Tech compensation

What is the right amount?

As a young man, my formal education steered me toward the accounting field. While in college, I earned money by selling shoes. After college, I found employment in the managerial arena working for a small business and later a national banking corporation.

The small business managerial position offered no chance for advancement. The banking position offered advancement opportunity but only at the cost of my integrity due to the internal political pressures of corporate businesses.

Being a person who believed in truth and the American dream, my entrepreneurial spirit was pushing me in a different direction which could utilize my past educational and practical experiences with numbers, sales and management. As luck would have it an opportunity to break into the PHC industry arose. PHC techs need to utilize numbers in a logical manner for measuring, calculating, etc. Contractors need numbers, sales and management skills to run a business with hopes of success.

I started as the lowest of lows. But, I knew if I applied my knowledge and capability I could attain the position I was meant to have. As I was working in the shop of the first contractor for whom I was employed. He later retired and shut down his business upon retirement. I finished my training with my second employer. My third and final employer was myself.

The first contractor I worked for gave me some sage advice in the form of a question. He said, “Rich, do you want to be a needed mechanic or a wanted mechanic?” 

He walked away leaving me to ponder the question. I came to the conclusion a needed mechanic was a person who had mechanical aptitude but lacked the integrity, loyalty, motivation and/or attitude needed to be a wanted mechanic who could lift his/her status in the industry while helping the employer attain his/her goals so the employer has reason to keep the wanted mechanic employed. Needed mechanics are only bodies needed for the short-term to perform tasks. 

Wanted mechanics are those who are valuable to the employer’s business future and the consumer’s requests as well as themselves. Years later, I coined the term "star tech" in my contracting business coaching sessions to describe wanted mechanics.

Techs are your partners

Although technicians may not own any portion of your business, they are your partners since a good employer/employee relationship has a mutual goal — the success of your business. 

When choosing to marry someone, you had better pick a person whose goals are similar to yours because divorce is costly and ugly. The same holds true for your choice of technicians. 

Your business goal should be to deliver excellence to your clientele, recovering the cost you incur for the delivery and earning the reward you deserve for the value delivered. The goal of star techs should be to deliver excellence to your clientele so you can pay them in a fashion that allows them to live their lives in a comfortable and content manner. To accomplish this feat your prices and protocols must be set up in a fashion that will allow your team to deliver said excellence to your clientele, proper compensation to your techs and reward to you.

Your techs deal directly with your clientele more often than you do. They are your sales force and the personnel who interact with and perform the tasks for your clients. When deciding on tech compensation you must consider their importance to your business as well as their own contentment.

Keeping techs content

Your cost of living, business operational expenses and your techs’ cost of living are always in a state of flux and increase — making the need for more money an issue which must be addressed. Having enough money to satisfy obligations and foster contentment is an issue you both share. You and your techs want the same thing in life — financial security and the feeling of contentment. 

Determining the amount of any raise can be at best awkward if not addressed in a fashion which is acceptable to you and your employee. Unfortunately, after a certain amount of time goes by, the urge for and process of calculating another raise  rears its ugly, uncomfortable head.
Hire star techs and think out of the box. Develop a system of employee compensation that can address the employee’s need and urge for a raise as well as your financial business obligations. A properly thought out compensation protocol can rid yourself and your employees of the awkwardness that accompanies the conventional raise associated process.

Arriving at the right amount

Traditionally workers have been paid by the hour, by sales commission, or by piecework. By combining these methods you can pay your techs an hourly wage which will give them a steady flow of money to help them survive and an incentive program to allow them the opportunity to flourish. 

Techs talk to each other. When a tech discovers he is earning a lower hourly wage than his fellow techs, animosity will affect his performance. In turn, your business’ ability to deliver excellence to your clientele will diminish with regards to the services that tech performs for your business. And, a cancerous mindset will develop among your employees.

You could always terminate his employment. However, if he was a star tech who gets fired due to a misunderstanding about compensation, you, and your business protocols, are responsible for losing that star tech. 

To avoid this situation you must come to the realization that as techs are more productive, they are more valuable to your business. By paying all techs whose abilities are comparative the same hourly rate, you will avoid the animosity associated with different hourly wages.

To address a tech’s value to your business, each technician’s total compensation, inclusive of hourly wage and incentive bonuses, would then be based on each tech’s productivity. In essence each tech would be responsible for his/her financial compensation from your business. If they don’t earn enough money, their own productivity level would be to blame — not you as long as you have set up a doable and logical compensation procedure.  

In the instance of callbacks, the financial incentive remuneration could be adjusted to reflect the cost your business incurs for the callback. This would give techs a reason to keep their callbacks at the lowest possible level.

My book, Solutions Management Theories & Methods for the Contracting Business, contains a chapter dedicated to the assets you must look for in your search for star techs, and, the evaluation of tech performance so you can be assured that your investment in each tech is yielding dividends. For a copy and/or my help so you can attain your contractor profit advantage regarding this, or any, contracting business matter, give me a call.
Keep in mind, the right amount of tech compensation is the amount that allows you to hire and retain star techs while compensating them in a fashion that allows them to achieve their needs and desires so they will be motivated to help your business grow and successfully satisfy your clientele. 

Richard P. DiToma has been involved in the PHC industry since 1970. He is a contracting business coach/consultant and an active PHC contractor. FOR INFORMATION about the CONTRACTOR PROFIT ADVANTAGE or to contact Richard: call 845-639-5050; e-mail richardditoma@verizon.net; mail to R & G Profit-Ability, Inc. P.O. Box 282, West Nyack, N.Y., 10994.

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