Blue Collar Business Podcast
Welcome to the Blue Collar Business Podcast with Sy Kirby. Dive deep into the world of hands-on entrepreneurship and the gritty side of making things happen. Join us for actionable tips on scaling your blue-collar business, managing teams, and staying ahead in an ever-evolving market. We'll also discuss the latest industry trends and innovations that could impact your bottom line. If you're passionate about the blue-collar world and eager to learn from those who've thrived in it, this podcast is a must-listen. Stay tuned for engaging conversations and real-world advice that can take your blue-collar business to new heights.
Blue Collar Business Podcast
Ep. 36 - Performance Pay in Construction: Boost Culture and Profits
What if your workers treated every dollar of your labor budget as if it were their own money? In this eye-opening conversation, Michael Fortinberry, co-founder and president of Protiv, reveals the fundamental flaw in how blue-collar businesses compensate their workforce – and how to fix it.
The contradiction is startling: contractors bid jobs based on production rates and material quantities, then pay their workers by the hour – essentially rewarding them for taking longer. "Their incentive is linked to time, the very thing that is the antagonist toward our success," Michael explains. This misalignment creates an adversarial relationship between management goals and worker compensation.
Performance-based pay offers a powerful alternative. By sharing the savings from under-budget jobs with the workers who created those efficiencies, companies transform their culture from merely putting in time to actively seeking better ways to complete projects. The results are revolutionary – crews begin holding each other accountable, equipment maintenance improves, and quality increases as workers see a direct financial benefit from doing things right the first time.
Host Sy Kirby shares his own journey toward implementing this model in his underground utilities company, highlighting the challenges of establishing the accounting and production tracking systems necessary to make it work. Michael emphasizes that successful implementation requires mastering your numbers through solid estimating and job costing, then building transparency around budgets and goals.
The conversation explores how Protiv software manages the legal complexities of performance bonuses while integrating with existing construction management platforms. More importantly, it addresses the cultural transformation required – authentic leadership, clear communication, and patience through the transition period when some workers inevitably resist the change.
Want to discover how performance pay could revolutionize your construction business? This episode delivers practical insights that could transform your profitability and workplace culture.
Click the link above for a free marketing audit with insights to boost your blue collar business!
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Hey, guys, welcome to the Blue Collar Business Podcast, where we discuss the realest, rawest, most relevant stories and strategies behind building every corner of a blue collar business. I'm your host, cy Kirby, and I want to help you in what it took me trial and error and a whole lot of money to learn the information that no one in this industry is willing to share. Whether you're under that shade tree or have your hard hat on, let's expand your toolbox, guys. Welcome back to another episode of the Blue Collar Business Podcast. I am sitting in this wonderful studio in the solo room, solo pod, today with a remote podcast happening, podcastvideoscom. Man, they are always upgrading their equipment. I've been here about a year, as you guys know, sitting on let us know how this new camera is in the solo pod room. I was just talking to our guest about it and, man, the clarity, always improving systems and how they're treating our guests, and I'm really proud to be a part of Podcast Videos team here Today.
Speaker 1:Guys, you're joining for another episode of Blue Collar Talk and you can find it all at bluecollarbusinesspodcastcom.
Speaker 1:You can watch for free on the website and you can listen for free on the website. You do not have to have any type of subscription platform, but if you do make sure and give us a following and a good rating on a podcast you do listen to and then check out for more Furthermore. Guys, today I'm really excited to be joined by a gentleman that has and shares the same passion I do about the things I'm currently going through in my business and working towards, and it's a different structure that a lot some of you, I know for a fact, have never heard of it. Some of you think of it as a pipe dream, some of you think it's fairytale land. But this gentleman I am bringing to you guys today to hear the success, some of the failures, to get where he's at, and he 100% has already spoken a little bit with me and it is pure experience coming out of his mouth. So everybody, welcome up Mr Michael Fortenberry, co-founder and president of ProTiv. Thank you so much for joining me today, sir.
Speaker 2:Hi, super excited to be here, my friend. We're going to talk about some fun stuff, for sure.
Speaker 1:For sure. A little bit of backstory on Mr Michael here. Number one again, thank you for your service, sir. Military veteran with the US Army, former partner I'm sorry partner and SVP at Perennial Construction Solutions. That is still an active company today. Construction Solutions, that is still an active company today. You've held executive roles in tech, real estate and construction from startups to 500 firms and then, of course, today, founded in 2021, your company and what you're going to be talking to us about today and the generalizations of where blue collarcollar companies fail within their pay structure, and how passionate you are about fixing those compensation systems in our industries, because we need you. Frankly, you know what I mean.
Speaker 2:Well, brother, I appreciate the introduction. It's so interesting because we serve and deal with a lot of contracts across different trades and so I've gotten to know folks from everything from heavy civil you know kind of space where you operate in to mom and pop landscaping companies, to big commercial electricians. You know roofing companies and concrete guys. We got a company that we're working with that this guy's got like 100 scuba divers that clean weeds off the bottom of lakes in the summer in the Midwest OK, I didn't know that was a thing, but that's apparently a job and he's like an underwater landscaper All right, that's cool.
Speaker 2:And there's a lot of amazing things out there that we do with our hands as contractors and all of us have pretty much a core set of challenges when it comes to we have hourly workers and I got a labor budget and those two things are often the bane of my daily existence. Like I got guys being paid by the hour and sometimes they act like they're paid by the hour. And how do I drive a culture in my organization where they come to work and care about what they're doing? I I want them to. You know. You know it turns out you get a free brain with every employee. I don't know if you knew that they come.
