Is paying piecework feasible for electricians? I think I could solve a lot of my problems by paying by the piece, but paying by the piece might be good for painters, drywallers and door hangers, electrical piecework seems kinda fuzzy.

It seems no 2 electrical tasks are the same, maybe in new houses piecework would be fine, and maybe commercial TI, but all other electrical work seems to be custom, one of a kind....

The Service guys use Flat Rate Books to pay by the piece, the technician knows in advance how many hours he's going to get paid for, so piecework is present in our industry.

I'm very interested in what you guys have to say.

I have heard of several contractors who have used peicework in the past. However, they are not still around, that I know of, so I don't know if it will work for all types of electrical.

However, the HVAC industry uses it and as you mentioned with proper price books or pricing system many aspects of our trade could be done with piece work.

It will be interesting to hear what others have to say.

rr,

check the legalities for 'piecework'. since we are a licensed industry, you can't truly do piecework to an unlicensed worker.

when doing flat rate, you are paying an hourly rate (including all applicable taxes and benefits) sometimes it's as a percentage of the job price, sometimes as a negotiated hourly rate.

but true piecework, with a 1099, won't fly in NJ, unless the worker has a license and insurance of their own.

good luck.

Mahlere, you're confusing piecework with sub contracting. They would still be employees and have taxes withheld, etc.

I found this description of piecework online:

"Piecework, work for which the laborer is paid on the basis of the amount of work done. The system is best adapted to standardized operations in which quantity is preferred to quality. Its advocates maintain that it pays the worker according to his ability. Its opponents argue that it tends to pay the best worker what he would receive on a time basis, while other workers receive less than they would by the hour and that it forces the pace of work. In the United States the 1949 amendment to the Fair Labor Standards Act in effect required that pieceworkers be paid at least the minimum wage."

Here's a very interesting presentation on piecework:

http://www.paypiecework.com/Piecework_files/frame.htm

very ok by me

It does not fit the IRS definition of self employed person, no 1099 is required. An employee paid by the piece is still an employee. As far as the "workers comp problem", my comp premiums are a percentage of what I paid my employee. If I pay him $100, my comp premiums are $14.

I didn't expect the thread to head in this direction, questioning the legality of piecework, it is most definately legal.

The statement that "true" piecework is sub contracting is not true. I defy anyone to provide evidence that supports that statement.

Even the IBEW supports piecework:
http://www.ibewflorida.org/orgnotes/060130_miami349.htm

OK, we've established that it's not against the law to base a workers pay on his productivity, but is it really workable in the electrical industry?

Can remodels and commercial TI jobs be paid by the piece? Or is the work too vague to define clearly?

Anybody here pay by the piece?

"The system is best adapted to standardized operations in which quantity is preferred to quality."

Kind of says it all right there.

What kind of help are you going to get that will accept piece work?

I know I would not be interested in piece work.

Most of these sophisticated service oriented ESI type shops pay piecework. I don't consider their work to be shoddy or their technicians to be substandard.

You asked for opinions.

I quoted info right from your post.

IMO it is ridiculous to think that a person paid per piece will be as careful as a person paid per hour.

I enjoy my work, I want to be craftsman not an assembly line machine.

That said, to each their own, freedom of choice is a great thing.

Bob

rr,

my point was to make sure that you and I were talking about the same thing.

we pay that way. the only way it works is to have the same people on the job from start to finish. essentially they will get a set rate for that job paid out as they progress.

for example, you can pay $20 per outlet or $20 per $100 revenue. If your outlet is $100, you can pay them $10 per outlet the week that they rough, and $10 the week they finish. Or you can add up all the work they produced for a given week and pay them based on that.

The only way to do this on TI or installations is to have set unit prices for everything that is going in. These prices can be particular to that job, but they must be determined and known. If you bid a project per opening, this will give you the unit price you need.

The key is to give the mechanics all the information as to the prices per item. Let them figure out how much they want to make.

Personally, i disagree with Iwire, i'd rather take a job this way (heck as contractors we take every job this way). The way I see hourly rates is that the mechanic and the contractor are going in different directions. The way for the mechanic to make more money is to work slower and get OT. This causes the contractor to make less.

