Employee Retention: 3 Cleaning Company Compensation Plans that Actually Work

Did your best cleaners quit?

When your employees leave, you lose time and money. Shuffling schedules while looking for more employees is a huge headache.

But there is a way to retain your best cleaning employees…

...and motivate them to work harder.

I want to share with you 3 cleaning company compensation tactics that will make it easier to hire and retain the highest-quality employees:

Why Great Compensation is the Best Way to GET AND KEEP Quality Employees

People work jobs so they can make money to provide for:

• themselves,
• their families,
• and their hobbies.

Think about your employees' problems and concerns as if they were your own and it will help you understand the decisions they make and motivate them to make the decisions that help your business.

Obviously, any compensation plan has to consider the company’s bottom line. You can’t pay people extravagantly if it means you won’t make a profit. You’re in business to make money to provide for yourself, your family, and your hobbies.

Here’s where the bottom line becomes a problem: If you always pay the bare minimum… if you always try to find “how can I pay my employees LESS?”... that will negatively impact your business. Employees who are treated that way start to do the bare minimum as a result. They’re always looking for a way to work less.

Employees who do the bare minimum to get by end up causing problems:

• They break equipment through carelessness.
• They break clients' possessions through carelessness.
• They miss spots and avoid high-effort portions of cleans.
• They WILL cost you clients and upsells.

Before adopting any compensation plan, consult your local labor laws or your business attorney (or accountant) about any legal issues with your plan. Unfortunately, I can’t offer a one-size-fits-all plan here because every locality is different. You can adapt any of these plans to work in your area, just stay within the bounds of the law.

The lowest paying employer has the lowest quality employees.

This is true in every industry. Low-ball employers who pay bottom-tier wages get bottom-tier employees and then those employees do bottom-tier work.

Consider who your ideal employee is (someone who is reliable, responsible, efficient, etc.) Now consider how much that person could get paid somewhere else. Look at entry level work in your area on GlassDoor. You want to hire the right people and dodge the biggest mistakes in your hiring process by knowing who you want.

Ask the Right Questions about Your Ideal Employee:

• Who are they (carefully define your ideal employee)?
• What is the peace of mind that kind of employee provides worth to you?
• What is the client happiness they’ll provide worth to you?

Now you’re in the right mindset to consider employee compensation. Remember: Employees are an investment.

3 Cleaning Company Compensation Plans and How to Use Them Effectively

1. Hourly - The Vanilla, Tried-and-True Plan

Pay your employees a standard $x/hr. It’s simple and it’s what most employers use. It’s the vanilla ice cream of cleaning company compensation. Nobody hates it, but it’s certainly not exciting like chocolate chip cookie dough ice cream.

Here’s the thing to keep in mind: You pay employees that same rate whether they’re working fast or slow, good or bad.

Pros:

• Easy to understand, easy to explain.
• Simple accounting/compliance with state laws.
• Provides employees with stable incomes (assuming hours are the same).

Cons:

• Encourages “clock-milking.”
• Doesn’t push employees to work faster or better.
• Your only leverage/motivator is threatening to fire people.

“I don’t know, Mom. Everyone else was doing it.”

Just because everyone does something doesn’t make it right or wrong. Everyone breathes air; right thing to do. Everyone tells lies; not the right thing to do. Remember your mom asking you about your friends and a cliff? Sometimes “everybody” is wrong.

Compensation is the same:

Everyone pays hourly because it’s the path of least resistance.

It may not be the best for your cleaning company compensation plan. If it is and you make that decision from a place of knowledge, awesome. If you haven’t considered other options, you don’t have any way of knowing it’s the right call.

2. Piece-Rate (Pay by Job): The Speed Clean Dream Plan

Pay your employees by the completed job. This can be flat-rate by the job, a percentage of the invoiced amount, or a variable amount depending on the size and difficulty of the house.

This system encourages speed and efficiency. When an employee’s pay is the same whether regardless of how long they take, they work more quickly.