Speaker 2:The free is like a gift of purchase, and these guys come in and yet sometimes they don't bother with it because we don't. You know, it's just an hourly job, right? They're being paid by the hour. They do their thing, then they go home. What if they brought their brain to work every day? Okay, sometimes that may be more effective than others with some of our folks, but I'm telling you there's an opportunity to do more with these folks if we can get them to care. Hourly pay is not the best model for doing that You've. And get them to care. Hourly pay is not the best model for doing that. You got to do something else too, and that was the thesis we have when we started building performance pay model for our own construction company.
Speaker 1:Man, you hit the nail on the head. Paying somebody from the owner's perspective kind of makes me sit here and wonder. As I was sharing a little bit briefly on the intro before we started the show is that we are working our way towards this system and there's some obvious limiters to a new company or a startup. You know. First, zero to five years, no zero business knowledge. But I'm sitting here going why do I pay guys by the hour to get the job done at the same time where I'm trying to cut as many hours as possible from time and efficiency standpoint? You know what I mean.
Speaker 2:So yeah, oh, I know. So when you bid a job, you bid it by what linear feet?
Speaker 1:feet in some case, if you're putting pipe in yeah, either linear foot day production rate or, uh, yardage okay, yard, yeah.
Speaker 2:So I kind of let's just take this thesis. There's probably others out there. You've got some unit on which you went. You went and bid this job. You say, all right, I'm, I'm going to get X dollars per unit square feet, yards whatever, it doesn't matter. And so you got a budget. Now I got to put in 10 feet of this pipe and I'm getting a dollar a foot. I got $10 in revenue. I think it's going to cost me $4 in labor to do that, which is about we spend.
Speaker 2:About 40% of US construction is in labor. I got about four bucks. I got to pay my guys to put that in. It cost me about four bucks in materials. I got a dollar in GNA and I got about a buck in profit. Honestly, that's roughly the financial model for most construction companies in America. Yep. So how do I take that? But the biggest variable that I have and I have, you have everybody out there, I guarantee you is their labor. If you don't have your material costs somewhat under control, you're probably not long for this business anyway. So for the most part, we get our materials marginally within a range, most of our trades. What balances around and what everybody struggles with is that control over labor. How do I get my labor costs to be beyond budget? If I could guarantee every contractor out there right now, you'd always hit your labor budget Boy, there'd be cheers. We'd all be like man, I'm a happy camper.
Speaker 2:Everybody be a contractor, then Four out of the five people working in our industry are paid by the hour. Their incentive is linked to time. The way they make more money is to put more time in the thing that is the antagonist toward our success is the amount of time it takes, and that's how we reward them with actually how they get paid, and we can't unplug that. We are stuck with hourly pay. Structurally, in fact, if you're thinking about you subcontractors, that's probably not going to last much longer either. State of California, that's pretty much impossible. Now that's happening in more and more locations. The answer is not move to subcontractors. The answer is to get an incentive in place where your hourly team doesn't act like they're paid by the hour.
Speaker 1:Answer is to get an incentive in place where your hourly team doesn't act like they're paid by the hour. No, 100%, and I'm actually so. We have two groups of individuals. We talked about two different units. There.
Speaker 1:I've got yardage guys that are on the dirt side of things, and literally this topic of conversation that we're discussing right now just came up and my dirt superintendent, who does a phenomenal job, yes, he makes mistakes, but he's got a operator, that's, um, that is been with us, I want to say almost three years, now two years, maybe two or three years, and great guy, helps, helps production, helps save us mechanic in here and there. Well, he brought me something to light that I never even knew. I've got pipe guys. I'm a pipe guy, naturally right, I'm thinking like a pipe guy, I'm paying like a pipe crew. And he comes to me and he goes hey boss, did you know that so-and-so never gets any overtime? And I said, well, no, now that you say that, I'll look into it. And sure enough, I went back three or four months, zero overtime.
Speaker 1:Went back a year ago, zero overtime, and I'm like, oh my gosh. Then I feel like I'm slighting him, you know, of course, and so I start weighing this out. I asked the admin. I'm like, hey, we need to look at this. And I went back to my wife and I said, hey, I think we really need to look at this and we restructured about how we pay the dirt team compared to the pipe team and sharing with them what you're going to share a little bit of P4P or pay for performance and getting that way.
Speaker 1:But it always looks a little bit different and it's scary sounding for the employer to get it set up and go through the growing pains, because I may be getting off on a little bit of a tangent here, but I'd like you to probably discuss, to start with those guys like myself and I'll tell them myself that didn't have the accounting in place, the trustworthy enough and it's not like anybody's stealing any money never had anybody do any of that but it wasn't locked jaw tight enough because we were handling it in-house not saying that, it was my wife, mainly, and Ms Shea, and we're just learning what we learn as business owners, right, but we're not accountants. And so here we are trying to pay a structure. I've always been so scared to dangle that carrot in front of them and then, all of a sudden, it comes time to pay, and I don't have it. That's as a younger business, and so we've spent the last year really spending the time and dissecting that account. But maybe speak to them today.