By going with a piecework type setup, the mechanic gets rewarded for getting more done, not by putting in longer hours. This lets the contractor make more money. kind of a win/win.

for service work it's even easier to pay this way.

Bob, I'm an electrical contractor. I contract to do jobs at a fixed price. By definition, I get paid by the piece. Only electrical contractors who do T&M are compensated by the hour.

So you're saying that it's ridiculous to think that I can do a job as well as a contractor doing the same job T&M.

That's an interesting conclusion.

Mahlere, I think I'm going to come up with a piecework program, but put in a safety net for my men, for example, after each day, they can choose either $15 an hour or piecework. This way they are not penalized if I do not estimate the hours correctly.

I might make some tasks strictly hourly, like demo, and other, more repetitive tasks piecework. A hybrid approach.

I'm sitting here watching the "Deadliest Catch" mini-marathon on Discovery Channel.

Do you think those guys would risk their life for an hourly rate?

Do think they could possibly be guaranteed $2000+/day?

I don't, however, by essentially getting paid piecework and busting their hump, they get paid better than alot of contractors.

Before we start with the crab fishing vs. electric arguement. My point is that given the incentive to be rewarded for productivity vs. rewarded for unproductivity, which does the industry better?

Also, when doing any type of piecework pay, quality assurance is huge. You have to monitor your men (or women) and assure that the work is done correctly. Incorrect work will be redone by that particular employee on their own time. That is incredible incentive to do it right the first time.

The currently hourly pay system promotes unproductivity. A guy knows that if he screws something up, he'll get paid more to fix it. If he hurries up and gets done early, what does he get? Sometimes a bonus, usually a not.

Our industry is changing, and it has to.

I used to work at the Post Office. I know all about nonproductivity. I like that Deadliest Catch show, I would hate to be a crab fisherman.

not on payday when they get $30k for 10 days at sea.

No, not at all.

The motivation for the owner doing 'piece work' (as you describe it) to provide a quality product is much higher than the employees.

But keep in mind it is not just my opinion, the quote you posted in this thread said as much.

To each their own.

Bob

Bob, please explain why the EC does good work when paid by the piece on the employee does not. Your logic eludes me.

if i know I'm going to get $40/hr or $1600/week whether I bust my hump or just make it look like i am, what am i going to choose?

if I know that I need some extra money for something, and the only way I'm going to get it is working overtime, what's my incentive to get the job done quickly?

I guess, because I was raised by a contractor, I've never liked the idea of working for a fixed hourly rate. I've never liked the idea of knowing that I am going to only make $X this week, no matter what.

Let me get rewarded, or punished, due to my efforts. If I thrive, reward me. If I slack, reward someone else. Simple as that.

There is however a certian mindset, we've seen it here, a mindset that rejects the notion of being given the opportunity to hustle and make more money, a mindset that actually prefers to be compensated by the hour...

Most people just want to get by and punch a clock and toil away for their hourly wage. Some people approach work with an enthusiasm and recognise that being paid by the hour penalizes them for being productive. The faster they work, the less money they make.

Only a productive, motivated person can see this. Wage slaves will never "get it".

Being compensated by the piece is so threatening, some will declare it "illegal" or make unfounded, disparaging comments about the quality of such work.

On the subject of quality, if an employee knows that he will have to fix problems on his own time, he will be motivated to do the work correctly. There is not a similar motivation for wage slaves.

Many people are have production based pay, truck drivers are paid by the mile, salespeople receive commissions, physicians at HMO's are paid per patient, lawyers get contingency fees, the list goes on and on.

But mention piecework to the average construction worker, and you'll get a bunch of reasons why it won't work. This resistance from the wage slaves convinces me that I'm on the right track!

Whoop! Whoop!

You two have no idea what [i]my[i/] mindset is.

I take pride in the fact I am highly productive. The high hourly wage I am paid is not because I sit on my rear. I am no 'budget burner' The guys under and around me work hard as well.

I have great respect for those of the trade that decide to step up and run their own business it takes guts and confidence along with 24/7 attention to the business.

