Before Vance adjusted his payroll structure, his three crews in Grand Rapids were averaging 4.1 squares per man-day during the peak of the humid July season. The pace was sluggish, morale was flat, and his callback rate for minor flashing errors sat at a frustrating 11.4%. After we implemented a three-tier performance incentive program, that same team hit 5.7 squares per man-day by September, while callbacks dropped to a negligible 2.8%. This was not a result of a "motivational speech" or a company barbecue, it was the direct outcome of treating labor as a variable performance asset rather than a fixed overhead cost.
After implementing tiered performance incentives, Vance's net profit margin climbed from 12.1% to 31.5%.
At a Glance
Reduces the 'overtime trap' where slower work results in higher employee pay.
Aligns crew speed with quality by incorporating a 'callback penalty' in the bonus structure.
Lowers recruitment costs by creating a high-performance culture that attracts top-tier Michigan installers.
Provides a data-driven framework for annual raises and promotions based on output metrics.
The Michigan Market Challenge
The Michigan roofing market presents a unique set of operational hurdles. Between the strict licensing requirements enforced by the Michigan Department of Licensing and Regulatory Affairs (LARA) and the unpredictable "lake effect" weather that can shut down a job site in Muskegon while a crew in Lansing stays bone dry, efficiency is your only real lever for growth. When I first sat down with Vance to look at his P&L, the leakage was obvious. He was paying his lead installers a flat $34 per hour regardless of whether they finished a ranch-style tear-off in six hours or nine.
He was essentially subsidizing inefficiency. If a crew took longer to complete a job, they were actually rewarded with more overtime pay, while Vance watched his job costs spiral. This is a common trap for contractors across the Great Lakes region. According to the IBISWorld Roofing Industry Report, labor remains the single largest variable expense for residential contractors, often swinging between 32% and 41% of total project costs. If you cannot control that variable, you cannot scale.
The Math of the Michigan Summer Slump
In regions like Detroit or Ann Arbor, the summer humidity is a silent profit killer. I watched Vance's crews closely for two weeks before we changed a single thing. By 2:00 PM, the heat on a black architectural shingle roof would reach 135 degrees. The crews would naturally slow down, which is understandable for safety, but there was no "finish line" in sight. They were just punching the clock until 5:00 PM.
We calculated that his "effective labor rate"—the actual cost of labor per square installed—was climbing by 18.2% during the hottest months. To fix this, we had to move away from a "time-spent" model to a "value-created" model. This required a systematic breakdown of every job into Labor Units. We started by looking at his exclusive leads and determining the average complexity of his residential contracts.
If a job was a 30-square gabled roof with a 6/12 pitch, we assigned it a "Par Time" of 48 man-hours. If the crew finished in 40 hours without any safety violations or quality failures, they didn't just get their hourly rate; they split an "Efficiency Dividend" representing 40% of the saved labor cost. This shifted the psychology of the crew lead, a guy named Jaxon, from "how much time can I bill?" to "how much profit can we unlock?"
Designing the Three-Tier Incentive Framework
Implementing an incentive program isn't as simple as handing out $100 bills for fast work. If you do that, your quality will tank, and you will spend your entire margin on warranty repairs. Vance and I developed a system that mirrored the National Center for Construction Education and Research (NCCER) standards for craft excellence. We divided the incentives into three distinct buckets: Production, Quality, and Material Stewardship.
1. The Production Tier (Speed)
This is the baseline. We used historical data from the previous 14 months to set "Standard Man-Hours" for different roof pitches and material types. For every hour the crew finished under the standard, they earned a $14 bonus per man-hour saved.
2. The Quality Tier (The Safety Valve)
To prevent Jaxon's crew from cutting corners on underlayment or valley flashing, the Production Tier bonus was held in "escrow" for 14 days. If a callback occurred during that window, the bonus was forfeited to cover the service call. This turned the crew into their own quality control department. They stopped leaving bundles of shingles overhanging the ridge and started double-checking the drip edge before leaving the site.
3. The Material Stewardship Tier (Waste Reduction)
In Michigan, material costs have been volatile, especially with shipping lanes through the thumb region. We incentivized crews to keep waste under 8.4%. If they stayed under that threshold, we shared 15% of the material savings with the team.
