116 - Paying For Performance: How Hourly Is A Failing Format
Paying for Performance: A Proven Strategy for SMB Success
Are you tired of paying your employees the same hourly wage, regardless of their performance? It's time to switch to a pay for performance system and see the difference it can make for your business. I often see the benefits of paying for performance, or P4P, in action with my clients. P4P is a system in which employees are paid based on their individual performance rather than the number of hours they work. This can be a powerful tool for small and medium-sized businesses looking to motivate and incentivize their employees. In this article, we'll explore the benefits of P4P and how it can help businesses achieve greater success.
P4P is a system in which employees are paid based on their individual performance rather than the number of hours they work. This means that an employee who produces a high volume of high-quality work may earn more than an employee who works longer hours but produces less.
There are several reasons why P4P is a good idea for businesses. First and foremost, it aligns the interests of the employee with those of the business. When an employee is paid based on their performance, they have a vested interest in the success of the business. This can lead to increased productivity and a better overall work ethic.
Another reason to consider P4P is that labor is often the biggest variable cost for businesses. By shifting the focus from hours worked to performance, businesses can better control their labor costs. This can lead to increased profitability and sustainability in the long run.
“Let people make more because they’re doing better.”
It's important to communicate clearly with your employees about the P4P system and how it works. Make sure they understand what is expected of them and how their performance will be measured. This will help ensure that everyone is on the same page and working towards common goals.
Incentivizing employees can have a number of benefits for your business. It can improve morale and increase motivation, leading to better performance and higher levels of productivity. It can also help attract and retain top talent, as employees are more likely to stay with a company that values their contributions and provides opportunities for advancement.
There are a few different ways to implement a P4P system. One common method is to set specific goals or targets for each employee, and then pay them a bonus or commission based on their ability to meet or exceed those goals. Another option is to pay employees a base salary and then offer incentives for achieving certain milestones or exceeding expectations.
P4P can also be an effective tool for attracting top talent to your business. High-performing employees are often drawn to companies that offer the opportunity to earn more based on their individual contributions. This can help you build a strong and dedicated team of employees who are motivated to succeed.
“If you pay people and they work efficiently, you will get more jobs done.”
One of the key benefits of P4P is that it makes it easier to measure the profitability of your business. By tracking the performance of individual employees, you can identify areas where your business is excelling and areas that may need improvement. This can help you make informed decisions about how to allocate resources and grow your business.
P4P is a valuable tool for small and medium-sized businesses looking to incentivize and motivate their employees. By shifting the focus from hours worked to performance, businesses can improve productivity, control labor costs, and increase profitability. By using software and setting clear
Why the hell are you still paying employees by the hour? It’s definitely not in your best interest as a business owner. Want an employee incentivized payment structure that increases productivity, efficiency, and jobs? Try the Paying For Performance (P4P) model, made popular by our guest, Mike Andes. Listen to this short episode for a breakdown of why hourly is a failing formula and how performance-based pay is ideal for your customers, your employees, and your bottom line.
Show Notes
00:00 - Intro
02:00 - What is P4P?
03:10 - Why P4P Is In Your Best Interest As A Business
04:05 - Labor Is The Biggest Variable
05:00 - Do Your People Know?
06:00 - Why You Should Incentivize Employees
07:00 - The Breakdown Of How P4P Works
08:15 - How P4P Attracts Better Employees
09:20 - Easy Software You Can Use For P4P
10:10 - How It Makes Profit Measurable
11:30 - Outro
Quotable Moments
“Paying by the hour and paying for seniority are antiquated concepts that are still around.” – Martin
“Paying by the hour does not align with what you want as a business owner.” – Martin
“Paying hourly is giving your employee the ability to drag a job out.” – Martin
“As a business owner, labor is the biggest variable. It’s a huge expense and out of your control.” – Martin
“The bad thing about an hourly job is that the only way to increase is to pester you all the time for a raise or to drag out a project.” – Martin
“Let people make more because they’re doing better.” – Martin
“If you pay people and they work efficiently, you will get more jobs done.” – Martin
“You will attract better employees because they can make more and they are treated as valued.” – Martin
Resources
Listen to CFC Ep 112 With Mike Andes
Read P4P By Mike Andes
Learn About Our Marketing Partner, Benali
Watch On Youtube
Subscribe To Our Newsletter, The Countdown
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