Along with all the pluses of running your own business comes all the problems and outright gambles that you will have to take.

That is not for me, I am not a gambler, never have been. If I was I might open my own business. I like to know how much I am going to make regardless of the job conditions.


I guess we just are not going to see this the same way.

IMO most people know exactly what I am talking about.

Sorry I seemed to ruffle your feathers.

Bob

Bob, you have not ruffled my feathers. I've asked you several times to support your objections to piecework and you have been unable to do so each and every time.

I'm amused that someone can have such strong opinions but demonstrate a complete inability to explain their opinions. It makes perfect sense to me why you're not an electrical contractor.

Your inability to explain why you feel the way you do is actually very charming...

LOL.

Good luck, I am sure you will be quite pleased with the employees you get.

Bob


[This message has been edited by iwire (edited 04-29-2006).]

LOL? That's your big response to my repeated efforts to get you to explain yourself? LOL? That's it? When confronted with your own evasiveness, you giggle like a school girl and type LOL?

This is a website for electrical contractors, further more, this is the business discusion forum. I'm perplexed as to how a guy with no experience as an electrical contractor and no experience in business can find themselves as the moderator of such a forum.

I simply don't understand. I guess I'll do wht you do when you don't understand:

LOL!

RR,

Let's tone it down a bit please, Isn't everyone entitled to an opinion?

Fair enough. I'm trying to define certain tasks that electricians perform, like a typical residential kitchen remodel. I'm beginning to appreciate the fact that there is little typical about the typical remodel.

Trimming out is another matter, setting finish is the same no matter what kind of job it is. That can easily be pieced out. I love the idea of providing incentives.

When I was an apprentice I got a job cutting in smoke detectors in many large apartment complexes, I think I got $8 for each one, this is 30 years ago, man did I hustle! I made a ton of loot! I never forgot the power of providing incentives.

Finding good help these days is harder than ever, the baby boomers have all retired and people no longer advise their children to persue a career in construction. The smaller pool of talent is on one hand a good thing, fewer contractors persuing a growing market has meant much higher rates. I'm charging twice what I charged 2 years ago!

But the downside is foot dragging, lazy workers who feel they're entitled to a job, I hate carrying these guys. Piecework, if properly and thoughtfully implemented could solve many problems.

I'm still in the thought process however, this is a serious topic.

>>>Isn't everyone entitled to an opinion?<<<<

Depends who you ask Bill, and on what site..

For the record, I know exactly what Bob is conveying...

Romex, Bob is a smart dude and has been here for a long time...just because he doesn't own a business doesn't mean he doesn't know what he is talking about.....
I know plenty of business owners that have no clue what they are doing and they been clueless for a long time......

Dnk...

Dnk! You showed up just in time! I've been fight'n these guys all night and I could use some help!

Well how do all these service shops do it? The big dogs, the ESI and NEXSTAR guys with the fancy trucks and TV ads? They pay piece work, and as far as I know, they turn out a nice product.

Everybody has their stories, little anecdotal tales of bad electrical work, these quiant tales prove nothing. In fact, from a statistical standpoint, most of the terrible work done in this industry is done by hourly employees. Using your logic, we can conclude the paying by the hour is more likely to result in poor workmanship.

As an electrician, why wouldn't I want the ability to earn more for improving my skills, knowledge and tools? To me, it would be far better for the owner of the company to say "Glen, we have allowed 14hrs on this project. If you finish early, you'll still get paid for 14hrs."

I wouldn't cut corners to get the job done faster. I wouldn't want to go back and fix it on my own time.

But I've spent a lot of time in commision sales too, so I may be biased!

The problem starts when a contractor is not bidding the correct number of hours. You can't give an unrealistic number of hours and expect a tradesperson to put up with it for long.

But if it is done correctly, I would love to work under that system.

Just my personal opinion.

"If you finish early, you'll still get paid for 14hrs."

There being the problem, the piece worker wants to finish early, and go to the next job, they will cut every corner they can, to get out of there, not something you want in electrical work.