That’s a two-edged sword. Employees in a hurry to get onto the next thing may cut corners. Be sure to have solid quality assurance plans, should you implement a piece-rate cleaning company compensation model.

Independent Contractors or Mis-Labeled Employees?

A piece-rate model is a good system to employ with independent contractors because it makes both of your lives easier.

You hire them to complete certain jobs, you pay them $X per job (or an agreed rate for each job, any of the above options will work). It saves you the accounting of paying contractors an hourly rate. It also saves the them the convoluted accounting of different hourly rates and different amounts of hours spent on jobs. Win-win.

The Catch: The Taxman Cometh

There are a lot of rules the IRS imposes to protect workers from being mistakenly identified as independent contractors (IC). This status is designed for small business owners operating without the protection of an LLC or corporation since being an independent contractor is an expensive status, come tax season. It's not designed for someone who works for a single employer.

If you wrongly classify an employee as an IC, you're likely to end up liable for $1000s in back-pay and taxes.

An employee:

• Is told when and where to work.
• Is told how to work (detailed instructions and training)
• Receives benefits (paid time off, seemingly permanent work, etc.)

An independent contractor:

• Is given specific jobs, decides on their own schedule and materials.
• Already knows the work, receives little instruction.
• Doesn’t receive normal employee benefits (PTO, seemingly permanent work, etc.)

If you classify all of your employees as independent contractors for tax purposes while also giving them vacation time and dictating their work schedule, you can get into serious trouble with the IRS and your state’s tax agency.

Don’t steal a nickel to get taken for a dime. Acknowledge the correct relationship with your employees or ICs.

Want The Ultimate Hiring Guide for Cleaning Companies? Get it now.

3. Hourly + Performance: The Happy Medium

A performance-based compensation model marries the strengths of the above models and strives to eliminate their weaknesses.

Pay your employees a flat hourly rate and then, on top of that, provide opportunities for bonuses based on how well they perform.

This is the model recommended by Martha Woodward of Dusting Divas.

This system:

• Pays a base hourly rate.
• Pay bonuses based on customer feedback.
• Pays rotating bonuses based on performance.

On whatever schedule or rate you set, employees get paid extra for getting positive feedback from customers. You can give this out as a bonus on their check or via paid time off. For example, 25 good reviews could equal a day of PTO (paid time off).

The rotating bonuses are the powerhouse of this system. This is where you can get your employees to solve your problems. If you’re having trouble with complaints about kitchens not being spotless, then you start a challenge for your staff. The cleaner with the most perfect kitchens at the end of month gets $200.

You can transfer any problem this way. Employees build habits during the challenge that carry over into the day to day. Wherever you’ve identified a problem, you can attach a bonus to solving it.

A system like this is best supported by constant feedback from your client base so that you can gauge employee performance. You can use Forms in SA to solicit feedback from clients after you service them (or on a monthly basis). To fully track customer satisfaction, Martha co-founded a software company called Quality Driven Software that can help you collect the data you need (and soon it’ll integrate with SA more fully).

A performance system of cleaning company compensation is adaptable to your business. It can meet your needs because you turn anything into a challenge. You budget for “bonuses” monthly, quarterly, whatever addresses your problems and create the challenge based on what you’re seeing in the business.

Good Cleaning Company Compensation Creates Good Cleaners

Paying your employees shouldn’t fill you with dread. Pay your employees for the kind of service you want them to provide and you’ll find that people “buy in” or they leave. If you’ve done everything you can to create a good employee and someone won’t get in line, then you have every reason to fire them. Employees who are paid well are less likely to leave and more likely to recommend quality friends and family for future openings.

If you pay peanuts, you’ll get what you pay for. You want the best employees and you’re going to have to pay top dollar to get them (otherwise, they’ll go work for a competitor who will respect them with fair compensation).

An employee is worth whatever someone is willing to pay them. Top-tier employees go for top dollar. They’re an investment, treat them like one.

Related: Need an Employee Handbook? A Simple Guide for Cleaning Businesses