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Incentivize Employee Performance: Track Production and Reward Success with This Game Changing App
80 Plays1 month ago
Join Brent Oberlink and co-host Travis in this episode of The Better Contractor as they chat with Michael Fortinberry from Protiv about an innovative app transforming the construction industry. Protiv links employee performance to quality and budget goals, creating a performance-based pay model that drives accountability and boosts productivity. Listen to this episode to see how this approach can lead to improvements of up to 20% while fostering teamwork and engagement. Don’t miss the opportunity to revolutionize your contracting business.
#TheBetterContractor #ConstructionSuccess #Protiv #PerformancePay #ContractorInnovation #BoostProductivity #TeamMotivation #ConstructionTech #Landscaping #BlueCollar #Entrepreneur #BusinessGrowth #BusinessJourney #Scaling
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Transcript
Introduction to Hosts and Guests
00:00:14
Speaker
welcome back to another edition of the better contractor today i am joined by my co-host travis what's up travis see you again travis the professor two podcasts in a row man You're on.
00:00:26
Speaker
And also joined today by Michael Fortenberry with
Introduction to ProTiv and Construction Challenges
00:00:30
Speaker
ProTiv. So Michael, ProTiv is a app, am I correct? is an app, platform, becoming more of a platform actually every day more code every day.
00:00:40
Speaker
Yeah. So lot of you guys that are in construction, contracting, whatever, obviously we're always looking at ways to increase production. You know, if you guys are like me, you know that when you go to bid a job, there's all these different factors that come into play.
00:00:55
Speaker
If the bid is a firm bid, hard price model, then obviously production is a huge factor in that equation. So if you're like me, I'm always trying to think of a way to improve that, still keep safety in mind, still keep culture and mindset, all of those things at ah at a high level of production at the end of the indeed matters. So Michael, welcome to the show.
00:01:17
Speaker
Hey, excited to be here. Brent, Travis, good to see you guys and looking forward to digging in on this topic. Yeah. one thing we'd of like to start off with is who you are.
00:01:28
Speaker
Sure. Explain your relevance to the to the industry and just kind of what got you to where you are today. Yeah. I've been a violinist for 40 years. No, I'm just kidding. I don't play the violin at all.
00:01:39
Speaker
No, we have a construction company here in New York City. We grew it, we were a large scale multifamily renovation company. We grew it up to about 130 or so people in the field.
00:01:52
Speaker
And if you had big apartment buildings in New York, we were dialed in to be able to turn those kitchens and bathrooms over for you. We had probably a similar problem that I find most contractors do.
00:02:04
Speaker
One, I have a shortage of really good skilled labor, but two, Sometimes my team didn't always appreciate the need to be done on time or the quality attention to detail that I needed them to deliver.
00:02:17
Speaker
And i have, you know, like many of the folks listening, frequently had Bob walk in the office and say, hey boss, you know, can i get a raise? And the only thing I'm thinking is, well, if I give Bob a raise, that just made my costs go up. But he doesn't do anything different the next day. Bob's output is Bob's output.
00:02:35
Speaker
So we were trying to align those two things. And a lot of companies have driven down this road, right? So we weren't the first. We said, okay, I want to pay him based on what he produces.
00:02:46
Speaker
And you end up in this slippery slope towards things like piece rate, which we are not fans of there's quality issues, legal issues, all kinds of things. But I still wanted to solve the core problem.
00:02:58
Speaker
How do I get it my team in the field to want to hit my budgets, want to beat my budgets, and want to deliver the attention to detail and quality that would make us more money And I'm happy to pay them more if they can do that.
00:03:10
Speaker
How do I bring those two things together? And we started on that journey about seven years ago.
ProTiv's Evolution and Features
00:03:15
Speaker
Okay. So Protiv has been seven years in the making. Is that correct? Yeah. So we have seven years, um about two and a half years ago, we were kind of like, wow, we're kind of onto something here. And we spread out as a, made it a product.
00:03:31
Speaker
We had kind of let a couple of people we know use it. Just kind of, you know, see if we were crazy. Is this really as cool as we think it is? And it really was game changing for us and for some folks we shared it with.
00:03:44
Speaker
So about two and a half years ago, we spun it out into its own company. So don't have to wear hard hat anymore. And so now run a software company. Didn't have that on my bingo card really, but it's okay.
00:03:55
Speaker
And since then, we've been kind of exploring the different trade verticals, taking ProtoVo out into different marketplaces, adapting it to the different industries, different job cycle times, different sizes of companies.
00:04:08
Speaker
sizes of jobs. But in the end, what started off as a spreadsheet for us has turned into an application that allows you to manage an incentive compensation system for hourly workers linked back to your budget.
00:04:22
Speaker
And so you're driving performance against the goals that you set. If those companies, if those employees can bring those jobs in under budget, do them the right way the first time, they've got a chance to earn more money as your labor costs actually come down. Okay. So are they k um like a KPI field is what going to look at.
00:04:40
Speaker
Does that vary? Can you customize that inside of the platform? Or if not, what kind of KPIs do you guys typically measure? It's pretty um flexible.
00:04:50
Speaker
We have a lot of clients that focus obviously on their labor budget. You know Bob's landscaping, he goes out, he's going to install a new sprinkler system for Mrs. Smith and he's got $5,000 in this. He's got $2,200 in labor.
00:05:05
Speaker
they can get that job done under $2,200, he's going to share some of that savings with his guys. Now, if he puts that, let's say they say they get it done for $2,000, they get $200 left over, that $200 can be shared between the company and the two guys that worked on the project.
00:05:21
Speaker
Hypothetical situation. But if Bob's setting set up so that if they go out there and they don't install the backflow preventer correctly, or you know all the sprinkler heads are upside down in the dirt, then of a sudden that bonus doesn't get paid to the team.
00:05:39
Speaker
So the quality check is that if there's a problem, the whole team is losing on that bonus money. What we find is that when the team starts to put their eyeballs on quality, it changes their mindset because it becomes their money.
00:05:53
Speaker
And what happens is Jim looks over Sam and says, Jim, that's backflow preventer is not going in correct. Jim, those studs have got to be 16 inches on center or whatever. All of those things have to occur correctly so that I can earn my bonus.
00:06:08
Speaker
So I want to hold you accountable.
