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June 2004

Paying Your Employees for Performance
by Tammy Sturgeon

You have sat in class after class, talked to other yard owners about switching over to paying employees for performance, and you are still paying them hourly, thinking all your employees will walk out or might cause chaos in the business.

Yes, just like you I was slow to change to pay for performance. I had all the excuses you are making, all the reasons why I should not disrupt my employees, because they were giving me all they had, but was I wrong! I still remember the day Keith and I changed to a pay for performance system for our employees... In 1998 our delivery driver was having trouble making all the stops. What we found out was he was going to his girlfriend’s house and taking naps and we were paying him for it! We changed his hourly pay immediately to pay for performance (pay per stop), and this caused an eruption with him, he quit but we kept going and hired someone else with the new pay plan, and have never looked back. The new person thought it was great, as they didn’t have the “baggage” of the former employee.

So why risk the change? As owners we have faith in our employees. We do not follow them around to see if they are spending their time efficiently or wasting our money. Instead of monitoring their work, we give them raises and hire more employees because, “they just can’t get it done.” If you are paying your employees hourly, take a day and just follow them around you will be surprised at how much they don’t do.

The benefits of pay for performance will increase your bottom line. How? It reduces the number of employees while increasing productivity. Pay for performance will weed out the under performers, and will amaze you with what your strong employees are capable of handling.

The driver must keep accurate records for delivery time, miles, etc.

Drivers will generally have to load and unload trucks. We have helped many yards with pay for performance, including dismantlers, parts pullers, drivers, and salespersons. In fact, its one of the most rewarding items we teach owners, over and over, site by site. It’s not unusual to see clients get our fees back in a week or less with the changes they implement.

Don’t forget to subscribe to my free monthly auto recycling e-newsletter, with news and tips, register at www.autosalvageconsultant.com.

Remember, only you can make BUSINESS GREAT!

Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. In 2001, he founded North Texas Insurance Auction, which he sold to Copart in 2002. In 2002, his book “Salvaging Millions” was published to help small business owners achieve significant success, and was recently reprinted. In June 2003, he joined the new ownership and management team of GreenLeaf. He also manages his real estate holdings and investments. You can learn more about him at WWW.autosalvageconsultant.com He can be reached at 5940 Eden, Haltom City, TX 76117, (best) rons@rdsinvestments.com or 817-834-3625 ext 6#.

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