Paying operators

[Gouterk]

How many months or weeks do they work a year? And how did you arrive at your base salary? There must be some expected minimum yearly hours you want the employees to work?

Are they putting in those hours and the production just isn't there?

How many months or weeks do they work a year? And how did you arrive at your base salary? There must be some expected minimum yearly hours you want the employees to work?

Are they putting in those hours and the production just isn't there?

We agreed upon a salary before hiring then divided it by 12. We typically expect to only work 9 months out of the year. Our Fabtek operator has only been with us since early fall so I don't really have good numbers on him. Our forwarder operator worked a maximum of 1,850 hours this cutting season. Due to all the breakdowns our Fabtek operator is severely behind in hours and production. We had weekly production goals set in place but due to the machine it's self they weren't met. Both operators are paid a very competitive wage for our area. What's considered reasonable expectations in a situation like this ? 

[jason.weir]

we just aren't seeing the extra effort when things are running smoothly.

trouble shooting that people don't want to take ownership of.

people need to understand the expectations of the job.

These are your issues and changing the pay structure probably won't fix things.

Great employees automatically understand expectations, take ownership & give 110% effort.

Poor employees don't and the more you pay them the worse they get, you can't incentivize them either because they really don't want to work any harder then they do now.

You need to find better employees & so does most every small business out there, it's got to be the hardest thing for any company your size.

When you find them pay them well & they will make you money - until they realize they can make more $$ working for themselves..

-J

[chevytaHOE5674]

With that agreed upon salary what were the agreed upon hours/expectations? 

Generally even a salaried employee has some ball park hours that they agreed to work. If not most employers would expect salaried employees to put in 80+ hour weeks.

To me it sounds like you have a machine with too much downtime and it will be very hard to find a good production operator that also wants to play mechanic. The best operators are in demand and aren't going to deal with that kind of machine long, they will work for somebody with a newer better machine so they can just cut wood. I always told my boss if I wanted to wrench all day in the mud/snow/bugs/etc I would go be a road mechanic and get paid accordingly.

[Southside]

We agreed upon a salary before hiring then divided it by 12. We typically expect to only work 9 months out of the year

Now this will probably sound harsh, but I learned this lesson a long time ago, and I believe many large Fortune 500 type companies work on the same principle, just at a different level.  As a rule, you have to keep most employees a bit hungry.  Now I don't mean they can't pay their bills and such, rather I mean they are not getting everything they want unless they are really giving 110%.  

Prime example, I had a guy that every time something broke down he would just stand around, never pitch in to help, you would tell him to go do A,B,C, and look over 10 minutes later and half of A was done and he was keeping his hands warm in his pockets.  We always had overtime available, this guy never worked any of it.  One day I received an unemployment benefits claim in his name, so I went over to him and asked what it was all about given that he was actively employed.  His answer was "it's supplemental pay", .  When it came time for the hearing I explained that I have numerous open overtime shifts available every week and he never works any - I was told he does not need to work anything beyond 40 hours and he was entitled to the "supplemental pay" given that he and his girlfriend had a child on the way.   

Like was said above- you can't motivate someone like that, and cutting your losses is the best option, that person will never take ownership no matter how hard you try.   

[jason.weir]

Prime example, I had a guy that every time something broke down he would just stand around, never pitch in to help, you would tell him to go do A,B,C, and look over 10 minutes later and half of A was done and he was keeping his hands warm in his pockets.  We always had overtime available, this guy never worked any of it.  One day I received an unemployment benefits claim in his name, so I went over to him and asked what it was all about given that he was actively employed.  His answer was "it's supplemental pay", .  When it came time for the hearing I explained that I have numerous open overtime shifts available every week and he never works any - I was told he does not need to work anything beyond 40 hours and he was entitled to the "supplemental pay" given that he and his girlfriend had a child on the way.  

What? Unemployment benefits for someone working 40 hours a week?  Supplemental pay?  Free $$ because he doesn't wanna work overtime?  Never heard of such a thing.  I sure hope that's a State thing.  No wonder people hesitate to hire employees..

Sorry for the hijack...

-J

[Gouterk]

With that agreed upon salary what were the agreed upon hours/expectations?