Incentive Systems and Employee Motivation
00:06:10
Speaker
I want to make sure Travis does his thing and Brent does his thing correct so that Mike earns his bonus. So what happens is you tend to get these say to get more people looking at what you're doing and how you're doing it.
00:06:22
Speaker
Interesting set of things happen after that because different conversations begin to take place. Some of are challenging conversations. If you think about it, if I'm at the job and I see Travis, Travis is not getting done. You know, like, hey, you know, on, you got step up. can't be carrying one brick at a time. We got to move, you know, whole lot of these.
00:06:41
Speaker
Then I'm more likely to say something. It's interesting that Employees say things to other employees that the supervisors aren't really allowed to say. right And so there's this also you get worker to worker engagement about what we're trying to accomplish, doing it the right way because it becomes my money.
00:07:00
Speaker
When you gamify that labor budget to be their money, they begin to care about it. I hate to break it to you. If you're listening, your workers don't care about your money. They care about their own money. And if you can get them to think of the labor budget as their money, they will treat it differently.
00:07:16
Speaker
So are they able to kind of track inside of that app their production or how they're getting ready to meet those goals? Yeah. So we have, what we're capturing is all their time entry data. So they've got a budget that the workers, all the way to every worker in the company can see on their phone exactly what the labor budget is for the job.
00:07:35
Speaker
So they say, all right, we know we've got a hundred hours. Then we're tracking how much time they've used, whatever time tracking system that folks are using. We integrate to most of them. And Now I know, well, we've used 50 of those 100 hours. I've got 50% left.
00:07:50
Speaker
But the worker can actually use our app to say, well, actually think we're about 60% the way done. What is my bonus based on how we're performing so far? And they can actually see their personal money if they stay at that pace and bring that job in correctly.
00:08:06
Speaker
So because we show them a dollar amount, it's one of the things we learned about making an incentive system really work is that they have to see it. It has to be very transparent. If it's opaque, the the workers don't believe it.
00:08:19
Speaker
Brent goes out there and you just tell your guy, you say, hey Travis, I'll give you a bonus. You finish this ahead of time. Travis doesn't know what you mean. If you go to Travis and I'll give you two tenths of a percent of my you know net profit above $1.3 million this year, Travis has no idea what that number is and whether he's ever going to see a penny.
00:08:38
Speaker
it's a They don't think like that. They think about how much going my paycheck Friday. And if I can show them how much it will be on their paycheck Friday and connect it to their behavior, That's where you get shifts in the way that they act.
00:08:51
Speaker
And so what we learned is keep it simple, keep it transparent, and actually pay bonuses frequently. Quarterly and annual bonuses, they just don't, they're not moving behavior. Why you have a bonus program if it doesn't change behavior?
00:09:05
Speaker
I want them to work differently. And if I can reward them to do that, then we're all winning. That's how I make more money. Yeah, no, I like that. um So like in contractor world, there's usually two different types of projects. One being...
00:09:18
Speaker
Maybe I'm installing water heaters and I'm doing six of them today. So I have six different jobs in one day. Or like with our company, what we're doing is more what I would call milestone projects. So it may be one crew on one project for three months. So I'm sure your platform, your app it allows for that as well, right? Like milestone type stuff.
00:09:38
Speaker
It does. It took us a while to get there. Actually, the milestone part was earlier because that's the way our construction company, we were oriented around a little bit bigger projects, at least a few weeks and bigger kind of thing.
00:09:49
Speaker
um What was interesting is the complexity of going to the to what we call group group jobs, where I'm going to really look at what I'm doing this week. Because a landscaper is going to mow 12, 14 lawns a day for five days or four or five days this week.
00:10:06
Speaker
I don't want to look at every one of them. I do track each job individually, but don't want to look at the data of each job individually. It's too granular. So we group those together and say, for this week, this two-person crew's got 72 hours to finish this set of jobs.
00:10:20
Speaker
If they can bring that in under budget, then we're we're tracking towards where we need to be. If I'm taking longer than that, we're not. so But they look at in terms of usually a week is a common structure.
00:10:32
Speaker
Milestones get really interesting on especially really big jobs because It's interesting if I've got milestone that's maybe I've got the same four people working on it for two months. That's interesting.
00:10:43
Speaker
What if I have 27 people that change out quite often they're going to be there for seven months and I'm going to have it's never the same 27 people in any given month? Who gets how much?
00:10:55
Speaker
And I also don't want to wait seven months to pay any bonuses. So we've created some really interesting powerful tools behind the scenes to let you pay partial bonuses along the way if the team is overperforming but carry a reserve amount case they get behind later.
00:11:11
Speaker
And even it will track each worker to each phase of the job so that if you know you owe some money because you were behind before, later you actually start making some money in a different milestone or phase, then it can roll some of that back.
00:11:25
Speaker
So it's really designed to handle both scenarios, but they do operate a little bit different in terms of a UI within our system, UX. Okay. I like that. um My mind when you were talking was going to culture,
00:11:38
Speaker
we talked a little bit at the beginning of the our pre-podcast.
Building a Performance Culture
00:11:42
Speaker
And I know, i guess, something we work on, we struggle with a little bit at work. It's just, you know, with the tight labor market, every contractor is is very focused on culture, attracting the right talent, and then keeping that talent.
00:11:55
Speaker
I feel, and I'm sure you've done some studies and you have some thought on that. How does Protiv help with the culture portion of this as well? It's interesting if our clients who are successful lean into our product as the center of their culture in some ways.
00:12:12
Speaker
They are What you're building effectively is a culture of performance. Now, that could be performance against your quality goals, your safety targets, your production goals, your everybody wore a blue shirt this week, whatever whatever those things are.
00:12:26
Speaker
You can have policies around the distribution of bonuses that can get pretty comprehensive. Preventive maintenance schedules that you need done. don't You know can't have a no call, no show or you lose your bonus.
00:12:38
Speaker
bunch of policy things to drive the culture you want. Protive does is establish an architecture for you to have a pool of money based on how they're performing. So without having to fund it from a separate line item in your budget, we're going to fund it from savings on your jobs.
00:12:54
Speaker
So just foundationally where we pay for this process is interesting. But then what happens is now I'm trying to build a culture. And we believe that a culture of performance is is just an outstanding stake in the ground for our industry.
