Should I Pay Decorators Hourly + Commission?

Business By cakeldy1 Updated 10 Jul 2012 , 7:49am by scp1127

cakeldy1 Posted 8 Jul 2012 , 6:33am
post #1 of 9

I have had 2 decorators working for me for some time now (4 and 8 yrs), and both have become talented decorators. One produces well, and the other one not as much, but she does quality work. They both want raises, and I would love to give them raises, but I have just expanded my business, and do not have the funds. I was thinking seriously about moving them to hourly + commission, or just commission. I figure I could pay them hourly + 15% or just a straight percentage off of all the cake orders/case products sold. I realize there would be a change in the way they/I pay taxes, etc. , but I feel that I would get better production out of both of them, and they would be happier, as they would be more in charge of how much they were making. I own a pastry/cake shop and we pretty much sell out of our products daily!

I was, at one time, a completely independent cake decorator for a grocery store once, and I worked completely off of commission, and I loved it. I was responsible for all of my clean-up and phone order time, and I had a certain amount deducted from my check for any wasted product that I had made and did not sell. This made me want to produce product that sold, so I always wanted my case to look great! My partner thinks it's a bad idea, as he thinks that we will be paying out too much. I think we would be receiving a regular percentage of money based on production, and we should have better productivity, therefore, better sales. I think it gives the employee more power over their income, and also provides a guaranteed revenue for the employer regardless of whether or not the employee milks the clock, or an order takes more time to finish than it should.

Anyone with experience on this one? Thank you for your input!!

8 replies
BakingIrene Posted 8 Jul 2012 , 2:00pm
post #2 of 9

Better productivity is the key. Put your two decorators on this salary+commission for a 3 month trial and then decide.

jason_kraft Posted 8 Jul 2012 , 3:29pm
post #3 of 9

Commission typically works best when the employees on commission are responsible for making sales, and I don't think that's the case here.

What is your current net profit margin (i.e. money that flows into your business after you pay for ingredients, pay yourself and your employees, and meet overhead)? Paying two employees 15% each would probably wipe out your profit margin and more.

Since your primary metric is productivity you may want to look at a tiered bonus structure based on their throughput rate, as long as they don't compromise on quality. The bonus amount should also be tied to your net profit to reward the employees for both their own success and the business's, while at the same time making sure you don't give away your margins.

Now if these decorators go out on their own and bring you new business you would not have gotten otherwise, then it would make more sense to give them commission on the orders they bring in.

scp1127 Posted 8 Jul 2012 , 10:33pm
post #4 of 9

In my businesses, commission has been the most profitable for me by a long shot. It is up to you to structure your business and any costs so that the business is viable.

I had construction workers on all types of pay plans, mainly suited to their personalities. Some are just not motivated and need supervision and an hourly pay rate. These awere my least profitable employees. But those compensated solely on production made me a very nice income.

I don't agree that making sales must be a factor in the commissions. Productivity is the key.

My commercial kitchen is run on commission only. When a cake is baked improperly, I don't pay for that time, only on the completed project. When I go retail, my head baker will be paid on production only. Now there is no facebook time, solitaire, talks on the phone with boyfriends, etc.

My construction workers on commission could do a job that should have taken a day, by noon. No talking, no lunch, just get the job done. I was responsible for not having anyone on the team that slowed them down.

KoryAK Posted 8 Jul 2012 , 11:15pm
post #5 of 9

I'm interested to see where this thread goes as I have just taken on an additional cake decorator that will be commission based.

Jason, I can see that two decorators working on one cake and they get paid 15% each would be too much cost. is that what you were saying? One decorator on one cake at 15% seems reasonable to me.

scp1127 Posted 9 Jul 2012 , 6:49am
post #6 of 9

By the way, commission cuts out you paying for facebook, 100"s of texts, calls to kids and boyfriends, idle chatting among employees, etc. It's on their time. I would never go back to this, especially with today's general work ethic.

cakecraving Posted 9 Jul 2012 , 2:34pm
post #7 of 9

I do not own a bakery or any type of cake shop. But I have a little question what if the employees try to hurry and put out more cakes so they get more money and then the look of the product goes down. Does anyone have this problem with commission employees?
I am also interested to see what people have to say on this thread icon_smile.gif

BakingIrene Posted 9 Jul 2012 , 2:47pm
post #8 of 9
Originally Posted by cakecraving

I do not own a bakery or any type of cake shop. But I have a little question what if the employees try to hurry and put out more cakes so they get more money and then the look of the product goes down. Does anyone have this problem with commission employees?
I am also interested to see what people have to say on this thread icon_smile.gif

Yes some people do hurry and don't give a damn about the quality. The business owner has to keep a sharp eye on all products leaving the door until they can trust that a new payment structure will not result in poor quality. Taking pictures of each custom cake will facilitate any discussion about quality.

Some employees are careless at following instructions, but in my experience this appears within the first week of their employment. One deals with this by using a probationary or trial period if permitted by local employment laws.

scp1127 Posted 10 Jul 2012 , 7:49am
post #9 of 9

Commissioned employees in any industry answer to quality control. These people are self-motivated and of a caliber that will not turn out poor quality, as that constitutes a do-over or repair on their clock.

A commissioned employee is essentially one who has been given the opportunity, through merit, to essentially run their own mini business without the overhead headaches. They have control of their paychecks through production.

This form of compensation only works in this situation. Trying to force it on the wrong employee will be a disaster.

Again, to me, it is the absolute only way to go. Baking is perfect because it is numbers based and easy to track.

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