A crew bonus that pays on jobs coming in under the labor target but deducts nothing on jobs that go over it lets crews choose which jobs to push on, and the owner absorbs every overrun.
Leland (not his real name) owns a foundation repair company where slab crews earn a bonus when labor stays under 15% of the job price. While reviewing his job-cost sheets, Stuart Trier spotted the missing clawback.
A clawback takes pay back, or offsets it, when later results fall short. For a crew, that means a job that goes over the labor target reduces the bonus earned on a job that came in under it (that offset is called netting: the jobs in a pay period are added together before any bonus is paid). Picture a crew that earns a $300 bonus on Monday and goes $400 over target on Thursday. With a clawback, the crew's week comes out $100 short, so no bonus is paid. Without one, the crew keeps the $300 and the company covers the $400 (this is a one-way bonus). Either way, base pay stays untouched.
A labor-percentage crew bonus sets a ceiling on labor cost as a share of the job price, then pays the crew whatever it saves below that ceiling. On Leland's slab jobs, the crew drew a day rate. If a crew completed a job with labor under 15% of the job price, Leland paid the crew up to 15%, so the savings became its bonus.
The target hadn't always been 15%. It started at 16%, and Leland lowered it after raising prices. The crews responded the way the bonus was meant to make them respond: when Leland first introduced it, they pushed to turn 2-day jobs into 1-day jobs.
Does a bonus that works need a second look? Yes, because the payout rule determines who pays when a job goes the other way. On a job at 17% labor, Leland said he "just paid the day rate" and didn't punish the crew for it. Yet he did watch those jobs (his words were "obviously we're watching it"), and nothing was taken from the bonus the crew had earned on a different job.
When a bonus pays on gains and ignores losses, a crew earns more from a volatile week than from a steady week at the target. Stuart spotted this while Leland explained how he paid the crews: a crew could earn a bonus on one job and, in the same week, go over on another job and still be paid in full for it. Leland acknowledged that crews were paid that way.
Stuart then explained why that matters for effort, since a crew that knows overruns are free can decide where to push.
"They get to choose when they want to work harder, and they still win. They get to cherry pick the jobs."
— Stuart Trier
He described the culture he wanted in weather terms: "when the sun shines, we all get a tan," and the rain can't fall on one person. Leland summed up the current rule in a single line: "You're the only one getting wet."
How much did the loophole cost Leland? The job sheet doesn't settle that, because it gives only an average. Slab crew labor averaged 14.7% of the price, just under the 15% target, and some jobs came in at 22% to 24%. Leland described those as special circumstances or jobs the sales team had mis-sold (underpriced or under-scoped). But Stuart wasn't pushing for a rewrite, because 15% labor is "really good" and he didn't want to rock the boat. Still, an average of 14.7% labor can hide several jobs far over the target, and those jobs are where a one-way bonus costs money.
Stuart also raised a second concern, which was information: in his view, crews who took no hit had no incentive to tell the sales department about mis-sold jobs, so a faulty estimate never got corrected. Even so, Leland wanted crews to earn the bonus on every job, and Stuart agreed.
Stuart's first step was a count of overrun jobs (1 in 3, 1 in 5, or 1 in 20). If the answer is 1 in 20, he said, the owner probably won't squeeze any more juice out of the plan, so a rewrite buys little. The sheet comes first, because that's where an overrun shows up.
Any owner can run the same test on the last 20 completed jobs:
The next table applies steps 4 and 5 to a made-up week. Each of the 5 jobs is priced at $10,000, so a 15% target allows $1,500 of labor per job (these 5 jobs are invented for the arithmetic).
| Job | Day-rate labor | Labor as a share of job price | Crew pay under a one-way bonus | Crew pay with the week netted |
|---|---|---|---|---|
| A | $1,200 | 12% | $1,500 (includes a $300 bonus) | $1,200 |
| B | $1,100 | 11% | $1,500 (includes a $400 bonus) | $1,100 |
| C | $1,300 | 13% | $1,500 (includes a $200 bonus) | $1,300 |
| D | $2,300 | 23% | $2,300 (day rate only) | $2,300 |
| E | $2,400 | 24% | $2,400 (day rate only) | $2,400 |
| Week total ($50,000 in job prices) | $8,300 | 16.6% | $9,200 (18.4% of job prices) | $8,300 (16.6% of job prices) |
Before any bonus, the week's labor already stood 1.6 points over the 15% target. Yet crews still collected $900, which pushed the week to 18.4% of job prices.
