Mr Silva, I don’t want to get into the middle of this question. I
had a side question about using the price guide lines. Does the
price per piece go up over time? What I mean is: Does the book
rate have a way for increasing with inflation, or are the prices
paid to the bench jewelers frozen at the time the book is
printed? As you can tell I am not familiar with this system.
Thanks Steve Ramsdell
The definition of who qualifies as a true independent contractor
is a very sticky one. If you ever go through an IRS audit this
could cost you big money. If you are hiring one you should
contact a CPA or even better a tax lawyer to make sure that your
practices are within the IRS definitions for who is an
independent contractor vs an employee.
Jim
@jbin
James Binnion Metal Arts
4701 San Leandro St #18
Oakland, CA 94601
510-533-5108
All;
Ganoksin hosts some extracts from David Geller’s book, You might check it
out at:
and order his book at
http://ganoksin.com/borisat/nenam/other-docs/jewelry-profit-form.htm
Mr. Geller’s contacts aRe:
David S. Geller
Jewelry Artisans, Inc.
Profitable Pricing Systems For The Bench Jeweler
510 Sutters Point Drive
6690 Roswell Road NE
Atlanta GA 30328
Tel. (404) 255-6268
Fax: (404) 256-6539 Evening: (404) 255-3712
Email: davidsgeller@msn.com
HTH
Hanuman
Thank you Lawrence, I too am one of the so called hacks that was
lumped together by Mr.Huffman.I make a great living and work in a
mall.I have a very strong following of customers and provide a
service to them.I provide them with clean,efficient timely work
and get it to them in a timely manner as you do.This is reflected
not only in my customer base but in the success of my
buisness.Iam never in want of work and have people from
neighboring towns and stores ask me to do their work.I work as a
contractor and it has worked well for me.Life IS what YOU make
it! So make it. J Morley Coyote Ridge Studio
To all of you who took the time to reply, I want to thank each
and every one of you, the positive as well as the negative, who
offered input to my question. I have printed all the responses,
and ordered the from Mr. Geller. When I have
everything put together, the three of us will sit down and
discuss the options in depth. My youngest bench person is very
much in the learning stage, and I will probably maintain her
primarily on an hourly rate, with a small percentage on repairs.
She will understand that this process is in the future, and have
a better understanding of what is expected of her.
I also appreciate Mr. Huffman’s input, although I seriously
think that he has personal issues in his life that impact his
outlook on this subject. Life is too short to be so bitter and
dissatisfied. Nothing I do is ever “written in stone”, and if
this doesn’t work out well, we can always go back to an hourly
wage. Many of you hit the nail on the head, and I realize that I
simply don’t like being a “boss”, watching time cards and
monitoring productivity. I check quality issues like a hawk, but
I prefer to think we are all adults, and put in a fair day’s
work for a fair day’s pay. Mr. Geller’s system appears to insure
just that.
Again, thank you all,
JMF
I am sorry to offend anyone by suggesting that working on
commission is synonymous with being a “low-paid hack”. Part of
my pay is commission. The commission I get is 3% of all custom
work, which makes the difference between my being paid a
ridiculously low wage and one I can live on (barely). I also
would put my skills up against any in the business. But I think
that if the store is not run skillfully, with experienced sales
people taking in and pricing jobs correctly, and employers who
don’t get greedy and “fudge” the commission with upper limits
and exclusions, you are going to see skilled people frustrated
by not being able to make a fair wage, and they will leave.
When you end up with people who’s skill level matches a low pay
expectation, what excuse will you find to fire them? Because,
there are plenty of bad jewelers/bad employees who will work
cheap. I work very hard, but here’s an example
Today I spent 1/2 the day, no lunch break, custom making a head
for a mounting in platinum that was just sold. Designed to
accomodate a 1 carat stone, max, this one hade to fit 2.6
carats. No time to order one with a bigger head, and the head
is not one you can order and solder in, it’s unique to the
design, built right in. As I worked on this “designer” piece,
most of the stones fell out. The setter had cut through all the
bracing between the sides of the channels. He/she had set the
stones by using a graver to bring up little burs. This was a
brand new, pricey mounting! Re-built bracing, re-set all stones,
Next half day was spent re-sizing a platinum/18K mounting I had
made. I told the salesman to be SURE! of the size, because this
wasn’t going to be easy to re-size. Heavy band, 18K ridge all
the way around. Of course, it didn’t fit. Customer was very
finicky and only in town the afternoon. Had to take out the
18K, clean off all solder (no laser, sorry) and weld it, then
re-make the 18K part (sticks and comes out in pieces, of
course). Of course, didn’t have any wire the right size, so had
to cast an ingot and roll it down. $20,000 in sales on those
two jobs. Almost all in materials.