Generally even a salaried employee has some ball park hours that they agreed to work. If not most employers would expect salaried employees to put in 80+ hour weeks.

To me it sounds like you have a machine with too much downtime and it will be very hard to find a good production operator that also wants to play mechanic. The best operators are in demand and aren't going to deal with that kind of machine long, they will work for somebody with a newer better machine so they can just cut wood. I always told my boss if I wanted to wrench all day in the mud/snow/bugs/etc I would go be a road mechanic and get paid accordingly.


Yeah I totally hear what your saying. Obviously we didn't enticipate the unusually high amount of breakdowns. Up until the purchase of our Barko in 2016 the Fabtek was what we made our entire living off of. We tried to keep expectations realistic knowing it's an older machine prone to breakdowns but there just wasn't any fool proof planning for what we encountered. I would have to ask my husband what the agreed upon cordage per month was. Obviously the loss of production isn't on our operator but what's the incentive to put in long days when things are running good when the check stays the same ? I'm just searching for the healthy balance to keep things fair yet motivating. 

[barbender]

Gouterk- first off, welcome to the forum, and I also recognized your operation from that Northern Timberline article😊 I run a forwarder for a large operation over in Itasca County, we have both CTL and conventional crews. We have a variety of ways employees are paid, but to my knowledge, the only operator we have on production based pay is a slasher operator (which has way fewer variables than a processor). All of our CTL operators are on hourly pay as far as I know, and it's the only way I would go as an employee. We get OT pay over 40 hours, that's our incentive to push hard when it's needed. I'm a pretty simple guy, and I like the system of- I work, I get paid. I don't work, I don't get paid. If I was getting a salary, I'd still feel like I should be out killing it in the winter working 80 a week, but I would really struggle only showing up 30 a week in the summer to balance things out. I'd say, pay your guys the best hourly wage you can afford, and let them draw unemployment in the spring if you're down for 3 months. That seems to be the most common method over this way, anyhow.

[BargeMonkey]

 The grief and headaches I've watched my parents go thru with some employees would make the average person want to sell out, bogus unemployment, abuse of disability insurance, outright calling us out on FB, my father has been in business since 1975 and I grew up seeing it all.

We are more "sand and gravel / excavation" than logging / sawmill, I'm the only one in the woods, Im 1 of 6 employees with 3-4 others who will work part time as needed. I can't wrap my head around paying anyone salary in the woods, we are adding 15-18 more people shortly for a diff business and the managers will probably be salary but the average person no way. We built this other business with the idea if we have employee problems we keep the best 1/3 of them, sell the core items and still more than cover the payment with less headaches. You can't ever let an employee think they have you in the corner because that's the end. Employing family can be a disaster especially if they have 0% financial stake in the business.

"Southside" hit the nail on the head, you need guys who are hungry and willing to work as a team for YOU, nothing wrong with a bonus or incentive pay but YOU are the one employing them and holding the bag at the end of the month, if they don't like it within reason they can go down the road, sometimes a harsh dose of reality does wonders, sometimes it gets everyone onboard, we are pretty open with the guys and it works out well. Everyone of our guys but 2 truck drivers are able to float, one bales for us in the summer, others can drive and swing dirt, weld, one of our pit guys literally is the keeper of our shop. We learned a while ago that payments aren't always a bad thing, we try and trade 2-3 machines a yr so the big repairs doesn't kill us, 10yrs ago we started having a mechanic come in and do the heavier work / maintenance, it actually saves us money and we have a maintenance program in place which works out great falling under MSHA. Do your guys perform their own maintenance ? Is their job title clearly spelled out for them ? I'm getting at do you have a way to say "you knew this was going to break / didn't say anything and you ran it anyway" so now you sit home this week. I worked for "big oil", we had paperwork involved for just changing a light bulb, you messed up enough you where gone.

There is a huge qualified help shortage out here, even just a laborer who will show up consistently is getting harder to find nevermind a skilled operator. Wages are all over the place around here in NY, 19-23 bucks an hr with benefits / bonuses / perks is about the going rate here, the hourly rates don't exist for 30+ an hr.

[Matt601]

I'm still a firm believer that a guy working alone for himself can make more actual profit than a big company with new machinery cutting a hundred loads a week.