00:13:08
Speaker
it It leans into the professionalism. I think that a lot of our tradespeople want to carry into their jobs um the respect that we want to have for the trades that they've perfected. So If we can build a culture performance, that's the right mindset to leverage Protiv.
00:13:24
Speaker
So if you are if you have a poor company culture or if or if you have poor financial controls in your company, Protiv in some ways can make it worse. And the reason is it's going to shine a light on everything you're doing wrong.
00:13:38
Speaker
Because right now, you have about one-fifth of your workforce is in management, about four-fifths is in labor, direct labor, roughly across the industry. What that means is right now about one fifth your team cares about your logistical problems, your estimating problems, bunch of other stuff. they don't One fifth cares that Bob is slow, right? The rest of the four fifths don't really care about that stuff.
00:14:01
Speaker
What happens if if, Brent, you go out you order the wrong brick for a project? And now your team is sitting out there waiting on the right brick to get delivered. And they're pissed because it's their money. So they're calling back to the CEO of the company saying, Brent, what are you doing?
00:14:19
Speaker
You know, you ordered the wrong brick. You're costing us money out here. yeah You need to get your act together. This is an interesting shift, right? Because they don't do that now. They're happy to wait on the right brick to get delivered or whatever, right? So there's this...
00:14:32
Speaker
we We think this is a good thing. We think it's a directionally correct energy for your company. You want your employees to care about all the stuff you care about. Yeah. We're going to incentivize them. And if the goal should be to talk about this stuff every single day, you build a culture to where every day your whole team is talking about the budget. Your whole team is talking about production.
00:14:55
Speaker
Your whole team is talking about quality because it's the financial incentives are connected how they all do. And that's where it's just you want to weave that in consistently. When you do that, you're building a really powerful culture that when you combine that with good financial control, which is the other to me, the other half of building a great contracting business.
00:15:16
Speaker
If you have great financial controls and you you know you really know your numbers and you have a great company culture, there's not really a limit to what you can scale in terms of especially trade contractors. Yeah.
00:15:27
Speaker
No, I love that because ah the the KPIs, those focuses take it back to one of the things we're wanting to see as a result of this podcast is an elevation of contracting as a whole.
00:15:38
Speaker
Make it more of a professional trade. You know, get more interested in the craft of whatever it is that you're doing. And I think you're right on the money there with the culture, you know, tracking these core things, these KPIs.
00:15:50
Speaker
but That's how you do it. And like you said, talking about it, you know, so like with us, we work in oil and gas a lot. So we're a contractor there. So the safety stuff is a big thing. So safety, we start our day off with it.
00:16:02
Speaker
After lunch break, we do it again. We do a little mid you know afternoon, another one. Like it is talked about all the time. So it's always at the forefront. Unfortunately with us, sometimes I'll just be honest, this isn't as much.
00:16:15
Speaker
So like, you know, when Travis met you was telling me about you, I'm like, I think I need to have a conversation with you as well, because it still has to be an element of what we do as well, because it is a for-profit business and we can't be,
00:16:26
Speaker
highest bid. So obviously this is an important aspect. So super interested in it. Travis, I think I interrupted you a couple of times ago and you haven't asked the question yet. I know you got some.
00:16:38
Speaker
I've got three, ah what but I think Michael, you might've answered this one as far as the quality assurance lead time to, might've answered it by like having the bucket of money there and you can add or subtract based off of time. I'm sure it works similarly in that,
00:16:56
Speaker
If a job, there's quality assurance issues that don't get identified until two weeks after whatever. yeah Assuming that person is still there, it would just be docked out of out whatever the the future bonus would have been for another project.
00:17:12
Speaker
The system has two kind of um safety valves for this. The first is most all of our clients will pay bonuses somewhat in arrears. So usually a month in arrears.
00:17:24
Speaker
Now, once you're on that schedule, I'd... I personally encourage you to pay bonuses every week. If they've accrued some money, pay it to them. but But if it's sitting a month in arrears, it's not unreasonable. And that way, if something comes up, that job is still open in our system. And so if they clock back into that within your time tracking, your job costing system, it'll automatically still be eating into whatever that budget was.
Implementing ProTiv: Challenges and Considerations
00:17:46
Speaker
So that's automatic. Now, if they've already been paid the bonus, you can't go back and claw back or put deductions on a future bonus check. Now, if they coincidentally were paid a bonus and then they left your company the next day, can't help you. so But as a general structure, though, it it we wanted really, again, it's two kind of bites at recalling bonuses based on on the quality.
00:18:11
Speaker
And the first one's very automatic. The second one's manual. Most of the time, it's not always, but most of the time we tend to have a good sense of where our quality issues are within 30 days or so or less. Some kind of some people know within hours, some people, you some depends on your trade, depending on the business you're in Um, the landscaper generally knows because Mrs. Smith calls the next day and said they didn't do the backyard.
00:18:32
Speaker
know, you know, pretty quickly. Yeah. Um, second question, learning curve on this. So I guess, uh, two part question one, uh, what's the learning curve for somebody adopting this for an organization? Like how, how much of a lead time do they need and how intensive is it? And I guess that ties into the second one is so day, day one, somebody wants to adopt this. What is kind of the ah learning process of how it all works initially integrated into the the organization and then the time that it takes to get it up and running and, and smooth.
00:19:11
Speaker
Yeah, I've seen companies launch in a week and go from nice to meet you to we're deploying and you know this is changing the world for us.
00:19:23
Speaker
I've seen people take three months just looking at their data. We actually usually deploy our customers into a sandbox environment where their system, once we're integrated into whatever operating system with Procore, Buildertrend, ServiceTitan, the Spires of the world, all these different platforms we tie to Once we start pulling that data into our system, they see their whole bonus incentive structure live in our software before they ever tell their employees about it.
00:19:51
Speaker
And sometimes they just want to get comfortable with the way that it's running because there are settings and configurations that they may change their mind about. So lot of times they'll watch the data come in for a bit. They may realize that um Wow, we never make our budgets on a job.
00:20:07
Speaker
Every single one of our jobs goes over budget. Okay, you know this they're never going to make a bonus if that's the case, so let's look at that. baby there um Maybe they're not clocking into the right jobs and the time data is just not right because you get some discipline around the way you're clocking in.
00:20:24
Speaker
So a lot of times the initial setup is just to validate that their operating processes will work well in this. We get that with their data running live. The next part is really when do they want to kind of announce to their team?