Speaker 2:So the problem you're addressing right there and the fears you have. The problem you're addressing right there and the fears you have. I'm so familiar with that and we had to find a way to pull this off and solve that fear right, Because if I'm always afraid that, well, what if I end up overpaying or something? You never get there. You never end up going down this road. Now I'll start at the fundamental levels. People understand.
Speaker 2:There's really two things that are going to drive your success as a contractor. The first is you have to master your numbers. You talked about it from the standpoint. I just didn't know my accounting, Not just accounting. One you need to know your estimating. You have to get your estimating down. You're making wild guesses, You're just flirting disaster on every job. So the better you master your estimating, the better off you're going to be. Number two, you really have to understand your job costing and you just need to get a master class in job costing. If you go to the biggest contractors, the most successful guys out there, they are maniacal about their numbers. They are not guessing, they know their numbers. They are deep into job costing.
Speaker 2:That is one of the defining elements of success, because we operate on tight margins as contractors. All of us do. Nobody understands that and we take a lot of risk associated with that. Right, we think that we don't even always control. They can throw a job off and all of a sudden we're upside down on a project. So we've got to do everything we can to be on top of those numbers and control.
Speaker 2:The other thing you have to do to take financial control on one side. The other side is culture. You have to build a culture of an organization. Every company has a culture. Your company culture is just your company. Culture needs to be strong if you're going to scale, or the inefficiency that comes from a poor company culture will eat all of that success you had. Financially, you would estimate a job really well and you've got a team out there that just doesn't care and so they don't pay attention to detail and get reworked. It didn't matter that you estimated it great, it didn't matter that you bid it well, that you're on top of all your spend, that you got your material costs under control. If that team just didn't care enough to pay attention to detail and they put that trench, you know, two feet left of where it's supposed to be, I don't know whatever kind of crazy crap happens in your space.
Speaker 1:You know what I'm talking about.
Speaker 2:What did we do? We did something wrong. That's six and five. Why the hell did you? Good quality work, being on time, you know, using our PPE, doing all the right things so that we can be successful.
Speaker 2:That's culture, right. That's how you become an employer of choice. You get the best people to want to work for you. You keep your best employees. You're not churning people out.
Speaker 2:That's say, you deliver a great product to your customer. A lot of people say well, we're a customer forward. Customer comes first. Organization. Honestly, you should be employee first. You put your people first. Your people are going to deliver your product and that product is going to take care of your customer. Customer takes care of your profit.
Speaker 2:I didn't invent that. Smarter people made it. So dive deep into your people, care about them. Build a great company culture, Know your numbers. Parts one and two building a good contracting space, good contracting business.
Speaker 2:So our belief is that a pay-for-performance model starts at this foundation. I've got some sense of my numbers. I'm dialed in there. Now what I want to do is I want to build a culture of performance. So what pay for performance does? It says I'm going to incentivize you when we overperform as a company. So one of the great things is you don't have to worry about. I'm nervous about putting the carrot out there and not having the money, because the only carrot that goes out there is the savings that we create, because the only carrot that goes out there is the savings that we create. So Cy goes out there and he bids this job for the city. He says I've got this $10 job. I'm going to spend $4 in labor to get this job done and if I get that job done in $3 instead of $4, I've done it right. Customer's happy, we're safe. I've got a dollar left over. I am happy to share that money with the people who worked on that job.
Speaker 2:That's the easiest money I will ever spend, 100%. My problem is I don't want to go to $4.10. I want to be at $3.90. So I want to find a way to get that crew in the field to want to do that job right the first time, want to be efficient, want to bring that job in under budget Because if they'll do that I've got money left over. I can always afford that check because I had planned on spending more anyway. So that's why we find that it's not a big leap to get folks to be able to afford a performance pay plan, because the performance pay part of it comes from savings. Right, that's the key. You want to build a sustainable bonus program. You got to build it where it's coming out of savings.
Speaker 1:No, it 100% is. And I think the biggest thing in my space as I was learning again, I'll tell myself is that the guess you hit the nail on the head again with estimation and production and how we analyze those things is accounting. So they have to meet all three together and so you have to have an estimator that's analyzing his stuff from the back of the house into the front of the house. Get him some good, solid, consistent numbers. And then production we have to hold them accountable enough to what's happening in the field per those numbers. Now, if he screwed up, that's fine, let's find out where he screwed up. You know what I mean. But setting those production rates and giving that crew in the field hey guys, look, we're an underground contractor, stuff is going to happen, whatever's going to happen, but we have got to get in 50 feet a day, no matter what. I don't care if you're slapping 700 feet in a day. If there's one day that comes now I will also tell them this like, hey, if you get out on that job and you're beating your production rate, that bad day that does happen is not as bad as it was if we weren't meeting production and they were, you know over-subsceeding it, and that's where it all washes out. But man, it took me some time to figure out, okay, my estimation's here. That's driving this rate at this footage per day. Let's give them this footage, let's give them these rock numbers, let's give them this amount of pipe and give them that information. And as a small young business owner mid-market now, but as I was growing I was so scared to death to let my team in on all the information and I'm like it was like just screwing myself from the get go because I'm going to be the answer guy, no matter what If I don't let them in and share a little bit of this information of why I'm moving the way, I'm moving way, I'm moving anyways, but those production rates are so key to they got to have a base goal for all any of this to work with. So I just wanted to add on to your point here.
