If you want a high-performance company, you need high-performance people. And if you want high-performance people, you have to stop thinking like many owners who view compensation strictly as a fixed expense. That mindset can create an artificial ceiling on your company's growth.
Performance pay is a leadership and compensation system that the fastest-growing shops in the world implement. In order to successfully roll it out to your team, you need to adopt these 5 mindsets.
1. Commit to implementation, not shortcuts
Every owner wants the benefits of performance pay, but you must put in that elbow grease to make it work. The goal is to hire A players and create an environment where A players can flourish, but some owners skip the process that creates them. They jump right into the "commission plan" and ignore the structure, clarity, and expectations the plan functionally depends on.
For starters, you need to go through it with your entire leadership team. Performance pay isn't a set-it-and-forget-it endeavor. It's something you will structure your entire organization around and constantly iterate on the feedback provided by your team.
The system needs to be actively maintained. You need to be able to point to your system and say with confidence this is how it works. If you can't explain it simply, it's too complicated. Your team needs to be able to understand and operate within its bounds.
2. Pay people more because the market has already decided you have to
I've run into owners who are trying to set up performance pay to limit how much they pay their team. The common question is: "Why should I pay my guys more?"
The math is straightforward: the best people have options. Low pay attracts low performers. High pay attracts high performers.
Your employee quality is your company quality.
Truly great employees bring in bigger tickets, higher conversion, better service, fewer refunds, and fewer callbacks. They make customers happier. They stay longer.
How much your employees are making should be the last thing on your mind as long as those higher checks are tied to high profitability. Your goal should be thinking how you can continue to reward the best in your company to continue to get the output that you are looking for.
Instead of thinking "Why should I pay my guys more?" Ask yourself, "Are my employees incentivized to act like owners?"
3. Build an environment that great employees actually want to work in
Top-tier techs aren't just in it for the paycheck. They want a job where output matters more than tenure. They want upside. They want to win.
So your offer has to be so compelling that they can't say no.
That means:
- A structure where top performers make dramatically more
- Consistent coaching
- A culture that rewards effort and results
- A scoreboard that actually shows real-time performance data
If your great employees can't answer "why should I stay and work hard for you?", they won't.
4. Birds of a feather flock together
Hire B and C players, and they'll attract more B and C players. If you keep your B and C players and let them dictate the terms, they'll drag down the standard for everyone else.
When you implement your performance pay system, this is what is likely to happen: your top performers are going to perform at a higher level; everyone else will follow suit and improve their performance. However, there will be at least one employee who hates your performance pay system. This is inevitable.
Not every tradesman wants to have a performance pay structure. Generally, it's because incentivizing improved performance means you're naturally disincentivizing employees who coast. If you try to cater to these individuals, there is a high likelihood that this individual is going to create a lot of friction as you try to grow.
You've already decided this is best for your business. You need to own that decision and trust the system you've built. You'll know who in your organization falls under this category pretty quickly, and a lot of the time, they'll self-select out if they don't want to be held accountable to the new standard.
This is the nature of the beast and will inevitably improve your organization. Now, it'll be your job to make sure that you are focusing your energy on keeping and recruiting A players. And since you've decided to implement performance pay, you'll have the compensation system necessary for A players to thrive.
What a performance pay culture requires
- Clear expectations built around KPIs
- Rewards tied to behaviors you want more of
- Accountability when people fall short
- A clear path to get promoted
TeamBuyIn tip: If an employee asks for a raise, you should be able to point straight to their KPIs. If they exceed them, they get the bonus and are on the right track to get that promotion.
5. Redefine "performance pay," it's not just commission
Most owners think performance pay is "just commissions," but performance pay is much larger than that.
Performance pay can be divided into two main categories: One-Level Systems and Multi-Level Systems. Commission is a one-level system. At its core, the one-level system follows simple logic:
The Technician completes a specific Action/Task/Objective --> The Technician receives a predetermined Reward.
While it isn't the final destination for a scaling business, it is the best way to introduce your team to the "Ownership Mindset."
One-Level vs. Multi-Level
If the one-level system is about rewarding today's effort, the multi-level system is about rewarding tomorrow's growth. This is the long-term, scalable version of performance pay that turns a job into a career for your team.
Instead of chasing a one-off payout, your employees progress through a true career path, where hitting specific milestones earns them a permanent bump in base pay or bonus percentages. This model shifts the focus from simple tasks to well-rounded performance.
Does performance pay create a cut-throat culture?
A well-implemented performance pay system will create a high-performance culture.
When done right:
- A-players push each other
- Underperformers either step up to the new standard or move on to a shop that's a better fit
- Everyone knows what "good" looks like
- Coaching becomes simpler
- Customers win because employees are happier
If you roll out a performance pay structure without thinking carefully about how your team is wired, you might get exactly what you don't want: techs pressure selling, undermining each other, or gaming the system against the company's best interest to pad their numbers.
That's because performance pay amplifies your already existing culture.
For instance, some techs are driven by a leaderboard. Others shut down the moment they feel like they're competing against a coworker rather than a shared goal. Both can thrive under performance pay, but they need different things from you as a manager. The driven ones need challenge and visibility. The collaborative ones need to see how their individual performance connects to something bigger, whether that's the team, the shop's reputation, or the customer relationship.
A well-maintained culture means being explicit that techs are competing against a standard, not against each other. When done right, something good happens: A-players push each other upward. People who aren't a fit find their way to shops where the expectations are lower. Coaching gets simpler because everyone has a shared definition of what "good" looks like.
And at the end of the day, performance pay will lead to happy employees when you take this into account. And happy employees create happy customers. And happy customers generate more revenue for the business.
Does your pay structure encourage the best possible customer experience?
The five shifts in this post aren't just about paying people more. They're about building a business where the incentives finally have a clear target. They align what's good for the tech with what's good for the customer, and what's good for the customer is good for you.
When you get there, everything gets simpler. Coaching has a clear target. Hiring has a clear standard. Your best people stay, grow, and pull the rest of the team upward. And your customers feel the difference, even if they can't explain why.
That's what you're actually building toward.
So ask yourself, every day: does my pay structure encourage the best possible customer experience?
Work toward that answer until it's yes. Performance pay is just the catalyst to help you get there.