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Pay plans

People optimise exactly what you measure.

The 9 pay plan structures used in the commercial trades, what each one actually rewards, what breaks it, and the questions to settle before you put one in writing.

No percentages and no dollar figures on this page, on purpose. A number invented here would end up in a real offer. The shapes are ours; the figures are yours.

How to use this

Read the structure that fits the seat, then read its what breaks it list twice. Every plan on this page works when it is set up well; each one also has a way of quietly paying for something you did not intend, and that is the part that costs money eighteen months later.

Then settle the questions at the bottom of the card before the plan goes in writing. Nearly every pay dispute we hear about in the trades is not an argument about the rate; it is an argument about an edge case nobody agreed in advance.

One legal point worth knowing before you add any bonus to an hourly plan: a bonus the employee was promised for hitting a target generally has to be folded into the regular rate when overtime is calculated. It is in the questions below. Have payroll or counsel check your plan — we are recruiters, not employment lawyers.

Hourly plus overtime

Most field roles, and the right default until you have a reason for something else.

An hourly rate for hours worked, with overtime at time and a half past forty in the week. Everything else on this page is a layer on top of this one, not a replacement for it.

What it pays onPick few, publish them
  • Hours worked, recorded by the person doing the work
What breaks itRead this twice
  • Overtime becomes the plan. When a technician needs sixty hours to make their number, you are paying a premium for fatigue and you will lose them to anyone offering the same money in forty.
  • Rate compression. New hires get market rate, long-tenured people get last year's, and the people who know your customers best are the ones underpaid.
Settle before it goes in writing
  • What the rate is for each step of the ladder, written down, so a raise is a step and not a negotiation
  • Whether drive time, shop time and training time are paid, and at what rate

Hourly plus spiffs

Service technicians, where you want a specific behaviour more often than you are getting it.

A flat amount per qualifying event, paid on the next cheque. Deliberately small and frequent rather than large and annual, because the point is the feedback loop, not the money.

What it pays onPick few, publish them
  • Maintenance agreements sold on a service call
  • Accessories or upgrades quoted and accepted
  • Jobs closed on the first visit with no return trip
  • Photos and readings attached to the ticket
What breaks itRead this twice
  • Spiffing the sale and not the outcome. Pay on an agreement that cancels in month two and you have bought a cancellation, not a customer.
  • Spiffing one thing hard enough that the rest of the job suffers. If accessories pay and diagnostics do not, you will get accessories.
  • Technicians selling things the customer did not need. The spiff caused it, and the review site will say so.
Settle before it goes in writing
  • Which events qualify, in writing, with the edge cases named
  • Whether a spiff is clawed back if the agreement cancels or the job comes back
  • Who adjudicates a disputed spiff, and how fast

Hourly plus a billable or efficiency bonus

Service departments with a reliable flat-rate book and dispatch that can keep a truck loaded.

A bonus tied to billable hours produced against hours paid, usually over a month or a quarter so one bad week does not wipe it out.

What it pays onPick few, publish them
  • Billable hours against paid hours
  • Callback rate as a gate on the bonus
  • Ticket completeness as a gate on the bonus
What breaks itRead this twice
  • Dispatch, not the technician, controls most of this number. Bonus someone for a metric they cannot move and you have taught them the plan is theatre.
  • Gating on nothing. Efficiency without a callback gate pays for speed and bills you for the return visit.
  • Flat-rate book out of date. The plan is only as honest as the times in it.
Settle before it goes in writing
  • The measurement window, and whether a bad month can be carried
  • What the callback and completeness gates are set at
  • Who owns fixing dispatch when the number is dispatch's fault

Lead or foreman premium

Crew leaders and working foremen who are still on the tools but now answer for other people's work.

A premium per hour while leading, or a step increase on promotion. Paid for the responsibility rather than for the title.

What it pays onPick few, publish them
  • Crew size or jobs run
  • Rework on the crew's work
  • Whether the paperwork comes back complete
What breaks itRead this twice
  • The premium is less than the overtime they gave up. A lead who earns less than the technician they supervise will go back to being a technician, and you will have taught the crew what the job is worth.
  • Paying the premium and still measuring them as an individual producer.
Settle before it goes in writing
  • Whether the premium applies on every hour or only on days they are leading
  • What happens to it when the crew is stood down

Salary plus a margin bonus

Service managers, project managers and operations leaders who can actually move the number.

A salary with a bonus against gross margin on the work they control, paid quarterly or annually against figures they can see throughout the period.

What it pays onPick few, publish them
  • Gross margin on their department or projects
  • Revenue against plan
  • A people gate: turnover on their crew, or safety
What breaks itRead this twice
  • A bonus on a number they cannot see until the year closes. If they cannot check the scoreboard, it is not a plan, it is a surprise.
  • Margin bonuses with no people gate. The cheapest way to make a quarter look good is to run short-handed and defer maintenance on both equipment and people.
  • Changing the target mid-year. Do that once and the plan never motivates anyone again.
Settle before it goes in writing
  • Exactly how margin is calculated, including which overheads are in it
  • What happens to the bonus on a job that slips across the year end
  • Whether the gate is a threshold or a multiplier

Base plus commission

Salespeople and estimators whose own effort is the main driver of what gets sold.

A base salary with commission on sold work, usually on margin rather than revenue, and usually paid when the money is collected rather than when the contract is signed.