Speaker 1:And the other thing was was know your cost? I'm going to drive that home even more before we get past here, because KeyWit has a sign when they were anyways, I know the backstory of it, but they have a sign that they put on some of their projects. Literally it says know your costs. It's an orange construction sign. I'm getting one made for my daggum office, because you have to not just me, not just the admin and the estimator and the PM, but the superintendent and the foreman and the guys in the field should have an understanding from day one.
Speaker 1:We've got to hit a hundred foot a day or this job is hosed from the get-go. And as long as they're at least adhering to our production rates or giving us justifiable reasons of, hey, I can't adhere to this because of this site condition or this pipe or whatever, where we can push it back on that admin team and go hey guys, really need you to find out what's going on here. This is halting this. Or hey, did you guys not catch this? Was this not on the drawing? We're really screwing the pooch and this one's going to cost us.
Speaker 2:But production rates, man going to cost us, you know, but production rates, man. The step after that is to get the team to care about it.
Speaker 2:There's one thing for them to know, and I'm a big fan. I now oh, some people okay, open book management. I'll give you that's a debatable thing. I actually like it, but some don't, maybe different reasons. I'll tell you what needs to be open book. Is your labor budget? Maybe different reasons? I'll tell you what needs to be open book. Is your labor budget right? So so let's the labor budget. Is their money right? I want them to feel ownership of it. So take that labor budget and we actually in our, with our app, we actually put it on their phone. They see it yeah, same here see the labor budget.
Speaker 2:I want them to see every day what they've used so they know what's left, so they kind of take. I want them to feel like, okay, this is my money, cause they don't really care about your money. Cy.
Speaker 1:No, they don't.
Speaker 2:Took me years to figure that out, but they do care about their own money and they're actually somewhat accountable to their peers. So what you want to do is create this environment where they feel like that labor budget is their money Cause then they're going to treat it different. All right, so now, now they're. Now, once I've shown them the labor budget, I say look, you guys have four hours to do this. You got $4 to do this. Whatever it is, you have 5,000 hours to do this. How are we doing? You know, and what I'm doing is I actually?
Speaker 2:There's this fun conversation you can have where you go to the job site. You get the team around and say are you guys making any money on this job, this job? You think about that concept, right, because right now they get paid by the hour. So what do you mean? Making money on the job? No, are you making money on this job, or are you guys just only making your normal hour? Are you only making your hourly wage? Are you guys making any money? Like, yeah, I'm paying you 30 bucks an hour, but who cares about that? Don't you want to make 35? Don't you want that as bonuses? So are you guys making any money on this job? And talk to them Like are you tracking towards the goals that you set? You know you guys set that goal. You want to beat this budget by 10%, this job, are you on track for that? You ahead, you behind. So what we found is, when you can engage the team, show them the labor budgets, talk to them about it, and then what we believe is you have to have a transparency to it, where they can see it, and a simplicity to they understand what they personally get for performing better. So we use our app to show them. This is the dollar amount that's going to be in your pocket when this job is over. If you hit this goal, based on how you're performing, this is how much money is coming to you. When they can see the dollar amount, it becomes very real to them. You begin to get this buy-in to the behavior shift that we're looking for.
Speaker 2:The goal of an incentive plan is not to pay bonuses. The goal is to actually get behavior change. I want behavior change. I want the teamwork, I want the communication, I want the attention to detail. Those are the things that make me money as a contractor, not time. So I want to incentivize that and then I'm happy to share that savings. So that's where. That's where it was really born. It was born out of a need for, in our own construction company, to get our guys to finish the job right the first time and be out of schedule. If they could do that, frankly, I'm happy to share this. In fact, I'll give you most of this money that's left over. You know, I'm just already a happy guy at that point.
Speaker 1:My problem is being an underground guy and I can't even. That's what I used. That excuse for years, right was oh, I'm an underground guy, you know, but it's. It is a little bit more challenging to be consistent, um, on things you can't visibly see. Okay, okay, check mark, cool. But at the same time, it's up to me as the leader to go. This is unacceptable. If they could literally come in every single job under budget and under time, there's always going to be leftovers that I would love to sparse across.
Speaker 2:But you guys have the extra advantage You're saving money on equipment time too, I got a $40 an hour guy driving a $300 an hour piece of equipment. Those hours are worth a lot. Yeah, and I want to feel all those hours back I can and yeah, this is real money.
Speaker 1:Exactly, and so my struggle and I know a lot of our audience members are the same way is that they're in that, you know, maybe they're past that scale point of that one crewed into two crews and they're sitting here thinking in their head all right, I'm adding this third crew, or I have one crew that just absolutely kills it. And then I've got another crew that I'm literally just paying the bills to have. And I was there not too long ago with the crew that needed to dissolve and one of my longer tenured employees too, like that knows the difference and it's still kept happening and I had to. Once you buy into this system as a leader, you can't detour off of it for the people below you. Like, if you truly want to share your money, you got to make sure, as a leader, there's going to be money for them to have. So that's kind of where I was getting at with that, because there's I know there's guys sitting out there that want what you're talking about, but they're struggling to find the scalability to, and that comes with production rates and setting good estimation.
Speaker 1:I can get that, but I was there the same way as like well, it's like they'll settle, I think, is the word. They'll settle for a crew just to get the work to say, or just to do the work to say that they have. You know what I mean, instead of trying to be absolutely proficient with everything they touch and turn it into a money-making opportunity. I have as well, personally settled to have three guys out there, kind of laying pipe, but I know I'm going to have to go back and I'm just it's not the way to be thinking and I maybe speak to those individuals, because I know there's a couple of guys out there struggling like I was.
