This lesson is also available as a video. Watch it here!
We spoke to Ellen Rohr, who is a superstar when it comes to growing service businesses. She is the former president of Benjamin Franklin, a plumbing business which, in just two years, she helped grow all the way from 0 to 47 locations, with over $40m in franchise sales. Ellen is now the president of Zoom Drain, franchising the business from 0 to 18 locations so far. Working with so many employees in these businesses has meant Ellen has been able to refine a payment model that is both profitable and incentivises their staff to help grow their business.
In this lesson, we round up Ellen’s take on the common mistakes cleaning business owners are making when it comes to paying their staff, and what you can do instead to use to increase your profitability.
How to Pay your Employees with Ellen Rohr
Common Mistake: The Side Deal
The side deal is when an employee comes to you asking for a raise and you agree, but ask them not to tell anyone else. This will never work out! Employees always ask each other what they earn, so there is no hiding it. You’ll have other employees coming to you asking to be paid the same and create an organisational culture where everyone feels in the dark about how they are paid.
How to Pay your Employees: Be Transparent
Share your organisation chart and with the pay brackets for each role. You could include it in your welcome pack or keep it somewhere central like in a Google Drive. This will eliminate secrecy and ensure employees are paid fairly for the role they complete. A bonus of this is that employees will also be incentivised to aim for the next role up as they can see what remuneration would be. Make sure it’s clear what they need to do to earn that promotion and work with them to help them get there.
Common Mistake: Holiday Bonuses
Bonuses at Christmas or at a certain time of year make very little sense. You are sending a signal that bonuses are a given rather than a reward!
How to Pay your Employees: Sales/Productivity Bonuses
Bonuses should be a reward for good performance. Depending on the roles in your company, establish targets so that your staff can earn either sales or productivity targets. This way, you are incentivising them to take part in the growth of your business. Make sure you communicate changes to annual bonuses way ahead of time so no one feels they are going without.
Common Mistake: Yearly Reviews
Meeting once a year for a pay review does not work. Both you and your employee will be ‘saving up’ topics for this meeting and they will not be dealt with quickly enough to avoid further problems occurring.
How to Pay your Employees: Weekly Check-ins
Meet once a week instead. Create scorecards so that you can discuss your employee’s performance with them each week and give them feedback so that they can either improve or continue as they are. This will keep everyone accountable – including you – and create a team culture where staff feel they have the opportunity to discuss hurdles along their career journey as they arise.
Are you making some of these common mistakes? If so, it’s time to change! Remember that you are not perfect, so you’ll sometimes not be able to hold weekly meetings or fall behind on scorecards. What matters is that the intention is there, as you are as committed to your employee’s growth as the businesses, after all, they come hand in hand.