Everyone wants to be compensated fairly, including Fire and Life Safety technicians. Like other industries, there are different models for how employees can receive payment. The most common compensation models that technicians see include commission, hourly, salary, and hybrid. Choosing the right model is essential for technicians and the Fire Service Providers that employ them.
Commission-Based Compensation
The U.S. Department of Labor (DOL) defines a sales commission as a payment given to an employee after completing a specific task, typically related to selling a certain quantity of goods or services. In addition to technicians, other roles that use this form of compensation in Fire Protection are sales reps, deficiency inspectors, and corporate development professionals.
The commission-based compensation model isn’t cut and dry. There are a few types frequently seen across industries. Homebase lists these to be:
- Straight commission: Employees earn a percentage of sales with no additional pay.
- Variable commission: Employees earn a fluctuating percentage based on sales targets, project/task output or metrics.
- Draw against commission: Employees receive advance payments deducted from future commissions.
Regardless of which commission the Fire Service Provider chooses, it substantially impacts payroll. That’s why the company and technician must keep detailed records to ensure each payment is correct.
Pros
While commission-based compensation is much different than typical hourly pay, it still can have significant benefits in the long run. One Fire Protection Veteran Sales Leader cites these as:
- Incentive-driven performance: Technicians are motivated to sell additional services or products (e.g., fire alarms, fire suppression systems), as their earnings are tied directly to performance.
- Lower fixed labor costs: Since technicians are paid based on sales or job completion, companies might have lower overhead costs than paying hourly or salaried employees.
- Higher potential earnings: Top performers can earn significantly more, attracting highly motivated individuals.
The higher potential earnings are typically the biggest plus of all these in the eyes of technicians. “The one company I was strictly commissioned for, the most that I got was, I think, about $4,000-$5,000,” said one former technician. “That was just for one week. But that was because I had one big ticket, and they had about 400 fire extinguishers. Every single one of them was due for service. So, it depends on the jobs that you have.”
Cons
Unfortunately, unpredictability is a big part of the business when there’s commission-based compensation. “With the smaller jobs, you’re not making as much because you have maybe one or two extinguishers, and you just don’t make much money off those,” one former technician said. Other common issues that arise with this compensation model, according to one Fire Protection Veteran Sales Leader, include:
- Customer relationships: Technicians may push for unnecessary products or services, potentially harming the company’s reputation if clients feel pressured.
- Limited control over workload: Technicians may neglect necessary but less profitable work if the commission is tied to a specific type of job.
- Job dissatisfaction: Many technicians are more comfortable in a pure service role and enjoy their job a lot less when pressured to sell.
Due to these downsides and lack of technicians overall, turnover continues to be a problem in the industry. “Companies nowadays, you got recruiters out there, and they’re just offering more money than others,” one Fire Protection Veteran said. “And when more money is involved, those technicians are jumping ship.” This has caused many Fire Service Providers to implement a salary model to help combat these issues. Consolidation has also increased technician compensation overall as larger companies want to grow.
Salary-Based Compensation
Salary-based compensation is quite the opposite of commission-based compensation. Technicians receive a fixed, regular salary for this payment model regardless of performance. According to the DOL, this predetermined amount is paid weekly or less frequently and can’t be reduced due to an employee’s performance.
Pros
Not having a commission means technicians aren’t worried about making specific numbers to get a high paycheck. This results in many positives for the Fire Service Provider and the technicians. One Fire Protection Veteran Sales Leader says some of these benefits include:
- Predictable costs for the company: Companies know exactly how much they will pay their technicians each month, which aids in budgeting and financial planning.
- Employee stability and loyalty: A salary can foster long-term commitment and reduce turnover, as employees receive a steady income regardless of seasonal work fluctuations.
- Focus on job satisfaction and quality: With salary pay, technicians may feel more secure and are often motivated to focus on the quality of their work rather than rushing jobs to increase their earnings.
According to one Fire Protection Veteran, another plus of this compensation model is that it can help reduce liability. “Technicians have the time to do the job properly, and they’re not worried about having to rush through that because when we rush through this stuff, we’re putting our name on it. So, we’re liable for that if we skip over something and it doesn’t work, we’re going to be the one that’s getting sued because of it.”
Cons
As grand as the salary compensation model may seem, some cons still come with it. One former technician finds these downsides to include:
- Less incentive for extra performance: Some technicians may not go the extra mile to boost productivity without a direct link between pay and output, which could mean deficiencies go unaddressed because of a lack of intrinsic motivation.
- Overhead costs: Salaries can be costly for companies, especially during periods of low demand when technicians may be underutilized.
- Potential for complacency: Some technicians may feel less motivated to improve their skills or take on extra responsibility if their pay remains the same regardless of effort.