Speaker 2:We've seen organizations deploy performance pay and start to build this culture. Organizations deploy performance pay and start to build this culture. You might have. You know, maybe you got 20 people out there in the field. Two of those people are probably going to quit in the first 60 days because they don't want. You know where they quit from. They quit from the peer pressure, because what happens is Bob looks over at you and goes what are you doing today? We're trying to build this, we're trying to get this done so we can make this. No, we've got a bonus opportunity here on this job.
Speaker 2:Yeah, we've been doing good so far and all of a sudden you're screwing around the day and like come on, man, let's go. Like, why were you late this morning? Why is the equipment done? They're not on the feel like I've got a chance to make more money. I start to spend it. Right, you know, maybe you need shoes. Come on, let's go. And so now you get peer pressure down. The other thing that can happen with performance pay is, if your equipment is part of the problem, why they're not being efficient. Now they're like okay, well, whatever, I kind of deal with it because it's not my money Once it's their money. All of a sudden, now they're in size here.
Speaker 2:They're like I told you this thing you can't dig a hole with this excavator to save your life, you know, and, and so I need you to get this fixed. If they see that hydraulic leak, they're like I got to fix this because this equipment goes down. We're never going to get this job done. I'm going to miss my bonus, right? So I want them to take some more ownership of what's happening around them. I want them to be upset because you order the wrong pipe.
Speaker 2:The four-inch pipe shows up it's supposed to be six and they're like boss, get your act together, man, you're talking with money, accountability, structure Up and down the organization. Now, the difference is they can only go to their base wage, right, the way we approach it is there's a base wage. They get paid their base. That's their floor. You can go below zero. That's the risk for the owner, right? That's the challenge. That's the price of fame. So what we're trying to do is get them to take some ownership of it, say okay, we want to be successful on this job. I'm going to hold myself accountable, I'm going to hold my peers accountable, let's go?
Speaker 1:No, and you keep saying it's buy in, buy in, buy in.
Speaker 2:And.
Speaker 1:I will tell you. I thought, and you know, as an owner, hmm, you can buy, you can set up the wrong culture in, yes, the way that you're thinking of, the obvious way of your, you know, a complete dick to your guys. Nobody wants to work for you in that regard. But I'm telling you, I swung the other way and I told you exactly, michael, why I built this business with my wife was because I wanted to be better to my people and I was taking them on fishing trips and I was taking them to be like I would do anything for them, but at the same time, they weren't tangibly incentivized to get there. So, yes, it's cool, boss is doing this, but at the same time, it's like they earned it. They worked their ass off all year, there's no doubt about it. But did we really make money? Or did we just throw that on a credit card or what did we do? You know what I mean.
Speaker 2:And so it's a combination You're trying to wrap. These two things are not mutually exclusive. I want to build an environment where my team can earn more money by helping me be successful. Yeah, I want to give them some power. At the same time, I want to build a great place where you want to be just because you like the people you work with. We're social together. So that's why we're going to do a team lunch, we're going to go on a fishing trip, and those kinds of things are built on top of this performance culture, right? So now we've really created depth to the culture of our organization and that's a really winning position where people are going to want to come work there. You're telling me I've got control over my bonuses and my incentives and I can earn more Because I'll come in and tell you I'm the best excavator driver on earth and I want you to pay me more. Well, I don't know, but we're going to find out because our best guys make more because they're really good at what they do, and that's because we have this performance culture here and we reward our team automatically. You don't even have to ask for it. You guys deliver this job. We all make more money.
Speaker 2:The crazy part is that sometimes jobs don't come together. You go out and do this job. You didn't know there was 300 yards of solid granite. You're going to be going through that. Nobody knew was there for some reason. Okay, we're not going to make a bonus on this job, and that's you know what.
Speaker 2:Sometimes that happens. We're all on the same page, right? And if you order the wrong materials, they may come in and say well, don't we get our bonus? It's not our fault. Actually, no, you don't get your bonus because we're all on the same page. It's the same thing. We're all. If I don't make money, you're not making money. We're all in this together. We all have to do our job. Estimating has got to be strong. We've got to get our permits in. We've got to make sure the weather's got to cooperate right. We've got to not run into a giant boulder. You know the where. Don't crash my truck into a tree All the honored things that have to happen for us to make money. All of that has to come together and then we all make more money.
Speaker 1:That's right.
Speaker 2:We're sharing, we're in it together and that I like building a company like that.
Speaker 1:Man, I, I really have strived to put culture first, but it needs to be an incentivized structure to put us all on the same. You know, the same goals, the same milestones. We're hitting them together, not owners got an idea, labor pool's got another idea and we're just playing this teeter-totter to keep each other happy. And I've been there and it's not fun, but it and I'm just telling guys if this is something that's encouraging to hear we're fixing here just a little bit more past the points of hey, we've got to get okay, we've got to get this accounting. You may be sitting there going man, this sounds awesome, but my accounting is trash. Well, I was the same way. Guys, take the time, go, sit with a different CPA, find a fractional CFO, put the time in so you can get here. This isn't some fairytale pipe dream. Yes, it is going to take months of hard work. If you didn't have the right accounting and structures in place, you're going to have to unscrew that and then start over and then eventually you'll get here, but one day at a time, right.