How often does a week like that need to happen before the difference matters? The next table shows the answer under 3 assumptions: winning jobs average 12% day-rate labor (close to Stuart's 12.4% example), overruns average 23% (the middle of Leland's 22% to 24%), and the target stays at 15%.
| How often jobs go over | Labor as a share of job price, one-way bonus | Labor as a share of job price, netted bonus | Cost of the one-way rule |
|---|---|---|---|
| 1 job in 20 | 15.4% | 15.0% | 0.4 percentage points ($800 on $200,000 in job prices) |
| 1 job in 5 | 16.6% | 15.0% | 1.6 percentage points ($3,200 on $200,000 in job prices) |
| 1 job in 3 | 17.7% | 15.7% | 2.0 percentage points ($4,000 on $200,000 in job prices) |
At 1 overrun in 20 jobs, the cost is small, which is consistent with Stuart's rule of thumb. But from 1 in 5 upward the cost grows quickly, and with 1 in 3 the average day-rate labor has already passed the target, so a netted plan pays no bonus at all. That makes the loophole matter most to companies with frequent overruns, and it's why the count comes before any rewrite.
An owner can shut that loophole by changing how the bonus is measured, when it is paid, or whether to touch it at all.
Leland's next step was asking his operations manager how many jobs had gone over, since that count decides which of the 3 options fits.
A bonus pegged to labor percentage earns its place when crews are hired at an average wage, because the pay for excellent work comes out of savings the company would not otherwise see. Stuart put the logic in a sentence.
"The idea is that we can hire for average and pay you as an A player."
— Stuart Trier
Leland's crews already showed the effect, since they pushed 2-day jobs down to 1 day. Closing the loophole keeps that effort. It also takes the cost of overruns off the owner, who has been covering every one of them.
Stuart also showed Leland a pay ladder from other clients, with illustrative rates: a worker at $18 an hour earns $21 an hour on a crew that is profitable. A $3 difference sounds small. Yet as a share of the $18 base rate it is about 17%, and households come to depend on it. Crews then stop tolerating a teammate who drags their pay down, and a netted bonus can strengthen that peer pressure because the whole crew shares one result.
Any trade that pays crews against a per-job budget can end up with a rule like Leland's:
Start with the count from the 20-job test, then find your overrun frequency in the first column of the second table (its rows assume 12% labor on winning jobs, 23% on overruns, and a 15% target). At 1 overrun in 20, the loophole is cheap enough to leave alone. But at 1 in 5 or 1 in 3, netting returns 1.6 to 2.0 percentage points of job revenue to the owner, and crews still collect the day rate on every job. Either way, keep the bonus: it got Leland's crews to compress jobs by a full day, and a netted version keeps that incentive.
Ask 3 questions about the plan: what the crew is paid on a job that comes in over the target, whether Thursday's overrun reduces Monday's bonus, and whether the bonus is figured per job or per pay period. Leland's answers were the day rate, no reduction, and per job. Still, a per-job bonus with no period total is the clearest sign, because nothing exists to net an overrun against.
Subtract the crew's actual labor percentage from the target, then multiply the difference by the job price. Stuart's example used 12.4% actual labor against a 15% target, a difference of 2.6 points, so a $10,000 job (the price is an illustration) pays a bonus of $260. The crew's total pay on that job then equals the target amount, $1,500, which is why Stuart called the bonus the difference between target and actual. On any winning job the company's labor cost therefore equals the 15% target, and only the split between day rate and bonus changes.
The company should, because the estimate came from sales. An owner can tag each overrun with a cause before it counts against the crew, such as weather, scope left out of the sale, or crew pace. Leland said his 22% to 24% jobs traced back to unusual conditions or mis-sold work. A job that overran because the estimate omitted work belongs to the estimate, so it can be left out of netting and sent to sales for review, which is where the correction belongs.
Yes. Netting (adding up a period's jobs before paying any bonus) reduces only the bonus, and the day rate stays. Leland's crews were never docked below the day rate, and a netted version preserves that protection: the netted week in the first table still pays crews $8,300 in wages and removes only the $900 bonus. Keeping the day rate intact also lets an owner describe netting to crews as a change to the bonus only, which is a much easier conversation to have.
Record the bonus on each job as the target minus the actual labor, then total it each month, which also shows what a netting rule would have saved. Keep that monthly total beside the overrun count from Stuart's overrun-count test, because the two together show whether the loophole costs more than it did last quarter, and the bonus total alone can't show that.
No. A crew bonus plan is one pay rule, while home service coaching is the wider work of improving how an owner manages the business. In Leland's case, Clear Results started from the owner's own job-cost sheets and read them line by line, which is how the missing clawback surfaced. A template shows what to pay when a job beats the target, while the sheet shows what the plan did on the jobs that missed it.
Client details in this article have been changed to protect confidentiality. Any resemblance to a specific business is coincidental.
Stuart Trier is the Founder and CEO of Clear Results. Over the past 20 years, Stuart has built, bought, and sold 11 companies across the home service, healthcare, and marketing industries. He built his first company from startup to $8M in revenue in 3 years before a successful exit, then built a chain of 28 healthcare clinics and sold the business to a publicly traded company. Following that acquisition, Stuart spent 3 years working alongside the CEO, helping lead the organization through a take-private transaction before participating in a nine-figure exit to a Fortune 10 company. Today, he's the lead investor behind an electrical services platform operating across 3 U.S. states, and has worked directly with owners through 1,800+ strategic advisory sessions.
