Incentives for Service Personnel

By Diane M. Calabrese / Published February 2018

Two questions loom large when considering an incentive system. What’s the upside, and what’s the downside?

“Everyone likes to be rewarded,” says DJ Carroll of Coach Carroll in Louisville, KY. “It’s important to show your team they are appreciated. It should be a part of your company culture.”

The upside, then, is that employees respond positively because they feel appreciated. Their positive feelings are correlated with sharper and more industrious performance of their jobs.

On the downside, problems can arise with the use of incentives. “You must watch out for bad attitudes that may start to expect the incentive,” says Carroll.

Incentives can take many forms. “We do holiday bonus and job performance incentives,” says Carroll. “We also incentivize our team by paying them a salary—versus being hourly.”

With deep experience in sales training, Carroll thinks about incentives in terms of the way they may boost results obtained by individual sales representatives. But every member of a company’s team contributes to sales made. They do so by representing the company well in their particular role.

Service personnel sometimes have the opportunity to make a sale. If a customer brings in a machine that’s beyond repair or cannot be refurbished to current standards, a service technician might be asked to recommend a new machine.

In the day-to-day activity of a company, service personnel contribute most to the bottom line by giving nothing less than exacting care to equipment they maintain and repair. In doing so, they bolster the image of the entire company.

Q&A With Brenda Purswell and Roy G. Chappell

Brenda Purswell, president of Alklean Industries Inc. in Pasadena, TX, and Roy G. Chappell, CEO of Chappell Supply and Equipment in Oklahoma City, OK, share their perspectives on incentives for service personnel.

Cleaner Times [CT]: Do you offer your service personnel incentives of any sort?

Purswell: Our company pays its service technicians a percentage of the gross profit on each job in addition to his regular hourly wage plus benefits.

Chappell: Our services techs start at $15 per hour. After three months, they receive $16 per hour plus commission, and after six months, $17 per hour plus commission. 

We pay the service techs six percent commission on labor and parts from the tickets they write. If a second service call is needed because they didn’t do something right, they will not get paid any additional commission on the second call.

We make sure our techs know how to use an ohm meter to check parts and find the problem. Replacing parts that aren’t bad will cost you a lot of business over time. People will soon realize what your service tech is up to and start calling other companies to find a good service tech. 

CT: Why do you find incentives valuable?

Purswell: We have always believed in incentive-based pay scales and feel employees should be compensated for the extra efforts put into their jobs. Their pay can rise according to their efforts and knowledge. Every employee should be cognizant of making a profit. That is why we are in business. It gives a service tech a sense of company involvement and helps him to see the big picture.

Chappell: By giving the service tech a commission on each ticket he writes, we have a way of knowing if we have to go back, then there will be no commission on the second call. The technician will make sure it is done correctly the first time. The service tech also knows if he does a good job, then the customer will call us again and again to come out and do their service. 

We work on as many machines that we didn’t sell as the ones we sold. The service tech checks in with the company when they arrive on location and when they are ready to leave. So, the customer gets to know our technicians and that builds trust. 

CT: Are there problems that might arise from the use of incentives?

Purswell: Not if it is monitored and rules are in effect to prevent trying to overcharge the customer. With our technicians, the majority of their compensation is an hourly wage, but there is enough incentive to keep them focused. The majority of major estimates are done by our service manager, so there is constant oversight. 

Chappell: Yes, all our service techs work in house for six months before they go to the field. You have to know that they know how to work on the equipment and know how each component works. They have to take ownership in what they do. Their reputation and the company’s reputation are on the line each time they work on a machine. You don’t want a parts changer working for you—that gets around very fast and will cost you a lot of business. That is one of the reasons we have them check in and out with the manager of the plant or company when they go out on a service call. Be proud of the work you do, and leave your card with the manager so he can call you with any problem.

CT: What should we have asked you about offering incentives to service personnel?

Purswell: On a national scale, how do you find your technicians? We use an employment agency and provide very specific job requirements, so they can do the screening. I require the agency to allow temporary-to-permanent transition instead of an up-front fee to hold them accountable to send the right person.

Chappell: How do we help employees be the best at their jobs? We also offer our service techs health insurance, long-term disability insurance, life insurance, and matching 401(k) retirement plan. Outside service people
also go through hazmat training as well as HAZWOPER [Hazardous Waste Operations and Emergency Response], a 40-hour training class with an eight-hour refresher class each year. These certifications have been very important with a few of our customers.

 

Value of Company Provisions and Conditions

Incentives vary. Alongside more compensation, incentives include things such as stock options and company events.

Employees also receive many incentives by nature of being an employee. The employer pays part of each employee’s social security contribution, and any employer-provided contribution to health insurance is also an incentive, for example.

When an employee is being hired, it makes sense to remind him or her about the benefits—or incentives—that are part of the compensation package. New hires often do not think about the monetary value of employer-provided health insurance or employer contributions to a retirement plan. A simple, one-page summary of what the company provides can be a good way to convey a full picture of all an employee receives.

In addition to tangible incentives that motivate service personnel, there are the many intangible ones. Purswell points to the importance of good hires who will be able to meet standards at the company. Employees who do their job well spread good will. Each member of a service department wants to know that his or her colleagues are doing their best to get a repair done right the first time and in the most expeditious manner.

When all members of a service department perceive their colleagues are working as hard and competently as they are, good will grows. With each employee wanting to do their best on each job, there is harmony in the workplace. And there’s no way to overstate the incentive that a pleasant work environment is.

Chappell mentions the training that his company provides. Training is another type of incentive. By providing it, an owner lets team members know they are valued. It demonstrates to the employees that they will get the tools they need to be experts in their company roles.

Tools, vehicles, workspace, and the like may all fall into the category of incentives. If an employee is not provided with the best tools or is given an unreliable vehicle, what’s missing can become a disincentive. A good service technician will still get the job done, but the technician may decide to look for employment where all the pieces are in place—from colleagues to equipment and training, to make it easier to do an excellent job.

In other words, it’s not just about compensation. Achieving the optimal balance between regular compensation and incentives for service personnel makes a company stronger. The strength derives not only from members of the service team who do their jobs with absolute competence, care, and efficiency, but also because the members of the team are likely to stay.

High turnover in a service department can be much more costly than providing team members with a state-of-the-art piece of equipment, regular training on maintenance of new models and types of equipment, and a well-designed workspace and/or vehicle.

Each owner will develop ideas about whether, when, and how to provide incentives. When considering incentives, be sure to view them in the widest possible terms. Employers with a solid team of veteran employees may want to query the team for their suggestions about incentives.