Speaker 1:But I got to jump in here and talk about my guys at Blue Collar Performance Marketing Real quick. They have been unbelievable to work with here as of late, in the last 90 days, sycon's YouTube side and they've also been integrating the podcast videos team. They have been doing such a great job. And if you guys are looking for someone to help you in the marketing space, you're looking to start building a website, need a discovery call. Just don't know where to go bcperformancemarketingcom backslash bcbpodcast, or click the link in the description and you can schedule up a discovery call and they're giving you a free comp. They'll take a look at your website and your marketing program and get you on the right track. Just like we're talking about incentivizing your guys, make sure you're marketing to be able to sell enough work for them. So hit them up for that.
Speaker 1:But to continue, say, I'm in the seat, michael, now I'm fixing to be there, I'm fixing to have my accountant, I'm fixing to have production rates and the guys are starting to jive along and things and everything's going in the right direction. Of course I'm estimating correctly and I'm maybe losing a job or, you know, not winning on a job, but you know we're starting to really consistently produce some profit here. Tell us about that next step through ProTiv. Tell us a little bit about ProTiv and what it can do and how it does it.
Speaker 2:So ProTiv, the software that we built, this is something we again. We built this internally for our own company and it just worked really well. So, you know, now we have a software company, but it was originally it was just designed to, you know, to link the production, the budget that we had, back to the actual time and manage the distribution of the savings to the people who worked on the project. Simple idea what we've done with it since then is we've built it in a way where we integrate into the operating platforms that most of the folks listening here probably used, so the builder, trends and the pro cores and all these different platforms that are out there miters and QuickBooks and all that we integrate into those systems. We can pull your labor budget and we're going to take your time tracking from wherever you're tracking time QuickBooks, time, pro core, busy, busy, clockwork all those types of systems. We pull in your time data and we show the budgets in the actual to your crew in the field on their app and they can set goals and track how they're doing. If there's money left over, the software will allocate what the savings were out to the people who worked on the job, prorate it out and then based on wage rates, et cetera. However, you want to distribute incentives. That's what we do.
Speaker 2:The basic level is what Protiv is, and we found one. We were stunned that nothing like this existed in the market, like we just want a bonus program for hourly guys that's linked to the budget. I mean, it seems like that should be there, but it wasn't, so we ended up building it. We found the app was really important. It's really critical for them to see it on their phone. That's a big part of what changes behavior, and the real first step for a lot of folks, though, is just that decision that you want that culture. The software itself is pretty straightforward to use. The big step is always the culture step. How do I have conversations with my team about budgets? Most of the folks listening probably never talk about dollars with their workers. Now, you got to start doing that. You got to go out there and talk to Bob about the fact we've got four grand to do this job. Bob, how much is it going to cost you guys? Right? No Different.
Speaker 1:No, it's so funny On one of our goal lists right now is working towards an incentive-based structure. So we are 100% going to look into it ourselves and excited to hear more about it. But it's kind of funny, isn't it, how every software company in the dirt game I know there's other companies out there that have already been more software integrated, but a dirt contractor and a pipe contractor, you wouldn't necessarily. Maybe we got a first-time listener here. They wouldn't really think there's much software involved. Boy, would you be wrong? And the software line item every year drives me crazy. I'm like we're a dirt company, guys. Why?
Speaker 2:is it?
Speaker 1:Why are we spending 60, 70, $80,000 a year and commune, you know, compounded software? This doesn't even make sense to me. But you said the word that I, in the seamless process that you integrate with the time trackers, and you guys already know, because you've done it for yourself, you guys know that time tracking and documentation in the same spot can be very hard or clunky for one or the other, because we've done the same thing. We're going through trying to figure out mitigating the software line item of why do we have five pieces of software to do two things. So we've been really navigating that down. So we've been really navigating that down. But the number one thing, as you said, is having that app and that transparency and clarity for your guys out there in the field to be able to see it. And we actually you hit the first two on the nail on the head.
Speaker 1:Procore, we did that for two years I am not a Procore advocate at all, We'll skip right over and I went over to Builder's Trend for about a sixth of the cost Come on back. And we actually saw utilization from the guys out in the field, because it's not this format that. Anyways, I'm also a tier one subcontractor. They're also going oh, you're a heavy civil guy trying to. Well, I'm just trying to be proactive with documentation. With the baby steps of a company, as most companies look at it, they're just like, oh well, that's, you just have to do that. Well, you don't know what you don't know. Hell, I didn't know I needed to document everything I did until I got into a lawsuit and figured out that, oh well, I don't have any of my ducks in a row, let's put this into place and it's just 100% experience. But no, you.
Speaker 2:Actually you did bring something up right there. You talk about the lawsuit side. The legal side to performance pay is actually very specific. Good, we do this program nationally Canada and in California, which is the toughest state, and we spent quite a bit of time and money and legal dollars to make sure it's buttoned up so it is auditable correctly to the way that what's called a non-discretionary bonus has to be paid under Fair Labor Standards Act and California regulations. So if you're out there running a bonus program, a performance pay program, today, I would be happy to describe to you and I can get into it with you guys, with someone who wants to call us and talk to me about how it has to be done legally, because there are specific rules.