00:20:39
Speaker
When you launch this, it needs to be a big deal. And so it's not that it takes a long time. i actually do an integration over to, you know, Procore in about five minutes. It's not the integration of the systems.
00:20:51
Speaker
It's more that once you tell your team, you need to go but You can't be, you don't stick your toe in the water for something like this because it's, It's too big a deal. You're literally shaping the way that they're paid.
00:21:05
Speaker
you're You're interacting with the way that they're they feel value in working there. If you think about it, they associate your perception of your your value, of what they think you value them based on their hourly wage.
00:21:18
Speaker
You pay me $25 an hour. That's what I think I'm valued in your mind. When you go down a performance pay model, they have a chance to earn more. It's it's a really big psychological step when it's presented right.
00:21:31
Speaker
So you've got to lean into that. You can't be, oh, you know, we're just going to try it with these two guys. You're just going to piss off a whole bunch of other people, right? It's like, wait, we're not worth performance pay. Like, you know, it's when you go down this road, it is, it works. It's just a function of where you're ready culturally to dive down that, down that.
00:21:53
Speaker
I've seen companies that they aren't ready for it culturally too. it just they willll They'll call us two months later and be like, we're we're all over the board on our estimating.
00:22:05
Speaker
I haven't been communicating well. but My guys, we've got problems. I've got other problems. I've had to let a supervisor go. got internal issues that kind of limit me from launching.
00:22:17
Speaker
Again, you kind of need to have some certain things in order. If you're estimating as a train wreck, this is not the time to launch produce. You need to kind of get some of your numbers under control.
00:22:27
Speaker
So small companies can pull it off. Bigger companies, it tends to be a home run. So I think I saw it might have been on one of your other podcasts or or something that you were on that there was the 20% kind of figure thrown out there as far as AB.
00:22:44
Speaker
ah What companies have seen as far as productivity increase? or but like but what What other metrics have you seen from companies that have adopted product? There are a couple of things from a impact to just overall productivity. In other words, I have a budget of a thousand hours. How frequently do I come in under that budget? I've seen clients have several different impacts based on their trade for For a commercial industrial electrician, they're not getting 20% improvement, but they can get 10.
00:23:13
Speaker
That's not uncommon. Get a 10% production lift on of your team. I've seen landscaping and painting companies hit 20. it's They've got a different gear. The more labor intense, I mean, raw physical labor intense the job is, the more I think the opportunity is for this to move the needle.
00:23:31
Speaker
And I will say the more that their teamwork makes a difference. Because what you can really get from teamwork and communication is another gear out of the output of a group.
00:23:42
Speaker
So if there's a real teamwork ah element to it, you can get them to work better as a team and communicate better. That can really drive production. Overall labor costs, we're seeing reduction in labor costs.
00:23:53
Speaker
depends on how you split this with your workers, but four to 8% is not uncommon. and Reduction in overall labor costs. Worker wages up about a eight to 11%.
00:24:05
Speaker
So it's ah it depends on how you split the savings. with We have companies that pay 100% of the savings on a job to their team. We have companies that do it 50-50, lot of people in between.
00:24:18
Speaker
So that kind of drives where the impact is to your labor costs versus impact to worker wages. Okay. That was actually my next question was was exactly that was what what do you see in most companies doing?
00:24:28
Speaker
You know, what kind of savings? Yeah, I think that's 75, 25. If had to just, actually don't know the exact number, but it's probably in that universe. think we tend to coach towards that a little bit. ah It's not.
00:24:41
Speaker
i think 100% works if you've got such a backlog of labor, of work, and you just can't get all the work done. And you want to, honestly, getting jobs done faster is the only thing that matters because you've got so much to do.
00:24:53
Speaker
Pay your team. if Look, in theory, you're supposed to be happy if you hit your labor budget, right? I mean, we bid the job. i thought it going cost me a dollar in labor. I got it done for a dollar. I'm supposed to have my margin somewhat safe.
00:25:07
Speaker
Labor's always our, not always, but usually our biggest variable costs. I mean, most of time our materials somewhat land where our materials are supposed to land. And our GNA is what it is and et cetera. But our labor is what tends to bite us if we get a foul of something on a job.
00:25:23
Speaker
And so if I can hit my labor budget, I bet everybody out there would take that bet today. If I said, you're going to always hit your labor budget for the rest of your life, they'd be like, sold. Honestly, I'm good. That's I'm done now. I'm happy contractor.
00:25:37
Speaker
So we tend to say, OK, well, why do you get greedy in trying to take half of the savings from your workers? and Maybe it's not greed. Maybe it's just the fact that I think I'm overpaying because I know they can go a lot faster.
00:25:50
Speaker
I know from personal experience that my carpenters were significantly faster. These guys were unbelievably fast once I put them on performance pay. They could put up cabinets like Lightspeed.
00:26:02
Speaker
Like, where was this before? right And all of a sudden I see them, I'm like, you guys are getting done and in six and a half hours that used to take you 10. And your job site's all organized. there's not a bunch of crap everywhere. Like, this is awesome.
00:26:15
Speaker
You know, and one of them actually even said the quiet part out loud. actually got it on video. I don't think he realized what he was saying. He said, well, my approach to quality in particular changed once I went on Propay because it cost me too much money to go back.
00:26:28
Speaker
And I was like, what? His name's Frank. I was like, Frank, really? Welcome to my world, Frank. you know it's it's the Once they grasp that the labor budget is their money, their approach to what i can i actually get done, there's so much anecdotal and There's evidence, everybody out there, every contractor listening probably seen an example of this somewhere in their career path of, yeah, we we paid them a flat amount for this and all sudden they just knocked it out so fast.
00:26:56
Speaker
But there's actual um university research on the impact of of traditional piece rate, which is kind of, we're kind of a blend of the piece rate and hourly. And when you look at what that does to overall productivity, it is it's undeniably more efficient.
00:27:14
Speaker
ah Universally, across every task you give a human to do, you pay them by what they produce, they produce more. Just what it is. Now, how do I do that without rotating too far into quality issues? And how do I do that without getting afoul of the rules? And that's where pro of we manage the legal compliance around this in all 50 states, Canada, et cetera.
00:27:36
Speaker
Okay.
