Posted on 03 Jan 2014
A sirloin steak may be good, but we all know that a filet mignon is best. Business practices can also be categorized as good and best.
We often hear that small businesses with remote hourly workers pay a set number of hours for a job instead of actual time. If the owner of a janitorial company knows that a building takes 3 hours a night to clean, he’s only paying 3 hours. It’s a strategy to limit payroll expenses. It may not be a bad practice, but is it the best? It may be costing more than it’s saving.
An employee doesn’t have the incentive to stay on the job more than 3 hours even though circumstances may require it. As the 3 hour mark approaches he is motivated to rush and cut corners leaving the quality subpar. Once a week or so the window blinds need to be thoroughly cleaned, but this may not happen if the worker is pushed for time. Will cleaners making minimum wage or just above it spend extra time on a job when they aren’t getting paid for it? This is a threat to the owner. To maintain quality control and keep his customers happy he will need to spend time doing frequent spot inspections on the work.
On the flip side, a job may only take 2 hours 51 minutes to thoroughly do. The owner is paying 9 minutes extra each night. That’s 45 minutes a week on an everyday contract. That’s 45 minutes closer to 40 hours that’s unearned. Or maybe you are feeling the effects of Obamacare and 29 hours is the number you are fighting. Either way, that’s 39 hours a year. A full week or more of unearned pay. And this math is assuming 1 job for each employee. Double it if an employee cleans 2 sites a night.
But what happens to work quality if you utilize telephone timekeeping to capture accurate time and that’s what you pay? The employee isn’t motivated to rush his work. He will spend time making sure that it’s done right. If you find that the job is routinely taking more than 3 hours, but the quality is top notch, then you may need to reassess the contract. Have another one of your best workers clean that site for a week. Evaluate her time on the job relative to performance against the first employee.
If the job is taking less than 3 hours but the workmanship quality is excellent, then you are making more money on the contract and you don’t have to spend as much time doing spot inspections. Give your employee a bonus.
So, on one hand you keep things simple and try to limit payroll by paying a fixed amount of hours per job, yet you have to strictly monitor those sites for quality control. Your employees aren’t incentivized to do thorough work and this leads to increased management efforts. On the other hand, you pay actual time captured by a technologically advanced timekeeping system and your workers don’t cut corners. The result should be higher quality workmanship and less oversight needed by management. Management time is valued higher than employee time.
One method may be good, but one is definitely best.