I'm gonna get tired of asking, but I'll ask one last time, how are these high end service shops able to turn out quality work while paying their technicians a flat rate for each job?

Everybody is so sure that piecework equates to badwork, but everybody has steered clear of my obvious example of the contrary. No one dares answer the question because it would conflict with their lofty opinions on piecework.

Service and Installation are 2 very different fields. What works with one won't necessarily work with the other.
I wouldn't offer piecework to an employee unless I knew him very well. You're tempting the guy to cut corners to make more money at the risk of your contractors license. Employing him as a subcontractor where he is the one held responsible for anything going wrong ( including OH&S issues) is a far better and safer way of doing it.

it's actually easier on installations than service work. on a larger installation, you (or your chosen foreman) can provide better quality inspections than you can on a guy running 4 service type jobs a day.

opinions are fine and dandy, but when they are not based on facts, but rather fly in the face of them, what good are they. if you can't explain your opinions with a reasonable argument, they are useless.
BTW- iwire actually explained his opinion with the reluctance to take a chance reasoning.

there will always be guys who rush through work - whether hourly or piecework. However, if a guy knows that he will be coming back on his own time to fix the screwups....and if he still screws up, what difference will paying him an hourly rate make. he's still gonna be a screwup. it's just gonna lose you more money quicker.

I understand where iwire is coming from. And if someone is adverse to risk taking, that is fine. I think the whole idea behind RR's questioning is that for every one Iwire, there are 10 nowires- or budget burners- so to speak.

this industry is changing. margins are getting tighter (guys are afraid to actually understand their costs and charge accordingly) material prices are more volitile than they have been in a long time.

But the extra work, coupled with the low margins, leads to a plethora of useless workers.

So, the big question- What is the answer?

is it to pay someone OT because he is slow and screws up on regular time? But you can't fire him because you need the body.

Do you put everyone on piecework and give them incentive?

quote"I'm gonna get tired of asking, but I'll ask one last time, how are these high end service shops able to turn out quality work while paying their technicians a flat rate for each job?"

RR, why don't you just join and find out? It seems like you are heading that way anyway. And good for you. And good for them. I would bet you could easily become the next star of Nextstar.

{Off-topic-deleted}



[This message has been edited by Trumpy (edited 05-03-2006).]

I disagree. Service work is much more black or white. You either fixed the thing or you didn't. It's fairly easy for the customer to tell whether you did your job properly or not. You could violate a number of codes on installation work without the customer ever knowing.
I think viewing this from a safety compliance aspect gives the best example of the problems involved. An employee on hourly rate has no incentive to skip safety requirements. An employee doing piecework does. And when an accident happens, who is going to be found guilty - the employer!
And yes one answer to this is supervision, but if I have to spend that much time on supervising piecework than that wipes out any advantage of having guys work on piecework in the first place.
I can only see disadvantages to having employees doing piecework rather than using subcontractors.

RR,

It is also anecdotal to say that high-end service shops turn out quality work.
Which ones do & which ones don't.
It all comes down to pride in workmanship, however, I believe that with piecework, thare will be an incentive to rush through a job to get to the next one, with the natural result being poor quality.

It seems that much sarcasm, hyperbole, and fallacious reasoning is being put forth from those who want to convince others that their own opinions are superior to others.

briselec,

I would suggest the opposite...
I don't think most customers would know whether a switch is grounded, polarity is observed, proper fan boxes are installed,
boxes are over filled , OCPDs are sized properly GFCIs & AFCIs are where needed.
Installations usually require inspections where these things are checked.



[This message has been edited by Redsy (edited 04-30-2006).]

If a guy cuts corners, you fire him, problem solved. Quality control is the job of the business owner, just like it has always been.

Some of the largest framing contractors in California pay piecework. I posted a link where even IBEW electricians are paid by the piece, I'm a former IBEW journeyman electrician and I doubt those guys cut corners.

Nearly all housing tracts and condo/apartment complexes have workers who are paid by the piece. It's not that novel a concept.

I'm going to take baby steps, approach it cautiously. I'm going to start with finish, trimming out is a repetitious task the lends itself to piecework.