There are lots of guys around here feeding their families well with just a skidder and a saw. There are no processors, forwarders, etc.

Somebody said it best in another post. You have to find the profit. Some expenses are a bargain others bankrupt you. Good topic.

Im a one man out fit. I have a truck and 50 hp tractor. Most people will not believe but most weeks I cut and load and truck to the mill 250 tons of wood. Last year I hired a guy to help. Know what I sold 250 tons a week. Its all how you set up I'm not set up to have more people. Now I work 7 days a week but that's OK too i rather work by my self then deal with having to stay on someone butt all the time.   

[chevytaHOE5674]

I would switch them to hourly plus OT if warranted and then let them draw unemployment during the spring. That way they get paid for the time they put it, and have incentive to work more. Also keeps the employee from feeling like they are getting taken advantage of. That's how just about everybody I know does it here.

My old boss use to try and pressure me to "make up for lost production because of downtime." Well I was present and wrenching through the downtime so in my eyes there was nothing to "make up" for.... I put in the same or more hours during those times..... one of the many reasons I walked away from that gig.

[snowstorm]

if you are only writing them a pay check once a month that needs to change. a lot of people can not manage money. they will spend it all the first week then look for a pay day loan to get by...........do you really need to run that fabtek????

[Skeans1]

Myself I'm salary but I cut 6 to 7 days a week 12+ hours a day with all mechanical fixes from top to bottom on a machine from undercarriage, engine, pumps you get the idea done by me. Our employee who runs forwarder is hourly with production based bonus in my eyes is the only way to go set it so it's the same is there's torn up equipment they go down the road, if there's too much stand damage in a thinning they go down the road or loss pay. Out here even the guys thinning for the large outfits 20 sides are all production based pay scales you have to make your guys hungry to do the work if they're down for something like a hose then they feel like just like you do. If you don't do something like this it's a fast way to loose your shirt or your business.

Here's the best question what kind of break downs is the 153 having hose related? Pump? Valve? Undercarriage? Rotex? Electrical?
Here's another thing same employee running our Fabtek head goes through hose about once a week or so, owner operator on that machine it's a month plus you think as well as watch where and what youryo trying to do with the head.

[longtime lurker]

I'm going to tell you what I do. Different country, different rules... some might translate, some might not... but its a different way around the same set of issues. I thought long and hard before I went this way - both on what I wanted which was a small crew of dedicated and competent staff that stayed with me through thick and thin plus the opportunity to take on others as required. You want to hold good people they need to be paid well. You want loyalty you got to treat them right. You want them to treat your business like it's their business... make it their business.

I dont believe in production bonuses, or payment based solely on production in any form. As a employee I used to get some real serious money out of production... and beat a lot of gear to death to get it. As an owner of equipment I know that often 90% of the production and a bit more love for the gear is more profitable.

Sooooooooo... I dont pay production bonuses. I pay profitability bonuses. I make profit, then we make profit. I cop a hiding then we all get our base pay and suck it up.

I trade as a company. I have two share classes... one has voting rights attached, one only has a proxy. As managing director I hold 35% of the voting stock outright, but I also hold the voting rights to the 40% of stock that only has a proxy vote. (My partner holds 25% voting stock.)
That 40% is there specifically to be held by permanent staff. It can only be sold by me or to me so I dont have any worries that way. It turns an employee into a shareholder which has some positive benefits for us in terms of insurance premiums and a few other tax breaks as well and is actually a pretty effective structure under our tax law. Basicly its a pared down profit participation scheme, with dividends paid on a bi-annual basis

The company is only an operating vehicle. It doesnt own much - it leases the mill land and buildings from family, it leases the mill equipment and harvest equipment from me. So owning a share in the company doesnt mean you get to own the skidder you sit on but you do own a % of the profit it makes.

But what it really means is that the guy over there on that machine... owns 10% of that machines profit and 10% of the profit of the machine beside him. It gives him an incentive to be friendly with his grease gun, and troubleshoot problems, and take a bit more care in his work. It gives him a reason to supervise the casual fill in guys we might occasionally hire a bit better, and lead them from the front because... he isnt just a foreman, hes a part owner. Aint no-one works harder then a guy whos working for himself right?

it's maybe not right for everyone ... and you'd really need professional advice before implementing something similar... but its been pretty good for me.

