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When it comes to gutter installers, those that install for at cost, pay their installers at a piece rate pricing. The installers are being paid by the foot. They do not receive hourly pay and are not being compensated for labor. This method directly promotes quantity over quality. Let’s take a look at how this impacts the gutter industry.
It is not uncommon to see poor quality workmanship from certain contractors, even those who have been in business for a while. Unfortunately, this means poor quality of work is associated with a cheap price.
We have three locations in Virginia, one in Richmond VA, one in Virginia Beach and the other in Lynchburg VA. When we looked at the competition (specifically in the VA area) and what they are charging, we saw a concern. We became curious on how they can afford to charge such a low price.
This was especially true when we looked at the “well-known contractors”. So, we decided to look into these companies’ business models as well as the quality of their work.
As you can imagine, the quality was not of a high standard, and often all over the place. We’ve actually seen gutter guards installed upside down and backwards, as well as really poor gutter installations in general. After seeing the quality of some of these completed jobs, the price began to make sense. It all came together when we found out how these companies pay their installers – by the piece.
The more gutter the installer puts up, the more they get paid. Why would the installer take the time to make sure it is done right? When they aren’t getting paid for their time or quality of work! As they are driven by how much gutter they put up. Seems like finding motivation to produce quality work would be hard under these circumstances. Because installers can only make more money by installing more gutter. They are competing with each other and racing to get more done. Therefore, the quality of the work severely suffers and so does the client.
Initially, as a business owner it may sound like a work advantage. For example, if installers get paid 25 cents per foot, and the company charges 5 dollars a foot to install, the business owner has nothing to worry about? For example, suspensions, call backs and/or overtime compensation because they are not paying by the hour, but by the foot.
A few years back when we first heard about piece rate pricing installation, we decided to hire a consultant to come in and see if we could adapt this business model. But, we quickly realized that this promotes throwing up gutter as fast as you can to earn a decent paycheck.
This does not promote safety, and it does not promote quality. We contacted the labor department and they said we are setting ourselves up for a lawsuit by using this payment method. It creates an environment where an employee has to rush. Or worse, feels “forced” to work unsafely just to earn a wage he can live on. If an injury was to occur, we would likely lose in court.
The payroll company also said that we would be at risk if we paid the installers piece rate unless they were sub-contractors. To be a sub-contractor a person has to have all their own equipment, tools, and the ability to make their own schedule. They also have to work for more than one contractor.
With this research, it became evident that we needed to continue to pay hourly, as well as time-and 1/2 and provide benefits and other incentives to promote quality work over quantity. We know there are a decent amount of gutter companies that use this method, and we’re sure some have figured out sophisticated ways to get both quantity and quality, but we decided it was not for us.
In the end, as the business owner, you need to decide if being the most affordable contracting company is worth exposing yourself and your reputation to these potential risks, and as the homeowner if it is more important to you to make the decision based on price or value.
When hiring a gutter contractor or any other general contractor, it is important to know how they compensate their employees, as this could say a lot about their quality of work. Judging by the poor quality of work we’ve seen produced by gutter contractors who follow this compensation method, as the homeowner, it is probably a good idea to avoid piece rate contractors.