Speaker 2:It's easy to run afoul of those rules. It's very hard to do, almost impossible to do with Excel. For perspective, if you're just running one in Excel, you're probably not doing it right. Just sharing legally it's probably not correct. We can help folks with that. The way we manage it is legally compliant. I'm happy to share with people how to do it legally compliant. So the specific calculations have to take place. But it's awesome when you can get it right. You can really drive that behavior change. We encourage people to really lean into the bonuses as a thing to celebrate Guys, we did great on this job. We're you know. Here's the checks, here's the money. You know we're going to celebrate this. We're coming out. Here's exciting days Every time we finish these jobs up. We're paying bonuses monthly. Whatever you know, reward everybody. Talk about it. Who made the most, let's go do more next month. Build that in deep into that company culture, into those moments of celebration.
Speaker 1:And I know there's guys sitting there like myself. They go, I can't wait to get there. I can't wait to get there myself. They go, I can't wait to get there, I can't wait to get there. But, guys, you are going to have to go. 20% of whoever's working for you right now will not be there through halfway through this change. It is if you've been doing it off of one structure for so long, and that's why I'm nine years in the game and I'm literally 10, 11 years. I'm really from 10 to 15, ready to see this structure. You know what I mean. And really let these guys fly and make some money. Nothing would see me more happy as an owner. Why I designed this is to help the people that helped me build it. And how do you help them? Well, money or time off or whatever they care about.
Speaker 2:And we like that layer on other things. We think that you need to start with dollars, like that needs to be fundamental to your incentive comp structure is paying people more for doing well. But you can layer other things on. You can build in things like time off and other types of non-monetary rewards. We think that's great.
Speaker 1:No, I've always been big on money as a tool to buy time Me. I was not a money motivated guy. I just told you I was running 30 people for $18 an hour and all the documentation and everything else. I'm loyal to a fault when it comes to that and I've had a lot leave me because I'm not designed to do 70 hours a week. We didn't design this company to do 70 hours a freaking week, guys. I'm sorry, that's just not here. I didn't design it for 55. I didn't design it for 60. I designed it for 45, 50 hours a week. We get done what we're supposed to get done in a profitable manner and then you go spend time with your family and I know there's guys that want to chase the 70, 80 hours a week. But think about just maybe, if you're listening to me for just a minute, think about trading that 70, 80 hour work week for 45 or 50, making just amount of same amount of money and having more time. Owners buy into the concept.
Speaker 2:So you've done all the time. You've done all kinds of trades. Performance pay is always a better model. It doesn't mean it's easy always to put in place, but it is always a better model than just straight hourly pay period. It's really. There's no structure in which it's not. I can incentivize quality, I can incentivize safety, I can incentivize the overall production Time performance. The KPIs that you have to comp get you a better outcome. It's a human nature thing, so we love to help people get there if folks are interested in going down that road.
Speaker 1:What do you think the timeframe is for a contractor like we keep hitting around about to switch from the standard hourly structure to where you know on the backside just an average of what you've seen.
Speaker 2:So it depends on the size company and the length of cycle time of your jobs. Too right If you have jobs that last six months to a year.
Speaker 2:Sometimes the absorption of this takes a little longer. It's more complexities to it. I've seen companies launch this and being up and running the next week where they're full on deployed. I've seen other companies take a couple of months. Some of it is driven by how quickly you adopt it culturally. Are you ready for the communication level that that takes? We're pretty adept at helping customers to navigate that path. That's kind of what our onboarding teams do every day. So you know. But from an implementation standpoint we can often get our software up in 20 minutes. It's more. You know it's getting ready for that cultural adoption. The communication around it sometimes takes, you know, a little bit of time it sometimes takes a little bit of time.
Speaker 1:What are two things that folks can be working on outside of? Maybe they're like myself and they're super early stages and their culture's all over the place. What's two things that you can see commonly, that folks can start right now?
Speaker 2:One is be really authentic in your cultural. When you develop your culture, make sure it's authentic to who you are. If you are oh, how to put this Okay, if the most important thing to you Cy is that we finish our jobs on time.
Speaker 2:That, culturally, is that's going to be our rock. When we tell our customer it's going to be done on Friday, it's done on Friday. And if we're not sleeping, if we're here all night in the rain, it doesn't matter. We're completing our time. If your culture and now let's take side number two Side number two says the most important thing to me is that you have the right balance with your family. If your kid's got a baseball game on Thursday at 5.30. I'm going to make sure you're out of here by five so you get your kid's game. That's actually the most important thing to me. You need to be authentic to that version of you, because you can only fake it for so long. Authenticity in your culture is critical. I'm not saying one of those cultures is better than the other.
Speaker 2:No yeah, you need to know who you are and what matters to you. When you no, yeah, you tell everybody it's get to your kid's game. It won't ever work that way and now you will have a broken communication chain with your people, lack of trust. Just be genuine. This is who we are. This is what it takes to work here and this is the kind of thing we're going to honor and respect and reward in terms of you know the people we bring in and the way we're going to treat them. That's it. And then run with that man, go, go, build on that. And when it means a lot of people talk about. Communication is central to culture. I want to emphasize that. That's bi-directional communication. It's not that you just are good at telling people what to do and what's going on and giving them information. It's you're listening back to from them and you actually care about what they say.