I think the only way it would work is if you paid very close attention to QC and you were willing to fire anyone who violated the code or did work not up to your specifications. The business owner would have to have cut and dry rules about what is acceptable and what is not, example: Backstabbing receptacles. Nobody who works in the service department where I work backstab and theres 8 of us.

The business owner would have to pay a high enough rate to get the quality of work they expected. If I'm going to make less money for doing things in a workmanlike manner or more of a workmanlike manner then of course I'm not going to be happy. If your company is the type where you don't worry about what things look like as long as it meets code I think it would work for you.

I don't think the IBEW using piece work proves anything, I've seen hack work done by IBEW Jman.

I've avoided this thread for awhile because I'm not very familiar with the term piecework. I'm guessing that it's what GCs are referring to when they call & ask for a price per outlet. My typical response is..."Is it a back-to-back outlet, or a sump outlet on a dedicated circuit 50 feet from the panel?".

Typically in this area I'd use the term piecework in new residential construction. I avoid this type of work because there's no profit in it. Usually it's low-bid work at code-minimum less a few required outlets, using back-stabs & cheap materials.

My business is residential service. While I use a price book with listed tasks, I also use my 21 years experience in estimating. While some tasks are repetitive, no two jobs are alike in residential service. The task prices need to be adjusted.

In piecework or contracting the incentive is that if you work faster, you make more money. With T&M if you work slower, you make more money. Honesty & character are the balance. With T&M a good worker will keep the speed up. With contracting a good contractor will use good materials & install with care.

Dave

LK

"If you finish early, you'll still get paid for 14hrs."

Is why I purchase better tools, look for time saving devices (such as my own glow rods, ballchain and magnets, and $1000s more on tools that the contractors I've worked for wouldn't buy because they don't see the time savings). I don't want to cut corners, I just want to be paid a reasonable rate for the expertise and equipment that I bring to the table.

Even as an employee of a contracting business, I wind up working T&M. We all know the issues with T&M work faster = less pay. That is really what an hourly employee is.

I admit, I don't like to work harder than I have too. But that doesn't mean I don't pride myself on quality workmanship. I do, however, believe that I should be able to share in the benefits that my entrepreneurial spirit brings to the table for the contractor that I work for.

Glen

Dave I believe in this thread 'piece work' means that the employer pays the employees 'by the piece'.

I have no idea the real numbers used but for example at trim out.

$2.00 per receptacle, $0.25 per plate, $1.00 per high hat trim etc.

In this way the employee has an incentive install as many units as possible in a given time. A motivated worker could make a decent wage. The employer knows they will not be paying for non-productive time.

However if a piece worker runs across problems, say stripped threads on the box or device are they going to slow down and fix it right or just 'make it look done'.

Bob

Rethread with 6-in-1 tap tool: 1 minute
Use sheet metal screw instead: 5 seconds

Wondered where that came from.

IMHO, our industry uses an interesting blend of the methods. Typically, we price "by drop" or "per opening", especially for new construction. This could be considered a type of piecework, from what I understand.

But then we modify the methodology, and, using a "labor rate" for each task that roughly equals "average" time to complete each task, based on hours of work, we assign a certain number of man-hours to the job as a whole.

If we base our bid on 300 man hours to the build, and only have to pay out for 240, we wind up ahead. Conversly, if we have to pay out 320, we take it in the shorts.

I think we can agree on "different strokes for different folks". Let folks believe their method is best.

Just my $0.02.

Not here! I haven't had a job inspected in years.

you mean to tell me that if you pay a guy hourly, you don't have to inspect his work for QC?

I'd love to meet that employee.

If set up properly, the only thing a piecework or incentive program does is give the employee some stake in what they are doing.

For example, you pay a man $45/hr total package. That works out to $1800 for a 40 hr week. If this is service work, that should be no more than 30% of your gross. If it's new construction, it will probably be about 40-45% of your gross.

So for service work, he needs to generate you at least $6000 in gross sales. For installations (at 45%) it needs to be $3275.

So what happens if he only makes you $3000 for a few weeks in a row? your still paying him the same 40 hrs, but he's not earning his keep so to speak.