While salary provides a layer of comfort, it doesn’t account for any overtime the technician may need each week. “There are companies out there that do salary, but for the technicians, they sometimes have to work a lot of overtime,” one former technician said. “So, a lot of technicians aren’t up to working salary and getting paid a set price and then not getting paid for that overtime they’re working.”
This is typically the case for exempt salaried employees. Those who are nonexempt are entitled to overtime pay. ADP says you’re an exempt employee if you satisfy the salary level and salary-basis tests. These include receiving a salary of at least $684 per week in full in any week they perform work, regardless of the quality or quantity of the work. Exempt employees must also pass the duties test. Under the standard duties test of the DOL, an employee’s primary duty must be that of an executive, administrative, or professional employee, which typically makes technicians exempt. Dealing with these regulations is one of the reasons why some companies include commissions in addition to their regular salary.
Salary Plus Commission Compensation
Many Fire Service Providers seem to be switching to regular salary compensation. However, many mom-and-pop companies have stuck to a salary and a commission incentive. Giving technicians a base salary with additional incentives can be the best of both worlds for those who don’t necessarily have a compensation preference. In addition, large companies that are acquiring smaller companies often implement an incentive for technicians.
Pros
One Fire Protection Veteran Sales Leader believes that offering a salary plus commission provides numerous advantages for technicians and companies. This hybrid approach can help Fire Service Providers strike an effective balance that promotes stability, motivation, and enhanced performance. Some key benefits of adopting this compensation model include:
- Balanced motivation: Hybrid models offer the best of both worlds—technicians receive an hourly wage for stability, with the opportunity to earn more based on performance.
- Flexibility: This model can be tailored to the specific needs of the business, with the right balance between fixed pay and performance-based incentives.
- Reduced turnover: Technicians have guaranteed pay, with the added benefit of performance-based rewards, making the position more attractive.
- Improved quality and quantity: The hybrid structure encourages the completion of work with high standards and motivation for extra effort or sales.
Ultimately, the salary plus commission model presents a balanced approach to technician compensation, blending stability with motivational incentives. By offering guaranteed pay and the potential for performance-based rewards, companies can foster a motivated workforce striving for excellence.
Cons
The salary plus commission approach can motivate technicians while providing stability, but it has potential drawbacks. One Fire Protection Veteran Sales Leader says some of the key cons to keep in mind include:
- Complex management: Tracking base pay and performance metrics (like commission or bonuses) can be administratively complex.
- Potential for dissatisfaction: If the balance between guaranteed pay and performance-based compensation is not well-calibrated, some technicians may feel they’re not fairly compensated.
- Risk of imbalance: If the commission portion is too low, the hybrid model may not motivate technicians as intended.
- Risk of devaluation: If individual incentives overshadow business priorities, technicians might devalue key activities and accounts that are beneficial for the company.
Nowadays, technicians are also becoming salespeople. A technician who’s also a salesperson working under this system can also result in upselling to maximize their profits. This does make the technician more money in the short term, but it also can create distrust between the customer and the Fire Service Provider in the long term. That’s why companies need to set the proper base salary to help offset this issue. Ensuring a strong culture with the right balance of supervision and accountability is crucial. There’s no substitute for leadership and training. For further resources and support, visit the FED Learning Center.
Importance of Informed Management
Sometimes, a lack of knowledge from management can result in compensation not matching the service. “A lot of it comes down to companies hiring management that’s never worked in the field, so they don’t know what we as technicians have to deal with,” one former technician said. “They’re like, ‘Alright, it should take you an hour to do that,’ but in reality, it’ll take us way more time than that. Since they’ve never been in the field, they don’t know about that, so it puts us in a bind and under immense stress to get these jobs done as quickly as possible.”
This type of management tends to lead to the cons mentioned above. “That’s why I always try to recommend managers, if they’re not familiar with that stuff, ride around with the technician and learn what they deal with on a day-to-day basis and learn the equipment,” one former technician said.
By having managers who genuinely understand what technicians go through daily, Fire Service Providers can fine-tune their compensation models to better match the work involved. This helps reduce stress and makes technicians feel valued and more satisfied with their jobs.
Conclusion
Regarding technician compensation, Fire Service Providers need to focus on hiring those whose values align with the company’s goals. That way, they can ensure they’re adaptable to the chosen compensation model. This also goes hand in hand with developing a good company culture. It’s up to them to create an environment that encourages ethical behavior and collaboration. This includes giving frequent feedback, reviewing compensation models regularly, and maintaining transparency. By doing the right things, companies can create a compensation system that drives performance and fosters a positive and sustainable work environment.
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