Performance Pay vs. Hourly: What Actually Boosts Contractor Profits?

If your crews work hard but your margins never seem to move, the problem might not be effort—it might be how you pay people.

In this Contractor Evolution episode, Danny Kerr sits down with Michael Fortinberry, co-founder of Protive, to unpack why traditional hourly pay often caps productivity—and what happens when contractors switch to performance-based incentives instead.

Michael isn’t coming at this from theory. He’s lived it. After years running a large multifamily renovation company, he discovered something that surprised him: his crews had another gear. They just had no reason to use it.

This conversation isn’t about squeezing more out of your people. It’s about aligning incentives so your team wins when your business wins—and eliminating the waste that quietly eats contractor profit every year.

The Big Idea: Incentives (Not Raises) Change Behavior

Hourly pay rewards time, not outcomes. Performance-based pay rewards results.

Michael explains how tying pay directly to labor budgets fundamentally shifts crew behavior. When teams can see the budget, track it in real time, and share in the savings, they naturally move faster, collaborate better, and protect quality, because it’s their money on the line.

And the impact isn’t small.

Depending on the trade, Michael has seen productivity lifts ranging from 8–10% in skilled trades to 15–40% in labor-heavy work like painting, landscaping, and cleaning. That improvement alone can be the difference between scraping by and building a scalable, profitable operation.

Key Takeaways Contractors Can Apply Today

• Your team has more capacity than you think. Most crews aren’t lazy. They’re under-incentivized. When pay is tied to outcomes instead of hours, hidden productivity shows up fast.
  
  
• Transparency beats motivational speeches. If crews can’t see the labor budget, they don’t trust the incentive. Real behavior change only happens when numbers are visible and simple.
  
  
• Frequent bonuses create momentum. Annual or quarterly bonuses don’t move the needle. Weekly or monthly payouts connect effort to reward and build performance “muscle memory.”
  
  
• Quality improves when rework costs the crew. When callbacks eat into future bonuses, teams start holding each other accountable for doing it right the first time.
  
  
• Performance pay requires grown-up operations. You don’t need perfection. But you do need job costing, time tracking, and basic estimating discipline before rolling this out.
  
  

Performance Pay Is More Than Pay Structure: It’s a Cultural Shift

Michael makes it clear: performance-based pay only works if you want a performance-based culture.

That means talking openly about numbers, coaching crews like intrapreneurs, and helping your people get what they want—whether that’s more money, more time, or more control over their future.

When you put your people first, they take care of the customer. And when that happens, margins follow.

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