Performance Based Compensation. Example HVAC Bonuses

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Looking for Performance Based Compensation Examples?

Did you read my article about Performance Based Compensation in Contracting Business Magazine? If not, please see the article here.

HVAC Installation Department Compensation Plan

Simplified Compensation Chart – Residential HVAC Installation Department

Many contractors have found that it is relatively easy to pay service technicians based on performance but far more difficult paying installers. This document outlines how to pay installers. The key behind this policy is to calculate labors times for various installation tasks (you do not have to share these labor times with your installers). You then must create an hourly wage that you will pay your installers based on their skill level, time within the company, etc. Once you have created labor times and hourly wages, you may then easily calculate “flat rate” pay for your installers.

We have created a simplified list of common installation tasks for you to consider. This list uses just one hourly wage rate. In other words, no consideration is given for their skill level, time within the company, etc.

Item Fee
Complete 80% Heating System $ 168.00
Complete 90% Heating System $ 200.00
Complete Cooling System Replacement $ 205.00
Complete Cooling System Add On $ 325.00
Complete Heat Pump System Replacement $ 220.00
Complete Heat Pump System Add On $ 340.00
Complete 80% Heating & Cooling System $ 264.00
Complete 90% Heating & Cooling System $ 296.00
Condensing Unit (all efficiencies) $   80.00
Heat Pump (all efficiencies) $   95.00
Evaporator Coil $   60.00
Evaporator Coil (with TXV) $   75.00
Humidifier (power and by-pass type) $   24.00
Electronic Air Cleaner (with installation) $   40.00
Space-Gard Air-Cleaner $   32.00
Flue Vent Stack Replacement (up to 25’) $   52.00
Flue Vent Stack Replacement (each additional 5’) $     8.00
Chimney Liner (up to 25’) $   52.00
Chimney Liner (each additional 5’) $     8.00
Dual Fuel Kit (add to installation) $   15.00
Refrigerant Line Set (liquid line, insulated suction line, and drier) $   60.00
Pull Thermostat Wire $   28.00
Plenum $   50.00
Complete Return Drop and Boot $   48.00
Return Boot Only $   30.00
Offsetting Transition $   30.00
Move Hot Water Heater up to 24” $   30.00
Remove and Replace Existing Hot Water Heater $   40.00

*All equipment must be installed to applicable code.

Company Wide Profit Sharing

Company Wide Profit Sharing through Performance Based Compensation

In addition to technician compensation, sales commissions, and spiffs, a Companywide profit sharing should be established when the company can afford to do it. This plan allows all employees to receive a bonus under rules and guidelines established by management. An ideal plan will assure that the company is making sufficient profit before any profit sharing is distributed.

Employees will be rewarded for helping to achieve company financial goals. Our minimum sales goal for the 4th quarter of 2004 is $308,000.00 (last year was $307,540). Our minimum gross profit margin goal is 46% (last year it was 40.58). If we meet this goal, everyone will receive a quarterly bonus equal to 20 cents times the number of hours they worked during the that quarter.

  • Example: Let’s say we have sales of $312,000 and a gross profit margin of 47% and you work 520 hours for the quarter. Your bonus will be $332.80 (520 hours x 64 cents).

Image of Performance Based Compensation Table for HVAC Contractors

Employees will be rewarded for helping to achieve company financial goals. Our minimum sales goal for the 4th quarter of 2003 is $308,000.00 (last year was $307,540). Our minimum gross profit margin goal is 46% (last year it was 40.58). If we meet this goal, everyone will receive a quarterly bonus equal to 20 cents times the number of hours they worked during the first quarter.

Example: Let’s say we have sales of $312,000 and a gross profit margin of 47% and you work 520 hours for the quarter. Your bonus will be $332.80 (520 hours x 64 cents).

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