Raymond was in an expansive mood as he walked into work his customary two hours early. He did not expect the euphoria to last all day but he did expect it to last more than ten minutes. Sadly, those expectations were dashed when John Kloake, his third shift paint lead found him and announced “Boss, we have a problem, a big problem.”
“What is it?” Raymond asked.
“We are missing our tombstone dates and there is no possibility that we are going to be able to catch up.” John informed him.
“I don’t know where you heard that, but that is simply not true.” Raymond said. “The project is going like gang-busters.”
“The project may be doing fine, but we are responsible for painting and we are on-our-ass. We are slowing down everybody behind us; the carpet and drape people, the furniture movers, the signage folks...everybody.” John said.
“Explain to me, how can we be behind. We are getting plenty of work because the electricians and drywall people are not slowing us down...” Raymond said.
“That is true for now, but you gotta remember we got the work late and we lost almost a week with the electricians and drywallers on different shifts being in a pissing match. Then we lost a couple of more shifts when our tools and materials were ripped off.” John said.
“We are almost a week-and-a-half behind and unless you hire some more painters there is no way we will ever catch up.” John said, stating the obvious. “The other thing I was told is that there are penalty clauses in our painting contract if our lack of output delays the opening of the facility. Right now, there is still time for the follow-up people to catch up, but we gotta kick it in the ass, like, right now.”
“How many more painter do you think we need?” Raymond asked, sure that he was not going to like the answer.
“I would like to say twelve more. Per shift.” John said. “But we cannot train all at once. So I recommend three additional painter be added and then two days later add three more and so on.”
Raymond had a head ache.
“I can afford to bring on one, maybe two more per shift. I just don’t have the cash to pay for more.” Raymond said.
John furrowed his brows in consternation. “You get paid more if you paint more, right. I don’t see what the problem is.”
Raymond said, “I get paid at the end of the week based on our output. That, and the tools and materials that got ripped off left me strapped. That is why I did not replace them but evened out the inventory between shifts. It is going to be touch-and-go making payroll this week.” Raymond admitted.
“I have been meaning to ask about that.” John said. “With all due respect, it is really stupid to pay 50% of your material bills with each delivery when every other contractor in the city uses 30 days-net. I don’t understand why you pay 50%...that has got to be putting a dent in your cash flow.”
Raymond was taken aback by John’s observation. John was right, of course. Raymond started paying 50% cash with each delivery when he was just starting up and did not have a credit history. It never occurred to him that he did not have to keep doing that.
“Why don’t you call up O’Leary Paint and ask if you can switch to thirty days. You might even ask him for sixty days on the tools that got stolen.” John suggested.
Raymond’s conversation with Colleen O’Leary was very brief. Of course they would extend 30 days-net. And when she heard that the stolen tools and materials had been insured, Colleen suggested that he instruct the insurance company to send the check directly to O’Leary Paint, Colleen would see that the tools and materials would be replaced and Raymond would not be on the hook for any of it.
Raymond hunted up John before John left for the day.
“Thanks for the suggestion about 30 days net. I want you to hire three more painters tonight.” Raymond said.
“I would, boss, but that is way above my pay grade.” John said. You want me to take on a lot more aggravation and responsibility and it is just not worth it.”
“I really can’t pay you more.” Raymond said. “I am still strapped for cash.”
“Would you consider a variable pay component?” John asked. “Say, so many dollars for every 1000 square feet above the daily goal that gets painted each night.”
“Let me check something.” Raymond said. He popped a spreadsheet open on his smartphone to check a few numbers.
“My variable cost to paint a thousand square feet is 20 Sedelia dollars. The base contract pays $27.50 Sedelia dollars per thousand square feet. That gives me a gross profit of $7.50 per thousand square feet. I have expenses to cover out of that $7.50 and I have to pay myself something so I can eat. Would you consider $2.50 per thousand square feet, over an above the daily goal, to be an adequate incentive?” Raymond asked. “That is one-third of my gross profit."
“I would have been happy with $1 a thousand square feet.” John said with a big smile. “You bet I will take it.”
Raymond was chagrinned to realize that he had overpaid, but then decided to focus on the fact that he would still be reaping 2/3 of the profit.
"My only caveat is that if the new painters cannot make-rate by the
middle of the second day that you let them go and hire somebody who can
make rate. My profit calcs assume employees who make-rate." Raymond
“Are you going to offer the same deal to the other shift leads?” John asked.
“Do we have the same problem on other shifts?” Raymond asked.
“Yup.” John said.
“Then of course I will make them the same offer, although I don’t know if they will take it.” Raymond said.
As if on cue, Preacher, the first shift paint lead came into the room. “I have been looking for you.” Preacher said to Raymond.
John piped up, “I already talked to the boss about our concerns. He has a proposal to make, one I already accepted.” and with that John gave them a wave and left the room.
Preacher was more than happy to accept the incentive and he figured he could train four new painters at a time. He lost no time and put in ‘bids’ on Labor-Bay so he would have them that shift.