Speaker 1:It doesn't mean they're always right, but you make an effort to care about what they say and it matters man, I actually it's funny you say that because, as you can see me, I was reaching for that ear because, uh, it hit me, oh, I'd say probably eight months ago, and we were just over communicating just every little thing to everyone email written and I'm like, are we just not listening, guys? Like are we just, do we just not care to listen to each other? Because if Sally Sue doesn't get her answer about Bobby's pipe, she can't do anything to get her job paid, to get her job done, to get us paid, so she can pay Billy Bob. You're like we're just not even caring. And I, literally, in a Monday morning meeting, I was just like this has got to quit. We got to answer each other, we got to like what is going on, and it was one of those meetings where, you know, a couple of people came not bosses, ain't gonna work for't going to work for me, deuces, you know, and I'm like, well, I'm sorry, where we're going isn't where everybody wants to go, but there's a large majority of us here that really want to do it and don't. I will tell you guys that are sitting there.
Speaker 1:Before we ask Michael one last question, the guys that are sitting there going. Well, this guy, and this guy is never going to buy in. Good, get rid of them. Get rid of them now, right, freaking now. Because if they can't see to the end of where you're going, they'll never make it to there. Number one, number two, when they get there, they're going to be the first ones to say, oh well, this isn't working. I told you so.
Speaker 1:And jump, I'm telling you guys, it is a little bit of a long transition and I'm in the middle of it with you guys. I'm literally got guys. I was talking with Michael man. I've got these guys leaving. Yes, trust the process. There's a reason this is all happening. Because where you're going, you're going to take those people that have been working behind the scenes for you, doing every little thing you've asked and you haven't even seen that they are yet. And I'm literally starting to see that myself through my own experience. I'm like, oh my gosh, how how did I not see this guy before? Like the last six months, paperwork is boom, boom, boom, boom, boom, boom, boom, boom, boom jobs, coming in on time every time. Like everybody likes him, like what am I doing, cy? And? But I would encourage you you leaders as well man, just take a minute. Look inside my and I, michael, hit it have the purpose designed of what your company is.
Speaker 1:We are a family first company, Always have been, since day freaking one. I've had a lot of these guys or younger guys with me. They've had younger babies and my office manager she stayed at home, we paid her. I've always anything around family. Your kid's sick, bye, we'll just jump in and we'll take care of it because that's an extension of us. We're here feeding them, we're here protecting and providing for them, like that's our number one thing. And we've got to understand that and it always has. Now there's people that also take advantage once they find out. And I understand you guys sitting there, you don't understand what this guy and that guy Listen, you don't understand what from family blood, non-blood. Anybody that's done this we do understand. Anybody that's done 10, 20 years of dealing with people and building teams has had everything done to them that could possibly understand. So we do understand in that regard.
Speaker 2:Just be genuine to who you are. Be authentic to who you are as a person. Your company, you know, so don't don't try and fake it. This is who we are. Be authentic to who you are as a person. Your company, you know, so don't try and fake it. This is who we are going to be, and trust in that, and go build a team around you that buys into that vision.
Speaker 1:It'd be great Dude. Last question, mr Michael, I ask everybody that's on the show what's the takeaway for the blue collar worker? Anybody from the guy just walking into the trade day one to the owner himself is being stuck in the mud and that can be absolutely mentally, physically, emotionally. But just being stuck in the mud and tomorrow is going to be tough.
Speaker 2:You just want one thing Get up early, early. I've always found that if I just get up a little earlier than I was planning on and use some of that time to get my head straight in the morning for me, I go to the gym early in the morning, it's my thing and it's just nobody else, just me, I think. I tend to find we need a little bit of time to let our brain process everything we got to do. That's not before I go to the office forum, you know. Talk to my wife, what's going on, whatever I just I need that time for me.
Speaker 2:If that means I need to get up at 5 30, give father and you give a five, you know five, whatever that, wherever that half hour is going to come from earlier an hour, whatever you're going to need, just start, start sooner. But the the day's yours. Go, start sooner, you know, and get more, get, just be more and go further and go harder than everybody else. Get more done. You know the morning, george, and I'm a big fan of get up and get at it. Let everybody else sleep in.
Speaker 1:That's right. Own the day, own the day, man. And man, I really can't tell you. Um, it's just funny. Our paths crossed right now, because I'm in the midst of it right now, fixing to get there and be looking for a phone call from us, no doubt. But if there's somebody that's in here would love to reach out to you guys, Tell us a little bit about how we get a hold of you guys website, et cetera.
Speaker 2:Yeah, I mean Prodiv P-R-O-D-I-V. Prodivcom is our company. Michael at Prodivcom is my direct email. Feel free, man, email me. Look me up on LinkedIn, dude, just reach out Whether you want to use our software. You just want to figure this out, whether you got a question about you. Know guys out there, be successful.
Speaker 1:Well, guys, there you go. A little blue collar business podcast exclusive. Reach out to Mr Michael. Ask him some questions about bonus structure. If they did it for themselves and they're seeing success, and it's repetitive, repeatable enough that we can start selling it and it's legal and it integrates with every software. Do you want to make more money or not? Guys, come on, I mean it's, it's that simple. So, mr Michael, thank you so much for your time and, uh, I look forward to hopefully maybe having you back in a couple of years and maybe we can talk about the, uh, the benefits of what Prodo has done for cyclone excavation and utilities.
Speaker 2:You just never know, boss Never know.
Speaker 1:All right, my guy. Well, until next time. You guys, be safe, be kind and be humble. If you've enjoyed this episode, be sure to give it a like, share it with the fellers. Check out our website to send us any questions and comments about your experience in the blue-collar business. Who do you want to hear from? Send them our way and we'll do our best to answer any questions you may have. Till next time, guys.