Long-term Incentives and Employee Retention
00:27:37
Speaker
This is a little bit of a two-part question. So on KPIs, so obviously you've been in construction. You've also been in this obviously ProTiv area. What are some KPIs that you would recommend people track? And then the second part of that question being, does ProTiv track all of that and kind how?
00:27:56
Speaker
Yeah, we're not tracking, we're not usually tracking their KPI. Their KPIs are applied as structure to what they pay bonuses on outside of the budget. So our system is going to manage the budget and then it manages the proration of who gets paid what based on who worked on the job.
00:28:13
Speaker
That's structurally what the calculators are doing behind the scenes in our tool and making sure you're calculating for the right overtime differentials and some other things legally. Now, What I have seen, it varies quite a bit by trade.
00:28:26
Speaker
I have seen landscaping companies that just wanted to deal with the no-call, no-shows. like yeah They've got 400 people, and they're just every day when 17 people don't show up for work.
00:28:38
Speaker
They are painters. you know where They've got 11 painters, and every week, at least two of them call don't show up. But they can't find anybody else, so they've got to take them back. Right. And that so um in our own company, we had a no call, no show problem.
00:28:51
Speaker
And we put a we put a stake through that heart when we basically tied their bonus payouts to they can't have a no call, no show. So for us, that was a policy KPI. It just, it had to be zero.
00:29:03
Speaker
And if it wasn't zero, you didn't get your bonus. And when you could see on your phone that you had $275 coming in bonuses, you would not call out. You've got, well, you can call out, but you can't not show up. That was it yeah that was the part that always bit me. I was like, you know, fine, let me know you're not coming, but that's just rude.
00:29:19
Speaker
So the other side is I've seen we have a contractor that has a preventive maintenance schedule. They have a lot of heavy equipment and they have a bunch of preventive maintenance or equipment operators supposed to handle. And if the preventive maintenance schedules are not completed on time, they don't pay the bonuses until all that's turned in.
00:29:36
Speaker
but I thought that was an interesting set up of goals for them. We have quite a few contractors that are applying. their safety training ah policies to bonus payouts. So if you, what OSHA doesn't let you do is say, if you don't have an accident, you get a bonus, right? That's can't kind of verboten.
00:29:57
Speaker
But you can say you have to, you get a bonus if you complete all these safety classes, you do your toolbox talks, you wear your PPE, whatever, don't have you know any any safety you know violations when I come walk your job site.
00:30:12
Speaker
If you do all those things, then then your bonus is available to you, or maybe you get a certain number of points off. One company has this kind of elaborate points thing where you know you can get a couple of points off and you're okay, but you get too many points off, you start to lose money.
00:30:26
Speaker
which I thought, you know, it depends on how complex you want to get. Interesting, a lot of those systems exist today in these companies. They've got models like that. What they don't have is an environment to wrap the incentive into it in a way that's tied back to the labor budget.
00:30:42
Speaker
but So what we're doing is actually linking those two things together. So we're funding a lot of what people may just set line item budgets aside and say, we're going to fund a $5,000 pool for everybody does all their safety training.
00:30:55
Speaker
Instead, we're going say we're going to have this larger pool of money based on the productivity savings, and we're going to link this release to the achievement of certain safety targets, such as, you know, going to make sure everybody did all their time into their toolbox talk to watch their videos or whatever they're supposed to do. You might be able to help with that.
00:31:14
Speaker
yeah That has occurred to me when we first met. was like, oh because so much safety content so bad, right? And it's just how do we get better safety content in the hands of the guys?
00:31:25
Speaker
And what i envision is actually that when I'm looking at my phone check, when I see my balance that I want to put into my bank account, I can't get that money until I finish watching until I finish checking off why i take this little test. i get Whatever it is i need to do these little bite-sized pieces is what I'm envisioning.
00:31:46
Speaker
I need to do these things and then I can move that money to my bank account. That is just a powerful step right there. Because it's my money. It's sitting there. I'm going to get it. I'm probably required to pay it to you if you leave tomorrow.
00:32:01
Speaker
But I can tie its release to, yeah we have to do our safety class. yeah Whatever. have to wear a blue shirt. I don't know. Whatever. You have to take a photo of your job site. You have to clean your truck. I've seen so many people care about different things.
00:32:14
Speaker
You to put your cones out. I want to see a photo of cones around your landscaping truck. every job, every stop. If I don't see that photo attached to every job, you're not getting your bonus.
00:32:25
Speaker
we We use Procore a lot, which you're familiar with. And lot some of the stuff we do there is the photos and stuff like that, because a lot of our crews work remotely. So but they may leave on a Friday return or leave on a Monday return on a Friday.
00:32:37
Speaker
So it's a remote job. We can't be there physically present every day. So we rely on those photos a lot to kind of say, Hey, are you following the rules in the field? Are you doing these things? And what's the quality look like? Let's see a before and after photo stuff like that. So I i love that aspect of it.
00:32:51
Speaker
Um, But you know the one thing I, as I kind of dive into this, i I love it overall. You know, so that's why I think, you know, I said earlier in the call or podcast is I'm going to my team reach out to you because I see a neat.
00:33:06
Speaker
um And I know if I put myself in the worker's shoe, you know, I'm someone obviously an entrepreneur. So I, I worked that way in my head, but if I was working for someone else, I would be a lot more apt to perform better with a system like this or with EOS, which is the entrepreneurial operating system, because that gives me some ownership.
00:33:27
Speaker
We think EOS and this lay really well against each other. the yeah the the The incentive program, long-term incentive program. So I imagine there's an element if they can see jobs stacked up over the next three, six months, that's money that they actually see as potential earning or earning potential bonuses that are are on the horizon. And they can probably, especially if it's repetitive type jobs or things that they've done before,
00:33:54
Speaker
they have probably a pretty good estimation for what they would potentially make on each one of those, as long as they went in the most optimal fashion. I know working for a major corporation, when they give the stock programs and it doesn't vest until three years, I've seen scores of friends like, man, I really want to move on or do something. But,
00:34:19
Speaker
I've got X amount vesting next year. It works for keeping talent. Yeah. I think there's something to be said for creating a long-term, uh, model for, ah want you to stay. And I think that can get real creative based on role, based on, um, on the type of trade that you have, the size of your company.
00:34:43
Speaker
think there's really interesting things. I have seen some of the coolest models around employee owned, uh, businesses that really, they those those folks stay forever.
