amount per sq. ft. billed
Percentage of favorable comments on the comment cards
Product usage compared to total monthly revenueYou will also need to record the same information on yourself for conparison purposes.
You may already have some or all of this info.
After tracking these items for a while (probably at least a month or two), then you can sit down with your employee and set goals.
With data in hand, set aside a large block of time to meet with your employee for the purpose of setting goals. You will probably want to have a pretty good idea which of your items you want to continue to track and which ones you want to work on improving. You will probably want to compare his stats to his previous stats as well as to your stats.
As you meet with him, keep an open mind. His hourly revenue is lower and probably for obvious reasons, but there may be more to it. Is he having to drive farther between jobs? Is he getting many of the jobs requiring more furniture to be moved? Is he getting more of the smaller jobs (which would obviously drive his average revenue per hour down)? Etc.
Try to have an open discussion and let him participate in setting the goals as well as contribute on how to improve. You need his “buy-in” to have the best chance for success.
Included in your meeting should probably be some sort of incentive, which will equate to dollars for him if goals are met. You may consider a flat percentage of each job as well as a discretionary bonus from you depending on his performance. Perhaps his percentage would increase for any amount over XXX dollars for the month as you will have covered the fixed expenses and be into higher profit revenue if his revenue is high enough. Be sure he understands that.
Consider meeting at the end of each month for three months. You can probably meet quarterly after that. You will get a feel for what time interval is best after a while.
I already alluded to this, but you want to be sure you have a list of what you will walk out of that meeting with as well as what your employee will have. Be sure you have accomplished everything before you end the meeting.
Keep in mind that improvements are frequently made in baby steps. He may eventually generage $60 per hour, however, he may get there in $2 – $3 per hour improvements over a few months.
Brian, I have a request. Could we use your situation as a clinic for us? You’ve already shown your willingness to share info. Would you consider giving us regular updates over the next several weeks/months to let us know how this effort is going for you?
I have managed a lot of people before, but I admit to having concerns about hiring someone. I’ve never managed an employee and sent them to customers’ homes where theft could be an issue. And I never managed them when I owned the business. I know I would like to follow your efforts. Perhaps other operators would too.
I hope this helps you some.
Good luck!
Mike
For those of you that pay your employees a commission, do you have them clean the pads and if so how do you pay them for that?
Gentlemen,
I believe my situation may be a bit unique. Since my employee lives 20 miles closer to my areas than I do, we keep his van at his home. I have set him up with clean-up and laundry facilities. We meet once or twice a week to exchange product, customer reciepts/checks and his pay check. This works very well for us, but the negitive side is I can’t keep track of his hours (he’s paid hourly). I rely heavily on the honor system. My goal is to move my home/operation to a more central location with ample room for both vans and having room for potential growth. Until then, I need to start a fire approx. 3 feet high near the rear of my employee.
I have crunched all numbers related to our operating costs, finding a net profit of $7.25/hr from my employee on non overtime hours and very near break even during overtime hours. His feet are definitly dragging. What I am about to impliment is a daily log sheet, allowing me to more efficiently schedule his jobs and to ensure hours are less likely to be stretched. I will be asking for the departure time from his home, start and end time for each job, travel time inbetween jobs and time spent for daily clean-up and laundry. I will do my best to present this in a positive format to keep him from becoming offended or threatened. I realize a commision type pay scale would be a great solution, but efforts to make the honor system work is a long-term goal as I would like to continue to try and groom my employee into a management position. I need to feel that I can fully trust him!!!
The info and suggestions are great. Keep them coming!
To answer Neils’ question on job difficulty, I schedule jobs to minimize miles for each truck. The conditions should average out.
So what is the consensus on the employee issue? I have just completed the buyout of another operator and have increased my area from 400k to 2million population so I will be hiring an employee and soon.
Hey Ron
Go big or go home! I like it!So at 400k your goal was to be at what dollar volume?
Now at 2 large, how big do you plan on getting? 100k/month?
I have found that if I pay for high performance the employee will police themselves. The pay schedule I use is based on what the guys in DC use. I pay a flat rate per hour. This includes every minute on the job, in the van, washing pads, mixing solution or even washing the van. They are then paid a commision based on the amount they earned the company for the week, divided by the hours. If the employee did 2000 dollars in 40 hours that is 50 dollars an hour and they are paid on that percentage. This is top wages for where I live. About 13.50 per hour. If the employee earned 800 dollars for the week in 40 hours that would only be 20 dollars per hour and they are paid my lowest wages about 8 dollars per hour. Their customer evaluations are also tied into the plan just let me know if you want to see it and I will email you a copy.
Now to really answer the question. I have the most honest hard working employee in the world. I am not able to work him but about 30 hours per week which hurts his average. For the last 6 months he has averaged between 40 and 45 dollars per hour. My basic rate is 35 cents per square foot.
Every quarter I will have a meal with the employee and we do an evaluation. It includes an overall averge earned per hour. It also includes a customer satisfaction report. If everything is in good shape I bonus the employee 1 percent of the gross sales. Good shape is 95 percent customer satisfaction or higher and at least a 40 dollar average per hour. If my employee does this he can earn anywhere from 25 to 35 thousand dollars in the year. I build trust, loyalty, and good faith between us because he knows the more work he does per hour the higher his pay check will be.
Hope this helps,
Jamie
Make sure you set goals for you, your business, and your employee. Make the employee part of the process. Then evaluate quarterly and work on strategies to improve.
You don’t get what you expect you get what you inspect.
I run two vans. I pay my employee $12/hr. He averages about 35 hours per week. On a bad day he’ll do $250 and good day $500-$550. He gets commission for extra sales. I make good money on him.
I think running two vans makes it more profitable. If he works with me, we get about 1/3rd more work done. With 2 vans, we get almost twice as much work done. (I work faster than my employee so he seldom matches my production.)
I think the only way to service 2 million people is another employee to start with (Hopefully you get to running 10 vans!) Pack the schedules to get more work done per day. The added benefit to this is building a customer referral base much faster.
Good luck. It sounds exciting to me.
Brian
I would also like to thank you for sharing this information. I’m not ready for employees yet, but thats the goal!
I agree with the information that Mike shared. I had an opportunity to initiate goal setting in a warehouse I worked at and was amazed at the results. I would be happy to share more detailed information if anyone would like. Much of it is the same as Mike’s response. Keep that communication going, verbal and written.
I had a young man call last week asking if we were hiring. I asked him what his expectations would be and he very matter of factly told me he was looking to make $75,000.00/yr. I had all I could do to keep from telling him, so am I!
Have a great day everybody!
Rick
I’ve often thought about hiring a helper but first I’d like to ask… as a 1 person operation, what is a realistic average anual gross that this type of business should be able to generate before paying that helper lets say 50,000 salary. I know that there are different variables such as how hard do you want to work so thats why I ask “average”
Ed H.
Ed,
I feel a “one truck/one man” operation should be able to generate $100,000 in sales per year with some occasional part time help during peak season and for large commercial jobs. I feel to do that alone, you are working too hard. I hired a full time guy in ’06 shortly after hitting the 100 mark. I payed him only $26,000 last year and he seems to be happy. A third truck will be started in ’09 (or maybe sooner). Hope this helps!
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