[mike_belben]

Lot of insights here and many that conflict which each other just goes to show that people are different.  What works for one group dynamic is a disaster somewhere else.  

1.  The fabtek sounds like a problem, but i can understand if a machine upgrade isnt possible right now.  If its that expensive to pay for and run...  Could a hand cutting crew replace it for a while?  I know the production goes down, but could profit go up?  You wont be making a payment on a parked machine and a couch bound operator anyways. 


2.  Is this guy youre paying to stay home worth keeping?  If so id bring him into the discussion.  Me personally, it'd be "bill, we need to talk.  Im at a point of having to decide on changing the pay, the machine or the employee and i want your input."  

Im not saying you owe the guy a job, but i am saying its more effective to hear it from the horses mouth what will make him hammer out the numbers, than to speculate on the internet.  Its possible he may not be the right horse.  But youll want that dialogue with him (or her?) directly. I get nowhere in life with suggestions and carrot danglings and unvoiced expectations.  So i just spit it out. 

3. That said.   Paid days off.  "Hey bill.  I cant pay you to sit home, its gonna sink our ship, Period.   here are your choices.  

A. You keep your current pay and take broken days off for free.

B.  We lower your overall pay rate and you can stay home with pay when we are broken.

C.  I will set up a firewood operation back at the shop.  When the fabtek is down or its too wet, youll go to the shop and run splitter under the lean-to.

D. I cut you your check today and wish you well. 

What do you want to do?"

[Gouterk]

I'm going to tell you what I do. Different country, different rules

This is great! I would say our overall goal would be to set up a somewhat  similar system. I would need to research and better understand what you have in place, but profit sharing is something we have discussed. We have no interest in just hiring people to do a job, I would much rather invest in people looking for opportunities to grow in a business. We thought we had people that were willing to go the extra mile with us in exchange for the opportunity's we can offer. But we're concerned that may not be the case. Essentially we're trying to determine if we're failing as business owners or if we just don't have the right fit in employees. Or most likely a combination of things! 

[TKehl]

They are out there, but they are not common.  When you find them, many/most that would jump at that opportunity are either already doing something on their own or will eventually leave to do something on their own, but will be great while you have them. 
 
It may make sense to look for people with struggling small businesses (handyman, painter, etc.).  There are a number of people that struggle in a small business due to a lack of business sense, but they have the drive.  That could be a perfect fit.  Also chat up the best person at an auto parts store etc. to see if they'd be interested.  Your best people will already have jobs and may not be looking.  Sometimes it takes some hunting (poaching).   ;)
 
There was a time, I would have jumped at an ownership opportunity like this.  I'm still have a J.O.B., but work for myself as well.  I'd have to weigh any opportunity against where I expect to be in 5-10 years plus the risk of being partial owner with input but not control...

[Southside]

Just a comment on your mention of a low boy.  If that is something you need to have a payment on in any way then think really, really hard about going that route at this point in your business.  I know from experience how it is easy to convince yourself that "if this happens, that happens, etc we are golden" and "there is no way it all won't happen".  Well - I am here to tell you that all the bad things can and will line up at the wrong time.  

Having another payment and hoping that piece of equipment can subsidize other parts of the business is extremely risky.  I have to suspect there is a reason for the lack of available low boys, it may not be a lack of work for them, but rather a lack of profit generated by them in your area.  

Not trying to tell you what to do, just speaking from experience in having been where now find yourself.  

[Gary_C]

Never lose sight of the fact that as employers, your job one is to eliminate obstacles, bottlenecks, whatever you want to call them to high production. If that harvester is the choke point because of downtime, you will never get more production and make more money by taking money away from your employees. If you had excess production capacity that was sitting idle, then you could think about pushing your employees for more production with incentives.

[Bradm]

Also my husband ends up shutting his machine down all too often to help with repairs and trouble shooting that people don't want to take ownership of.

How much production is lost when your husband has to walk away from his duties to assist in maintenance?  Does this create a bottleneck or loss of product to process somewhere else down the line?  Do you know what this lost time works out to in a dollar/hour equivalent?