00:34:55
Speaker
Not forever, frankly, they don't have stay forever because usually they're going to retire at 47 because they can. you know It's like these they're coming out of college at 17, they go to work there and 30 years later, they are done if they want to be and done well, right? Because those companies really pay it back to their employees. i think that's an amazing financial model and it works in certain spaces.
00:35:14
Speaker
I don't know if that's the right model for everybody. got to have an owner that doesn't want to own the company anymore, but There's something really powerful about that. I think we're we're a short-term incentive designed to evolve worker behavior at the job site each day.
00:35:31
Speaker
and People often have a Christmas bonus. You ever gotten holiday bonus, Travis, Christmas bonus? Yeah. yeah So the question i always ask people when they say they do that is like, do you think that Bob is changing what he's doing at your job site on Tuesday, April 9th because he's getting a Christmas bonus?
00:35:50
Speaker
you know that that is not It doesn't impact his behavior. And so I think that there if what you're trying to do is get people to think about long-term career, there's a way to do that. and i think there's models for that. I think what I'm trying to do with Protiv is influence what he's doing at the job today.
00:36:05
Speaker
but How does he behave within that context of thinking about how do I finish this task? How do I get through this phase of this project? Do this the right way? like Incentivize him to feel that um and own it.
00:36:20
Speaker
He's winning. You're winning.
Adoption of ProTiv: Company Size and Culture
00:36:24
Speaker
ah Have you seen any trends as far as adoption? ah Established companies versus newly started, younger owned, younger staffed versus legacy, older staff that are are more reluctant to adopt technology. Has there been any like noticeable trends in any of that?
00:36:45
Speaker
So i we've definitely got a couple of customers where the son of the owner is the one implementing our tool. um Sure, of course. And I think most any ah most software platforms and in construction can attest to that being a true thing.
00:37:02
Speaker
Interesting though, the bigger driver of people leaning towards ProDev is actually there're their desire to build culture. that in which tends to be bigger companies. When you reach a certain point, and I think it's probably where um maybe 20 employees on average, maybe somewhere, I bet in that universe, I'm not probably way off, especially once you've got your first person gets hired that you don't know personally, right? the Because every company makes that step at some point where there's somebody working there and you're like, who's that person? Oh, they got hired last week. I've never seen them. They worked here for three months. I've never met them before.
00:37:40
Speaker
There's a moment in every yeah large company's history where the owner doesn't know somebody for the first time. At that point, you really better have your company culture on a good path because it's going to take a life of its own now.
00:37:55
Speaker
And i think you want to leverage the best tools. And I think we're a tool for or building a culture of performance that's deep in the organization.
00:38:07
Speaker
The other thing that we get, the other type of customer we get as a profile are people who've tried to do this already. A lot of people have tried to do this. There's a lot of people out there with spreadsheets, probably not dissimilar to the one that we started with. In fact, I bet they've got the same formulas that we used to have, and it just breaks its scale.
00:38:26
Speaker
And so they're all frustrated with this very manual, cumbersome spreadsheet process to try and track, how much do I owe Bob? right? Because Bob thinks he gets a different amount and Bob never does, know, it's just like this whole thing. It's it's a pain.
00:38:41
Speaker
These are really hard to manage. And in fact, technically, just because we've gone all the way down this road, Excel can't manage this at scale. It it simply doesn't have the right formulas and right interactivity to keep you compliant with all the rules, but including legal rules that go into how overtime is calculated, paid,
00:39:04
Speaker
for what's called a non-discretionary bonus. So we do that. That's where the software comes in and it's meaningfully different. so I love what you're saying there with the scale. So used to work for an organization that was more global in nature and had a saying that if it doesn't scale, it doesn't matter ah in the sense that, i mean, ah if you want to be anything more than your local service provider, no matter what what you're doing,
00:39:32
Speaker
you better have scalability in everything that you do. And so i love that this, or I love pointing out that this point, ah ah this product is scalable. It helps you scale. It scales with your business meant to scale.
00:39:45
Speaker
where Most of our current development effort is around facilitating Protiv at scale because we have such larger we have quite a few larger customers that are bringing it on and he just they have different needs. And so we're building out deeper infrastructure to handle kind of unlimited scale.
00:40:04
Speaker
You want to put 2,000 employees on, no problem. Right? so just Being able to support those things at scale. the Again, larger contractors have just different varied requirements than small ones do.
00:40:16
Speaker
Not worse or better or different, just different. Love it. Getting ready for that. Integrations are also a critical part of our roadmap. We are constantly adding them. And when we're integrated into your current operating system, which is our objective with every customer, we don't want to have to do anything in Protiv.
00:40:37
Speaker
other than go in and improve jobs and pay bu yeah click the pay the bonuses out. The actual integration of all your job data, all of your time data, et cetera, is seamless with whatever you're doing today.
00:40:48
Speaker
yeah I was curious on, Michael, and and if you have the data, was do you know what has retention for most of the companies improved post-implementation of Proto-Fo?
00:40:59
Speaker
Yeah, I wish I had a data point on that. I know anecdotally it's better. i know from our own experience that it was better. we Frankly, we didn't lose our good people anymore. it's here's Here's the dynamic I think everybody can relate to is when you hire Bob and Bob is really good, Bob's a really good painter. He's a really good tile guy. He's really good, you know whatever, pipe fitter.
00:41:24
Speaker
If Bob is really good, there's a really good chance Bob wants to be Bob's pipe fitting and not, you know, your Bob best contract, best dude on your team. So how do you close that gap for more of those type people?
00:41:39
Speaker
And we have painters working for us on our renovation teams that I know definitively could have started their own painting companies. They're good at what they did, really good at what they did.
00:41:50
Speaker
And they could manage a team of people who make them better. Those guys were one one bad week at work away from having their from leaving us and going to their own company. Everybody out there knows how much it hurts when you lose really good team members, right? We've all lost really good workers, really good leaders.
00:42:08
Speaker
I mean, like, wow, that's a big hole to fill. If I can give them a chance to uncap their earnings and let it and be very transparent with them, I keep more of them. It won't solve it all the time because sometimes people get that entrepreneurial bug, right? It's just they're in their DNA and eventually they're going to leave.
00:42:24
Speaker
But I want to keep them as long as I can. And i don't want to make the most of them because that's that's the team that makes you money. i had never I never got upset when I paid big bonuses because that meant they were just delivering.
