Not to steal a idea of Reno, But a question comes to mind.

How many of you pay your technicians, or electricians bonuses or commissions on what they sell?

I have heard this pratice is ongoing, and seems unethical to me. Is seems some guys, rather than correct or fix a given problem, try to sell customers on big upgrades or extra services they don't need.

What do you folks think of this?


Dnk.....

Very good point, D. Anyone out there have a bonus/ commission plan, please share with us both the details of how it is applied, as well as feedback as to how it works out.

I was on a comission plan before I went out on my own. It was 1% of my gross income from jobs I did that month......some jobs I sold myself but most were already setup quoted price.

The commision was in addition to my regular check also.

In my case the commision was based more on production than on what I sold. It gave employees the extra incentive to get the job done as quickly as possible, there was also clauses that made sure the job passed all inspections and was actually profitable.

For us it worked out, I averaged $40,000/month in jobs and I got an extra $400/month average, I made sure my helper was taken care of also... lunch bought for him everyday etc. as they say "everything rolls down hill" that applies to good and bad

Now to what you guys are saying, I agree, I don't think this should apply to people actually selling the job, I mean that would make us like a car salesman selling the undercoating

I used to manage very large projects for a big time Dept. of Defense contractor. I got big bonus's for negotiations of change orders that exceeded a set amount. My hit was 10% of any CO that I exceeded the wished for amount the company was after. Once I got 60 thousand above the settle price.

I don't offer a comission plan but certainly would if my guys were bringing in $2,000 per day each ($40,000 per month).

What type of work were you doing Rich? Do you think your output would have been significantly less if you did't have that $400 incentive. Just curious.

Pat

Where I work we have an incentive program.

It is a fairly complicated formula to distribute profits from each job. I have done well with it.

I do not find anything unethical about trying to get more work from a customer.

Lying to a customer to get more work is unethical, but simply pointing out things we could do for them is part of my job.

I did Commercial and residential service work with that company and is what my company does now also. I'm not sure how prices are in different areas but an example of a typical day for me was a Service upgrade and interior breaker panel change.

A lot of houses down here have old 100 amp services outside and fuse boxes inside the house, the average price for this work was anywhere from $2300 - $3000. We would do this in a 8 hour day but keep in mind this is with a really good helper that can do things on his own without any problems and little supervision.

Another example would be a breaker panel change out in the morning...get done by about 1pm and then a do a couple of small service calls (ballast change outs, outlet added for an office etc..) average breaker panel change here is around $1100 and the service calls were billed at $99 for first hour plus $75 for every hour after that and materials plus $50/hour for the helper.

To answer your question about the output being less if there wasn't an incentive, the answer is yes. Those service upgrades especially are normally a 1 1/2 day job and without a real reason to kill myself getting it done I wouldn't have. I also think you have the right kind of people on the incentive plan to begin with. I don't think it will motivate a person who is not self motivated to begin with.

Another one of the things they had set in place was that if a journeyman couldn't produce $4000/week he wasn't eligible for the incentive plan. The type of work we had and the volume of it, it would be pretty hard to not make that in a week unless there was a problem with that electrician

Let me give you a real example, from two days ago.

A home with circa-1940 service suddenly lost power to one side of the fuse box. The customer was planning to do a service change this fall- but wouldn't really be able to afford one today.

I get the old service apart, and find that one of the clips on the main fuse holder was ever so slightly bent, and wasn't making contact with the buss. No signs of overheating or arcing....turns out the had just done some remodeling, and pulled the 'main.' Probably got dropped, or something like that.

Now I could have done the service change...the customer had already been "sold"...but would that have been ethical, when the problem was fixed in fifteen minutes?

No Reno it would not of been.

Honesty is what keeps customers coming back.


Would you like an AC guy to charge you for a whole condensor if a contact was bad?

Would you call on him again if you found out?


What if this was a TV news setup, and you just been taped BSing this homeowner?


Dnk.....

I don't think it would necessarily be unethical had you changed the service. I think when it comes to ethics it is a matter of intent and whats truly in your heart that is the issue. I've never taken an ethics class or even looked up the term in the dictionary so I don't know if I'm adhearing to the proper meaning and if it would differ from making a moral choice or a distiction between what is right and wrong (and then you have to ask yourself "right or wrong in the eyes of whom?")

But had you changed the service and done it for the right reasons, people could call you a con or cheat, but it wouldn't necessarily make it so. What if you trully didn't trust the bend would restore the contact to the proper tension as it had when it was listed. That would come down to a difference of opinion or expertise, not an issue of morality .The guy said he was going to change it soon anyway, why would it be wrong to push his schedule?