I realize some of this is a management issue and people need to understand the expectations of the job. But obviously we haven't given enough insensitive to take more responsibility for the loss of production.

It's good that you recognize that there is a management issue at play.  Unfortunately, 100% of it is on you and your husband.  You need to be clear with the employees as to what is expected of them as well as how you will treat (pay, benefits, bonuses, etc.) them and what happens when expectations aren't met.  This may be one of the hardest things you will have to learn to do.

We thought we had people that were willing to go the extra mile with us in exchange for the opportunity's we can offer.

In my area, minimum wage jumped about 30% ($11.70 to $14 per hour) on Jan 1 of this year.  I have spoken with many small business owners, from sawmills to fabricators, who had good employees, making well over the minimum, turn sour because their wage wasn't going to jump 30% as well.  It didn't matter what kind of opportunities were available or whether their individual profitability increased, they felt they deserved a 30% increase in pay because the entry level wages went up 30%.

Essentially we're trying to determine if we're failing as business owners

It's good that you are asking this question.  It shows me that you're trying to do what it takes.  Failing owners generally refuse to ask for help nor do they acknowledge that they bear responsibility for problems.  If you haven't already, sit down and figure out what your true costs are, both before and after employee costs (2x gross pay is generally a safe assumption).

[starmac]

I must have missed something, which is easy to do.
You have 4 pieces of equipment, right?
You and your husband each run a piece, and you have 2 employees on the other two, right?
How come when one breaks down, you pay an employee to take off and not work?
Why is he not taking over your husbands processor while he repairs the other?
even if your husband does not do repair work, why would you and him continue to run a piece of equipment and send a paid employee home?
Me thinks I need a job like that.

[Gouterk]

Never lose sight of the fact that as employers, your job one is to eliminate obstacles, bottlenecks, whatever you want to call them to high production. If that harvester is the choke point because of downtime, you will never get more production and make more money by taking money away from your employees. If you had excess production capacity that was sitting idle, then you could think about pushing your employees for more production with incentives.

Yes, these are all excellent points. And just to clarify our goal is not to pay our operator less but to offer better incentives and more ownership in the job. I'm definitely better understanding that until we see much more steady production from that machine we must keep our operators salary in place to be fair to him. It just really eats at your insides to pay out regardless of production. But that's on us and our nightmare of a machine. 

[Gouterk]

I must have missed something, which is easy to do.
You have 4 pieces of equipment, right?
You and your husband each run a piece, and you have 2 employees on the other two, right?
How come when one breaks down, you pay an employee to take off and not work?
Why is he not taking over your husbands processor while he repairs the other?
even if your husband does not do repair work, why would you and him continue to run a piece of equipment and send a paid employee home?
Me thinks I need a job like that.

Well feel free to apply :D because you basically have it right. I guess essentially neither our operator or my husband are very comfortable with him running our Barko. And once we're down to one processor there's no need to stick anybody in a forwarder. I only forward when there's enough work for 2 machines. My husband does most of our own repair work so there always something to do. I guess we feel like it's our business and we should carry the load first. He just puts in the overtime running his machine being he is the most efficient at getting wood down. Or we're just young and dumb hahahah. 

[Ken]

Excellent post.  I've dealt with all these issues over the years.  Gouterk if I was you I would think hard on getting rid of the old machine.  That sounds like the bottleneck.  When I plan my jobs the harvester is expected to harvest x amount of $/minute over x amount of hours/week.  It is hard to make up those lost minutes when the new harvester is sitting while working on an old one.  If the operator is not qualified enough to sit in the seat of the Barko while the other one is down he is not qualified to be there imho  Thankfully I have a very good harvester operator who goes the extra mile and I like to think I treat him accordingly.  Best of luck.  This industry is tough.

[Southside]

we must keep our operators salary in place to be fair to him

As a business owner you one day realize that the only thing "fair" in life is that event you go to in the fall where folks get a ribbon for growing a zucchini and you eat too much fried dough before riding the tilt a whirl until the reality hits you that the fried dough was not such a good idea.  

Your first priority has to be to your business, if you go under your honorable desires do no good for your employee or yourself.  Try skipping a check one month to him and see how fair to you he decides to be.  

[mike_belben]

Amen.