00:42:37
Speaker
Oh, great. and great you make You're making $84 an hour as a painter? Great. I'm happy to write that check because that means my job finished ahead of budget.
00:42:47
Speaker
and I know as a contractor, that's where my margins improved. we both I don't know how everybody out there sits in terms of net profit margin. I know at the end of the year, we tend to look at our accountant and think he's stealing from us because where'd all the money go?
00:43:02
Speaker
you know We had $9 million dollars this year. Why did I not make any money? And yeah we were we were doing $10, $12, $15 million a year. And why are we not making any money?
00:43:13
Speaker
We were one of those contractors for a long time. And when you move four points in net profit, you know you go from three to seven, then you go from six to 10, that is game-changing for a lot of contractors.
00:43:26
Speaker
All of that pressure we feel because of the risk we take relative to the reward we get and the stress that goes along with knowing we're one job away from from complete bankruptcy of our business, most of us feel that way.
00:43:40
Speaker
It's when you actually reach a profit and net profit margin to actually put cash in your pocket at the end of the year that is far. four points higher, five points higher, which is what you can pull out of a higher level of production, that's game-changing. And we think that in the end is, we we think that's only part of the reason you should go down this road.
00:44:00
Speaker
You know, when you go to performance culture, you should be doing it for a broader set of reasons, but I promise you that will feel a whole lot better, you know, when you're sitting there talking to your accountant and not wanting to strangle them.
00:44:11
Speaker
Yeah, yeah. The reason I ask is, is it kind of goes back to that savings or more or profit.
Performance Pay and Talent Attraction
00:44:17
Speaker
is you know if it increases production obviously that's an increasing profit hopefully but at the same time if you've got a really high turnover rate that's costing you money so this is another aspect if it can lower that sum that's still another part is when you have an incentive program with especially one like this when our bonus just if you had any kind of a bonus program you just put that in your
00:44:43
Speaker
add you probably get a couple more resumes the minute when someone came into our company and introduced them and they're in for an interview the first thing we dove into is the fact that we our performance pay company this is our culture and they were like well i want 45 an hour because i'm the greatest carpenter in new york and like well Our carpenters make a base of $35 an hour, but they average about $62 because, know, we're on performance pay and they crush.
00:45:12
Speaker
Our good guys make a lot of money. and allison you know you cant And I'll tell you, if they don't respond positively to that, do not hire them. They're not the right guy. Not the right rule, right?
00:45:23
Speaker
It's just there's, you want people who are, or their brain just kicks on the minute that they see the opportunity to to use their skill to unlock their earnings.
00:45:34
Speaker
They don't want to come to your office and ask for a raise. There's no need anymore. We don't, that conversation almost just ends because it's, there's no, the raise is irrelevant. if If you're making $25 an hour, but you average 32, which we show them on our app, we show them what they're actually averaging.
00:45:51
Speaker
Getting a raise from 25 to 30 means you're still making 32. It doesn't change your actual take-home pay. your your So your conversations around raises are kind of different. Yeah. They're very different, actually.
00:46:06
Speaker
Yeah. I'm just kind of curious what you see with people who've implemented. Let's say they go into this and their average pay is, let's just say, 30 an hour for easy math. Yeah. Are they leaving it at 30 and adding this onto it? Or are they saying, hey, we're going to base pay at 25?
00:46:23
Speaker
We had that originally. We had that as a mindset a long time ago. We got rid of that because of the very obvious unintended consequences that pissed everybody off. The other thing is we always we want this to be.
00:46:39
Speaker
incentivize around the quality of what you do, right, as much as well as production. And we found that the fear of loss, which is, i have to go home to my wife and say, I made less money this week because I suck at what I'm doing, or because my boss didn't order the right brick.
00:46:54
Speaker
That fear drove them to cut corners. And so we saw more quality issues when their base pay was was defaulted down. We did test this in our own company and it just it caused quality issues.
00:47:07
Speaker
because they were afraid to lose money. Even if they were not going to lose money, they thought they might. So they started to rush. don't want them rush. I want them to think. Okay. No, that's good point. That's a really good point. Yeah, that's why was kind of curious, kind of what you guys have seen by that.
00:47:21
Speaker
It's yeah, it was something we originally thought that was a thing and we
Balancing Management Skills
00:47:26
Speaker
killed that. Okay. No, that's good to know. One thing, Michael, I was just kind of curious, obviously you've got, you know, a few years experience with Protiv. You've got, I'm looking back at the resume here. You've got several different other firms that you've been a part of.
00:47:38
Speaker
And I kind of want to know what is the number one piece of advice, if you can think of it if you go back to your career and and you think, okay, I got this guy listening today who maybe he's 30 years old. He's doing a couple million in business. Yeah.
00:47:51
Speaker
What's a major piece of advice you would give that guy? Yeah. um So I tend to put people, management tends to fall into one or two rough buckets. They tend to be people people. They tend numbers people.
00:48:04
Speaker
I know it's not completely all encompassing of everybody and some people can do both. I can't do both. I'm terrible numbers. But you better know which one you are and get really, really, really, really good at that and make sure you have someone else being really, really good at the other one.
00:48:20
Speaker
If you're just pure in numbers, you're going to miss opportunities with your people. If you're all people, beable people, people, can bankrupt your company real quick. cause You have no idea whether you're making any money or not. and And I think that those two elements are, they rarely exist in one person. It's not that they can't, but they don't often.
00:48:38
Speaker
and And I'm just a big fan of lean into your strengths. I'd really encourage people to find it. Think about just those two broad areas. Which one do I love? I love um love out there talking to customers. Love out there, you know, talking to the guys and, you know, getting to know people. And I know everybody's name. I know their kids' names.
00:48:55
Speaker
Okay, you're people person. You know, if you're like, I don't really, i don't know all my people, but I know exactly what, you know, what Jeremy's production rate was last week. i don't know if Jeremy's got kids or not, but I know he delivered three points less than Bob.
00:49:10
Speaker
You know, OK, well, you're more of a numbers person, right? So just really understanding who you are, lean into your strengths and make sure you got somebody to cover the other because you got to cover the other. So I tend to put really good attention, detail people around me. I tend to find someone who can really dig into the numbers for me.