But had you thought to yourself "ooooh, I could get this working for him now, but my needs are more important, and I got him where I want him" then in my mind, wrong. I believe it is the intent to do evil that makes it wrong, or the blantant disregard for what actually might be good is also evil. That's why these are important things to think about. I personally belive it is just as evil to intentionally do wrong as it is to say to oneself "I don't know and I don't care to make the effort to find out."

Great points Jps1006.

Well stated....


Dnk.......

"Honesty is what keeps customers coming back."

That's so true. Too bad there are way too many dishonest electricians out there doing work that doesn't necessarily need to be done. Honesty is always the best policy.

I can't think of anyone in this area that's doing electrical work that doesn't need to be done. I'm not even sure what would qualify in that regard.

I've installed 200-amp services where a 100-amp would have been adequate (but the homeowner insisted on 200-amp). I've installed generator wiring that has never been used (homeowner wanted). I've installed dozens of recessed lights in areas that could have been served by several (homeowner wanted).

I can't think of any home I've been in that was so overwired that I suspected a greedy electrical contractor.

I can think of hundreds of homes that were under-wired, cut-corner, or hack-job.

Dave

Ive worked in the past for incentive type electrical service companies. Ethics was never a question. And if your sales ethics was in question they (My Boss) would call me to clarify my invoices.(and he should)

It is a fantastic system to fairly compensate employees. The smartest and hardest working employess get the most rewards for their efforts.Also most incentive based companies paid the highest wages and benefits because their employees were efficent which made the company profitablable.

That is why Ive created ethical incentives in my company today.

Zaney

[This message has been edited by Zaney (edited 08-02-2005).]

I don't know how many of you remmember this, I like to call this the "Sears syndrome"

What is that Dnk?

Years ago, I can't remmember excatly what year, but anyway, Sears had, and still do, have automotive repair centers. They were apparently paying their technicians a commision on top of their salary, based upon what else they could sell the customer, other than what the customer needed to fix a given problem. Anyway, the Justice Department got wind of this and investigated.
Sure enough, they got caught, seems the technicians were tought to sell more than needed to increase sales and drive profits up. Those that did got compensated handsomely. Very happy employees it seems, very unhappy customers.

From what I can recall, Sears admitted no guilt, paid a handsome fine, let alone the cost of the class action suit, and had to do away with this pratice because of ethical reasons. The technicians were suppose do diagnose a problem, not line their pockets.


Maybe someone can correct me on this, it has been many years ago.


Just thought if any of you guys that pay your technicians commisions based on sales should know this.


Honesty is always the best policy.

Dnk......

Just a follow-up....

My customer, whose service I was able to restore with a simle repair, has given me the go-ahead to do the service change. Now, without going into details, this will be a rather involved change, and I will be charging about 50% over a "standard" change.

People may know little, but sense much. It is always possible that, had I been thinking $$$$ first, he might have picked up on this, and found someone else.

As it turns out, this guy is well-situated to steer me some serious work. Since he has now shown his willingness to pay his bills, I will be happy to do further business with him.

A movie quote comes to mind: "This could be the beginning of a long relationship." (Casdablanca)

Congrats, next round at the bar on you?


Dnk....

Honesty is the best policy. If you set up a incentive plan you have to set up a check system "in house" to check the honesty of your employees.

Then you have to enforce it with a "no excuse policy". Even if it takes firing your best tech for a unethical sale to a customer.

Zaney



[This message has been edited by Zaney (edited 08-02-2005).]

Sell what they need and don't sell what they don't need.

Come on...... how much do we really "need"?? Pose that question to a starving person in a war torn country and electricity in any form let alone NEC compliant power is probably pretty low on the list.

There is nothing wrong with making suggestions like, "ooh, that fan would be a little more convient with a wall speed control." or "you know, I can lighten this place up a little more with new fluorescents," or "your repair is done, but I couldn't help but notice your AC is improperly fused...."

What I think someone needs, what you think someone needs and what they think they need are probably all different things. It is one thing to be a good salesman. There is nothing wrong with having the skill to articulate your point of view well and sell extras to people. It only gets questionable when your point of view is a lie or you prey on the customer's fear of fire or electrocution to convince someone to do something agaist there will if you really don't think they need it.

I have found through experience that certain things are convienent, and certain things look nice. I have no problem suggesting those things.

Selling an upgrade like 200Amp panel VS 100 is ok. labor is exactly the same but they pay little more to get the 200Amp.

A suggestion on a ceiling fan, new circuit new lighting, GFCI for the appropriate locations are O.K. to sell. But do not screw people by installing a GFCI in an bedroom,by installing a 200Amp service for a 800 sqft condo...

That is all i am saying.

A true sales person will not screw the consumer. But sell what the consumer needs upgrade to the existing condition either cosmeticaly or for safety.

Edward