Now, most contractors have a unit price for everything that we bid. Resi new construction might use a sq ft price, but I'd bet 90% of them also had figures per outlet.

So, it's simple to translate into piecework or incentive work.

Say for example, new resi, you charge $25/outlet. That mechanic needs to rough and finish 131 outlets that week to cover his costs. If it's simply a rough, use a percentage. Say that rough is 50%, finish is 50%. So then he needs to rough in 262 outlets that week and finish 262 outlets the next week.

most larger resi contractors don't even hire electricians, they run assembly lines with the worker doing the same task in every house. Very easy to monitor.

Now if you as a contractor charge $50/outlet. That same worker now needs to do half as much work for the same result.

all this does is set a benchmark for the worker to meet. As an hourly rate mechanic, how many of you really have an idea as to what financially needs to be accomplished each day/week/month?

So how do you know that you are hitting your targets?

like anything else, it can be used for good or evil. when implemented properly it does work and it does work well. if you don't implement it correctly, it can backfire and be a disaster. simple as that.

[This message has been edited by mahlere (edited 05-01-2006).]

now on the flip side-

if the 'going rate' is $25/outlet, and you want to be competetive, so you charge the going rate.

you hire a mechanic who does great work. quality is super. your paying him that same $1800/weej, but he only does 90 outlets in a week. What do you do? Do you cut his pay? Even though he is doing great work? Do you take a loss every week?

Also, if a guy cuts corners because he is doing piecework, what makes you think he will suddenly have integrity if you are paying him hourly?

RR stated right at the start that implementing piecework with new resi work was fine.
My comments have been more concerning all the other jobs we do.


[This message has been edited by briselec (edited 05-01-2006).]

bris,

there are exceptions to every rule. I don't know how long you have been in this industry, but I'm going to go out on a limb and say quite a while. You are used to things being a certain way. Change is not comfortable.

There are exceptions to every rule, and there are ways to make things work well for everyone.

I'd bet that there is a way to come up with a viable incentive pay program for whatever you do.

If you are afraid of change, that's fine, just admit it.

If anything, I'm exactly the opposite. I get bored out of my skull very quickly when I'm not being challenged.

Tiger:

What price book are you referring to for residential service pricing? I am primarily charging T&M for all my service calls, and this is because I am new and do not want to lose money. It would be helpful to explore a flat rate pricing, if for no other reason, to be able to give a figure for a job right from the start.If you can get the name and the author for me I will try to get one.

mahlere, your comment has been bugging me ever since I read it.
In my posts I was trying to voice the opinion that with installation work other than new resi I can see the possibility of being exposed to more risks than normal by having an employee doing piecework, whereas if they are employed as a subcontractor these risks become their responsibilty.
If you have reasons against using subcontractors than I would like to hear them.

I don't see how you could take my posts as meaning I'm against change ??

bris,

no offense was meant. I'm not against using subs, in fact my ultimate business model involves subbing out everything at fixed costs and shifting all the risk to other people.

as for change, i probably overstepped my bounds a little (i tend to do that) but growing up in this industry, i know a lot of old time electricians/contractors. they have been doing things the same way for so long, that they automatically deny that anything can be done differently.

but the way i see it, everything has a fixed price associated with it. When you take on a project to run 100 miles of cable, set 3000 poles and transformers, it's at a fixed price.

my issue is this, why does the customer shift the risk to us (we gave them a fixed price) and yet we can't share the risk (and this is the key) the reward with our employees?

My main point is that a person is who they are. If they are going to rush and cut corners if doing piecework, what makes you think that they are not going to cut corners if you are paying them hourly?

no offense meant, really. good luck

festus:

I've been estimating a long time & use that experience in bidding projects. I created my own sales book by using Craftsman labor rates. I've adjusted these prices by tracking jobs.

Do a search on Dave55 and look for "Flat Rate Pricing - Create your Own Sales Book". If you have any questions after reading that you can email me.

I've been using a sales book for over a year now, but I really use my experience as much as the book. The book is good for simple tasks, my experience for the complex tasks.

Dave