Hourly vs. Performance-Based Labor Models
| Metric | Flat Hourly Model | Tiered Incentive Model |
|---|---|---|
| Average Squares/Man-Day | 4.1 | 5.7 |
| Callback Rate | 11.4% | 2.8% |
| Average Labor Cost/Square | $114 | $92 (Bonus Included) |
| Crew Retention Rate | 64% | 91% |
Average Squares/Man-Day
Callback Rate
Average Labor Cost/Square
Crew Retention Rate
Overcoming the "Jaxon Problem": Implementation Struggles
The biggest hurdle wasn't the math; it was the culture. Jaxon had been roofing for 16 years. He was skeptical of "systematization." He felt that tracking man-hours to the minute was micromanaging. I had to show him the numbers. I pulled up the LeadZik mobile app and showed him the volume of verified opportunities coming in.
"Jaxon," I said, "we have enough work to keep you busy 6 days a week through November. But if we keep at this pace, Vance can't afford to buy the leads that keep your truck running. If you hit these numbers, your take-home pay goes up by $195 a week, and Vance's overhead stays manageable. Everyone wins."
We started with a 30-day pilot program for just Jaxon's crew. We used a simple Google Sheet shared via tablet to track the daily squares vs. hours. For the first week, nothing changed. They were still hitting 4.2 squares. In the second week, they realized that by organizing the staging area better in the morning—something they used to be lazy about—they could save 45 minutes of "searching for tools" time. By week four, they were hitting 5.3 squares. The rest of the company saw Jaxon's crew getting larger checks and suddenly everyone wanted in.
The 'Redo' Penalty Rule
"To maintain quality, ensure that any time spent on a callback or rework is UNPAID in terms of bonus eligibility. If a crew has to return to a site to fix a leak, those man-hours are deducted from their next production bonus. This creates a powerful cultural incentive to 'do it right the first time.'"
Quality Control as a Profit Center
One mistake I see Michigan roofers make is thinking that quality is just about preventing leaks. Quality is actually an operational efficiency metric. Every time a truck has to roll back to a job site in Kalamazoo because a technician forgot to caulk a pipe boot, you are losing approximately $380 in opportunity cost. That is $380 that could have been spent on verified lead acquisition or equipment maintenance.
Vance's callback rate was 11.4%, which is actually fairly standard for a mid-sized Michigan shop. By tying the bonus to a 14-day "no-leak" window, we forced the crews to adopt a systematic "Final Walkthrough" process. They started taking photos of the finished valleys, the chimney flashing, and the cleaned gutters. This data didn't just protect their bonus; it gave Vance a massive library of "proof of work" photos to use in future sales presentations.
We also integrated a 7-point quality checklist into their daily sign-off. This mirrored the same rigors we see in the LeadZik verification process, where every detail is scrutinized before it's passed on. When crews know their work is being verified against a standard, the "close enough" mentality disappears.
The Results: A 19.4% Margin Rebound
By the end of the six-month implementation period, the transformation was undeniable. Vance's net profit margin on residential replacements had climbed from 12.1% to 31.5%. While he was paying out more in total labor dollars, his cost per square had dropped significantly because the crews were finishing jobs 22.6% faster.
The most surprising metric, however, was employee retention. In a state where every roofing company is fighting for the same small pool of skilled labor, Vance's turnover rate dropped by 27.2%. The high-performers stayed because they were finally being paid more than the "lazy" installers at the shop down the street. The low-performers either stepped up or left the company voluntarily because they couldn't hide in the "hourly" model anymore.
This is the "Mia Collins way" of operations: identify the waste, align the incentives with the business goals, and use data to prove the value. We didn't need to buy new trucks or expensive software. We just had to change how we valued the time of the people on the roof.
Common Questions
Moving Toward a Scalable Future
If you want to scale your Michigan roofing business past the $2M or $5M mark, you cannot be the one "policing" the job sites. You need a system that polices itself. Performance incentives turn your employees into partners who are just as invested in the company's efficiency as you are.
When your operations are this tight, you can afford to be more aggressive in your growth. You can invest in higher-quality, exclusive leads because you know your crews will execute them with minimal waste. You can afford the best materials because you know they won't end up in a dumpster behind a job site in Flint.
Vance is now looking at adding a fourth crew next spring. He isn't worried about finding a foreman because Jaxon's brother-in-law, another veteran roofer, saw the checks Jaxon was bringing home and already asked for a job. That is how you build a roofing empire in the Great Lakes—one square and one incentive at a time.