What it pays onPick few, publish them
  • Gross margin on sold work
  • Collected revenue
  • Accuracy: sold margin against delivered margin
What breaks itRead this twice
  • Commission on revenue instead of margin. You will get volume at any price, and the field will eat the difference.
  • Paying on signature rather than collection. The one deal that never pays is the one that was commissioned fastest.
  • No accuracy measure. An estimator paid on sold margin and never measured on delivered margin will sell optimism.
Settle before it goes in writing
  • When commission is earned and when it is paid, which are different dates
  • Clawback terms if a job cancels or the customer does not pay
  • How house accounts and inbound leads are treated

On-call and shift differentials

Any department carrying a rotation, which is most commercial service departments.

A flat amount for carrying the phone, usually plus a minimum callout payment, and a higher rate for hours actually worked outside normal shifts.

What it pays onPick few, publish them
  • Weeks on rotation
  • Callouts taken
  • Response time, if you have a contractual one
What breaks itRead this twice
  • Paying for the callout but not for carrying the phone. A weekend where nothing happens is still a weekend they could not leave town.
  • A rotation that is not actually shared. One person covering most of it is a resignation with a date on it.
Settle before it goes in writing
  • The minimum paid per callout regardless of how long it takes
  • Whether a night callout shortens the next day

Tenure steps and retention bonuses

Any role where the cost of replacing someone is higher than the cost of keeping them, which in the trades is nearly all of them.

Either a published ladder of rate steps against time and credentials, or a lump sum at an anniversary. The ladder works better, because it is visible before they consider leaving.

What it pays onPick few, publish them
  • Time in seat
  • Credentials earned
  • Scope taken on
What breaks itRead this twice
  • A retention bonus paid after someone has already started looking. By then it reads as a counter-offer and it buys months, not years.
  • Unpublished steps. A ladder nobody can see does not retain anyone; it just pays people who were staying anyway.
Settle before it goes in writing
  • Whether a step is automatic on time or gated on a credential
  • What the top of the ladder is, and what comes after it

Truck, tool and phone allowances

Not a pay plan, but part of the number the candidate compares.

A take-home vehicle, a fuel card, a tool allowance or replacement programme, a phone or a stipend. Often worth more to the candidate than the equivalent in base pay, and usually cheaper to you.

What it pays onPick few, publish them
  • Not measured; it is a condition of the job
What breaks itRead this twice
  • Leaving it out of the offer conversation. Candidates compare base pay because that is what they are told; the offer calculator exists to make the rest visible.
  • A tool programme with no replacement policy. The first time someone replaces a stolen bag out of pocket, every technician hears about it.
Settle before it goes in writing
  • Personal use of the vehicle, in writing
  • Who owns the tools when someone leaves
PRINTABLE WORKSHEET

Where your numbers go.

The worksheet is one sheet per structure with the mechanics on it and blanks for your own figures: the rate, the trigger, the amount, the gate, the measurement window and the clawback. Fill it in with whoever runs payroll, then hand it to counsel before anybody signs anything.

Everything above stays free to read, with no form. The worksheet is the version you can print and write on.

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Questions employers ask

Why are there no percentages or dollar figures on this page?

Because a number invented here would end up in a real offer. The right split depends on your margins, your market, your mix of service and install and what your competitors across town are paying. What we can give you is the shape of each plan and what it quietly rewards. The worksheet is where your own figures go, and the salary guides and offer calculator are where the market data is.

How does a bonus or commission affect overtime pay?

Under the federal Fair Labor Standards Act, a non-discretionary bonus - one the employee was told they would earn by hitting a target - generally has to be included in the regular rate when overtime is calculated for a non-exempt employee, which means the overtime owed changes retroactively for the period the bonus covers. Spiffs, production bonuses and commissions usually fall into this category; a genuinely discretionary year-end gift usually does not. This is the single most commonly missed thing when a contractor bolts a bonus onto an hourly plan. We are recruiters, not employment lawyers, so have your payroll provider or counsel check any plan before it goes into writing, and note that state rules can be stricter than the federal one.

Should the plan be the same for everyone in a role?

Within a role, yes, and published. The moment two technicians on the same truck are on different plans, the plan stops being an incentive and becomes a grievance. Differences belong in the rate or the step, which are visible and earnable, not in the structure.

How often should we change a pay plan?

Rarely, and never mid-period. Rates can move annually. Structures should hold for years, because the whole value of a plan is that people trust it will still be there when the payout is due. If a structure is producing the wrong behaviour, fix it at a clean period boundary and explain why.

What is the most common mistake you see?

Paying for the thing that is easy to count rather than the thing that matters. Revenue instead of margin, sales instead of retained customers, speed instead of first-time fix. People optimise exactly what you measure, including the parts of it you did not think through, so the test for any plan is to ask what the laziest reasonable response to it would be and decide whether you can live with that.

Trade Talk A monthly hiring brief for commercial trades employers

What changed in your trade this month, and what to do about it.

One email a month, and only one. We write a separate issue for every trade we recruit in, so you get yours - not a round-up with your trade buried in paragraph nine. Every issue is written for the person actually doing the hiring.

  • Where wages moved in your trade, by market, and what that does to your next offer
  • How long roles like yours are taking to fill, and where it is getting worse
  • Interview and screening tactics that are landing candidates this month
  • What contractors competing for the same people are doing differently

Built on federal wage data, our own closed searches, and what we hear on the desk every week. Written for employers, not candidates. No pitch, no filler, one click to leave.

Pick your trade. That is the one issue you get, once a month.

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