November 12, 2024
People talk about culture initiatives. Morning meetings. Training programs. Motivational speakers. I’ve done all of it. I believed in all of it. And I can tell you from direct experience that none of it moved the needle the way a single pay plan change did at Lee’s Air.
The year before we made the change, we had 16 installation crews in Fresno, California. We changed the installer pay plan. The following year, we doubled revenue and dropped to 10 crews.
I want to make sure that registers. More revenue. Fewer crews. The productivity gain was so significant that we needed 37 percent fewer teams to produce twice the output.
Jobs that used to take two days finished in one. Large installs with multiple systems and full ductwork that were taking four or five days started coming in at two or three. Our people went from earning $35 an hour — which was already a high rate in Fresno around 2021 — to $65 to $85 an hour almost immediately. And our gross margin actually went up.
I was shocked. I had spent years running morning huddles and pushing training and trying to get more out of my install teams. All of that had some effect. But nothing, not one thing I had ever done, came close to what happened when we restructured how people got paid.
We used a flex pay plan — a model developed by Ian from MyHRGuy.com — that monitored installer production each week and adjusted their hourly rate for the following week based on performance. We modified it internally to fit our operation, but the core concept was the same: your pay next week reflects how you performed this week.
Rolling it out required nerve. Anytime you touch someone’s pay structure, there’s anxiety. We started with our top performers. We showed them the plan, tracked their numbers for a few weeks, and told them we’d pay them whichever was higher — their old hourly rate or the new performance rate. It didn’t take long. Once they saw their first performance check, they never wanted to go back.
Those top performers were respected in the shop. When their peers saw what was happening, most of them wanted in. The ones who didn’t want to transition to a performance-based model — well, they probably shouldn’t have been on the team anyway.
I won’t pretend it was painless. Some people quit. Some people were upset. When you shift from a culture where effort is optional to one where performance is measured and rewarded, there’s always turbulence. People who had been comfortable being average in a flat-pay environment suddenly had to decide if they were willing to perform for a real reward.
But here’s what I want every contractor to hear: the pain of that transition is the sound of under-performers self-selecting out and high-performers finally getting what they deserve. Your best people don’t want to work next to someone making the same hourly rate for half the output. A performance-based plan doesn’t just change productivity — it changes who stays and who goes. And that change, as uncomfortable as it is, is worth every bit of the turbulence.
I wish I had done it earlier. Years earlier. The gap between the performance we got from our teams before and after that plan change represents millions of dollars in revenue I left on the table. If you’re still running flat hourly pay for your installation crews, I am asking you to reconsider. The morning meetings aren’t going to get you there. The right pay plan will.