00:49:26
Speaker
I master those things. And that's where we start to win, i think, in this kind of crazy game of business. now I think that's perfect. And I know, you know, a lot of us, especially the very beginning or younger years, you wore all the hats in the beginning, you know, and I remember, you know, looking back at those years, one of the first things I did, i can do numbers. I just don't enjoy it.
00:49:46
Speaker
You know, I would rather be more active in the company. Yeah. More, more strategic. more but yeah Yeah, exactly. but We'll get them to do it, you know, and, You don't have to have them full-time. Go get yourself a fractional you know CFO, if v whatever. yeah Find somebody who is really good at that because they're just better at it than you are.
00:50:05
Speaker
They're going to see things you don't see. right and that That's just a powerful ah tool, especially if you're trying to build a company, not just build a ah small business. right There's nothing wrong with having you know, small four person business provided for your family. And it's a context.
00:50:23
Speaker
The minute you want to scale outside of your own shadow as a contractor, it means you have to trust people in different ways. You're going to have have different tools. And you start adding zeros to your revenue number. Every one of those zeros you add to your revenue is a big shift in the way you operate your business. And so find people who are just Really good at that. I've been down those roads before. There's great tools out there.
00:50:46
Speaker
There's different groups you can be a part of with us. Breakthrough Academy and and yeah also and i know that's one big one out there. there's different associations and and trade associations you get involved in.
00:50:58
Speaker
Find consultants. Find one that just speaks your language and has been there before. You save yourself so much headache. I wish oh so many times in my life. and saved me a lot of time. Even even in Protiv, in case everybody's wondering or how hard this is to even see the forest with trees sometimes.
00:51:17
Speaker
I wish we ah we finally hired a CTO. If we'd have hired him a year sooner, oh my gosh, I can't imagine where we'd be right now. We'd be so far down the road with this whole platform.
00:51:29
Speaker
what What he's done, because he isn't guessing, or sometimes I was guessing about, oh, let's go build this. That'd be fun. You know he's not guessing. He knows how to build software but materially better than we do.
00:51:41
Speaker
Right. He's not guessing. So go hire people aren't guessing. That's so powerful. That's so powerful. Because I know like even internally with ah our contracting business, you know, we're 15 years in and I look back at like the last several years, I feel like we've really fine tuned like our management team.
00:51:57
Speaker
And, you know, but we have the right people in the right positions. Like we have a guy that's insane at tech and can build out these systems. You know, we've got a great general manager, good safety guy, you know, but it took so long to get there. But like you said, I did try to hire the weaknesses first, which for me was, Hey, let's go to the CPA firm and see if they can at least do our books and do some of this for So it's done right.
00:52:17
Speaker
Um, because I hate doing it. So anyway, but yeah, that's hugely powerful. Get, get your numbers under control, put great people around you. Oh, and answer your phone. Especially if any of you out there are smaller contractors still answering your phone.
00:52:29
Speaker
As an industry, we are terrible at this. i was about to drop the F-bomb right there. We are terrible at answering the phone. Answer your phone because your customer is calling. And I know they're probably going to complain.
00:52:40
Speaker
I know they're probably upset with you, but answer it anyway. Deal with Mrs. Smith or deal with Bob over at your big customer and take care of the problem. yeah Yeah, it is true. And it's kind of funny. So you you bring that up. And literally last night I was scrolling on Instagram and there was this story that popped up for some other contractor. And he just did this little funny skit where he pretends he's sitting his truck.
00:53:03
Speaker
And it said like, you're one. He answers the phone. He's all excited. Hey, this is Joe. Hey, how can I help you? today Yeah, I'll be right there, ma'am, to get to get this fixed for you. And then it fast forwards like, you know, you're two to three or whatever. And he like the phone raised. He kind of rolls his eyes and he like picks it up. You could tell he wasn't as excited.
00:53:20
Speaker
then like year 10, it showed him just looking at and hitting ignore. You know what mean? So it's very true in the industry. Yeah. I know that guy. I don't know who he is, but I know that guy. I know.
00:53:30
Speaker
Yeah. It's answer your phone. That's my, that's my final parting extra
Embracing Technology and Future Collaborations
00:53:34
Speaker
advice. Like we come up with 50 more if you want, but no, that's perfect. Travis, you got any final questions? We're nearing on the hour mark.
00:53:42
Speaker
I love the creativity and solving problems. And there's, everything we've seen in the industry is moving more towards tech. And I think we're in this sweet spot as a culture, as globally, where lot of this tech just didn't exist for a variety of reasons in years past, just because maybe the the economics weren't there, the the platforms weren't ready. But I think we're we're reaching a sweet spot where the stuff is cost effective. There are, it which unlocks other things. It unlocks exploration and building new things.
00:54:17
Speaker
And so, Definitely, even even though companies may or may not have adopted technology in the past, it's definitely something that they should be looking at in every area. And I love seeing new creative things like this that just weren't available ah in years past, but now are. But I think things like ProDev will be game changers for the industry, for those who adopt it and are willing to at least explore it and see if it's right for them.
00:54:47
Speaker
I appreciate y'all very much taking time, listening a little bit about what we're doing. I'm excited of what you guys have done as well on the safety front in particular. We can create better and better content there. I'd love to find some ways to to incentivize, using our terms, folks getting engaged in their safety and making sure they get home to their families every day.
00:55:06
Speaker
It does matter. Part of building a great culture in company is caring about your people. really grateful for y'all hosting this podcast and, and having this conversation today. Oh, thank you, Michael. Yeah. Let's definitely keep the conversation going.
00:55:19
Speaker
Where can our listener find you at? Follow you. Proto.com P R O T I V Proto.com. My email is Michael at Proto.com. Um, got LinkedIn, et cetera.
00:55:30
Speaker
Don't find me on Insta, Insta talk or any of that, but I'm aware that things exist, but yeah, Instagram. And then, uh, you those kinds of things too, but, um, You know, email, email over. Always happy to talk folks. if you People just have questions about, you know, whether it's about Proto or just building their contracting business. I can at least tell them some of the terrible things I did.
00:55:52
Speaker
There you go. I like it. Well, thank you so much for joining. That was a very helpful podcast. Helpful for me as well. Our team will definitely be in contact with you. So thank you, Michael. Travis, always a pleasure, my man.
00:56:03
Speaker
Thank you all. We'll see you next time.