Field Service Compensation That Works
By Bruce Breeden, founder of Field Service Resources, LLC and author of the book and training program, The Intentional Field Service Engineer
Compensation is a difficult subject, and field organizations are challenged with establishing and evolving their plans to attract talent and achieve performance goals. As a field service operations leader with a background in various industries, here are some of my experiences and suggested best practices for you to consider as you either define a new plan or update your current plan based on the continuous changes in the field service market.
Field service is a specialized career requiring both applied technical skills as well as strong communication skills or soft skills. This is the dynamic basis of the field service role and reason to pay above average for technical professions considering the depth of responsibility the field service position holds. This includes personal safety while working independently in hazardous environments, care and use of company assets, and the ultimate; building brand equity through customer relationships.
I have never regretted paying for talent and performance, and I believe that recognizing the breadth of responsibility and the combination of technical and soft skills of a field service position justifies above average pay. Field service careers also provide many opportunities for advancement and have cross-over skills leading to other roles. By providing leading pay and career development opportunities, field service becomes an attractive profession that can effectively compete with the shortage of skilled labor.
Determining A Fair Base Pay
The first step is to establish a fair base pay relative to your service market and technical specialty. I am of the mindset to pay for field service quality and address operating margin in parallel through pricing and process improvements. Attracting a candidate based on economy pay ranges never works in the long term — either the new employee will be dissatisfied and leave in a relatively short period or, worse yet, they stay and you have poor performance or pay inequity amongst your workforce.
Base pay is interrelated to the other qualities of a service business: the quality of training, equipment, IT systems, safety, vehicles, and work environment. With the focus on quality, it is best to consider base pay with other quality factors of your organization to be congruent and offer the entire package to present a compelling offer to your candidate. This position on quality works equally well in retaining and developing your existing talent and operating performance achievement. Organization culture is largely formed by the standards and norms over time, and quality and accountability are strong attributes to ensure you build a strong, performance-based culture.
Other factors influencing fair base pay include the amount of travel, range of responsibility, and degree of decision making. Varying field service responsibilities might include making job scheduling and inventory stocking decisions as well as selling services or products. Start with a thorough job description to identify key responsibilities and skills required. Often, there are wide ranges of service delivery methods for field service and a good business discussion and job description exercise with the HR department will provide a better assessment of skills and therefore pay.
One common mistake field service organizations make is not taking the time to assess base pay across the entire service organization. If pay assessments are not done and adjusted periodically, new hires will be hired at higher rates, given the market, and create major issues in pay equity for your existing workforce. A common worry is paying too much and impacting the cost of services. The bottom line is that it’s easier to maintain and grow operating margins through pricing, value, and process improvement then it is with reducing the cost of labor, or having inferior human resources. Discrepancy in pay causes issues across an entire workforce that leads to demotivation and field performance problems. The best practice is to separate operating margin factors from workforce pay factors and address each individually under the umbrella of net operating profit.
Variable Pay: Determining Commissions And Bonuses
Variable pay incentives are common in field service for selling services, generating product leads, or other operational factors such as productivity and safety. I am a big supporter of variable pay to link individual or team performance with company mission, values, and key operating objectives. In most cases, commissions are paid for service contract sales on a monthly basis and other type of incentives for productivity, safety, and team goals vary greatly by organization. I really like the incentives for the technicians to obtain licenses, credentials, or technical and soft skill ability as a way to keep professional development front and center. An organization constantly developing skills drives adaptability and performance achievement.
In total, offering a variable pay element engages the team on the important goals and objectives for the business period and can be adjusted as the business needs change. One major area of concern for me is to avoid incentive creep, or an incentive plan too structured into the technicians base work where it is hard to undo variable pay practices. For example: The service organization pays large incentives for time and material work and products sold. Over time this could be 15 to 20 percent of a technician’s total compensation and designed to achieve “fair pay” for a high-performing technician. The first concern is that paying commission on time and material work and products will compromise service integrity and create team conflict with their product sales partners. Another unintended result could be that new technicians could never achieve fair pay levels as it took years and sometimes further team conflict for them to have the opportunity for these commissions. The result is poor recruitment and high turnover in the new hire levels, and protection of the senior tech and their territory, which together are obstacles for business growth. The lesson learned is that these types of compensation decisions and programs can be built to last and hard to change.
A best practice is to clearly align the company or service organization mission, vision, and operating metrics to variable pay. This often includes proficiency in their technical and soft skill abilities as one grows within an organization, retaining and acquiring new customers, safety, productivity, and revenue growth. Good field service organizations communicate frequently on continuous improvement and professional development, and incent their team on both accomplishments. Another core variable pay element is to demonstrate the values of the organization. After all, we believe in the importance to define values to ensure that is how the organization conducts work and relates internally as well as with customers.
In summary, plan to pay well for field service positions — their contributions to corporate objectives are significant as a field-based problem solver and brand ambassador. Second, structure your variable pay programs to align with your corporate vision, values, and operating plans. Usually you will have a mix of customer retention and acquisition, safety, teamwork, and professional development elements that can be incentivized while remaining nimble as the business evolves. The combination of base pay and variable pay will be a core element of your organization’s quality and commitment for professional and business growth.
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Bruce Breeden is the founder of Field Service Resources, LLC and author of the book and training program, The Intentional Field Service Engineer.