How much would I have gotten for this days work working on
commission alone?
It took my very best skills in platinum, sweating bullets, while
everyone else got ready to party. You want a jeweler who will
pull it out of the toilet like that for you again and again, you
better make sure he can pay his rent, or the next guy will.
David L. Huffman
Hey, David. I’ve been trying to read you post about David
Geller’s system and found it a little confusing. I bought his
book and tapes and think I have a little better understanding of
what he has done.
I believe Mr. Geller has developed a very self serving system which, because of it's many loop-holes, manages to allow him to pay his people just what he wants to give them regardless of their incentive.
David started off by loosing about a hundred thousand dollars in
a single year. One of the ways that he did this was by trying to
be competitive. It also seems that he was being as “kind” as he
knew how to be to his employees. He used his competition’s price
lists to form his own. Not having gone to business school, I have
made the same mistake. He had no idea where these prices came
from or how old they were. Even after his losses, I am sure that
it was hard for him to do, but he cut back his employees. He
introduced the incentive program and collected data on the true
cost of doing jobs with the aid of an accountant(a former
watchmaker). He now knew how much labor and materials were really
involved. He also factored in overhead. This must really have
been like starting a new business. Was it self serving? Hmmm…
Yeah! And if he had continued into bankruptcy, whom who have been
served? In the time since, he held onto two mechanics that
increased their income by fifty percent and has hired others. He
now knows that his business is healthy and he can monitor who
does what.
I'd be lucky, under Gellers system, to make $10,000 of this.
I think that under David’s system, even a novice will make
$10,000/yr if the system is strictly adhered to. There is an
important key. here. Dishonesty on the part of the business owner
will insure disaster. These are real numbers built around real
people. His mechanics are not expected to perform magic. Just
what is in the book. If the owner lowers his prices out of fear
of what “the other guy” is charging, he will lose money either to
his employees or his clients. David lets the competition absorb
those losses.
I'm definitely low paid, according to my skill level, it would be typical for me in a large city to earn up to $25 per hour.
Most bench jewelers are somewhat underpaid in the USA. I really
think that it is the result of a low tech skill that can be
learned in any economy. A very large percentage of jewelers in my
experience have emigrated from every other part of the world.
Business owners have learned to exploit this labor. It is not a
bad thing. It is just a part of the world economy. In just a
couple of years, I think that computer programmers will face the
same competition.
Impossible under Gellers system, unless you really slop work out, or gouge the customer.
What is gouging anyway? Getting a fair price for the real cost
of doing business?
, how does Mr. Geller determine who gets what work? Obviously, some jobs make a better margin for the jeweler, but does he have a fair way of allocating them?
It really doesn’t matter too much who gets what. Everyone is
getting paid the same thing. Maybe the guy that produces the best
results gets the most of that particular job. Good for that fast
guy, good for the slow guy and good for the owner.
Does he just feed the good work to the jewelers he likes?
You seem to miss the fact that there is now no “good” work. All
jobs are paid for according to the difficulty. All work has been
equalized.
I think he's done what a lot of people are doing, Finding a way to make their own deficiencies in managerial skills someone elses problem.
I can’t seem to shake my disagreement here. David has introduced
management skills that bench workers are not privy to. Remember
that most of the really successful chains have been assembled by
people that have spent a few years not on the bench but in
business school. They have assembled formulas that work. They
don’t try to do everything. They keep their systems simple
enough to be operated by available labor at prevailing prices. If
they need to or wish to, they can add new services as they see
fit. Their business models work from the ground up, however.
David makes a lot of good points. Among them are the fact that
the reason that clients come to us is that they trust us. Not that
they are comparing prices. Some do price comparisons and that’s
okay. He points out that one usually only needs to walk through
all of the servies that will be performed in their particular
case. Ya win some and ya lose some, but ya don’t give up yer
shirt.
That's good though, for us craftsman/owner types, and we're going to be all there besides jewerlryonlyjewelry.com and Really Big Chain Store in the Mall, Inc.
This is really an endorsment for guerilla businesses. Small guys
can conform to what the competition is doing. A long time ago I
was talking to a VP for one of the larger chains and he said to me
“if you want to increase business, increase service”. At the
moment, I thought that he said “give away service”. No, I think
that he meant to charge for it.
Hope everyone on Orchid has a happy new year!
Bruce
Bruce D. Holmgrain
JA Certified Master Bench Jeweler
Steve,
This system like anything can be changed or modified without
losing the initial concept.
If I have a particularly involved and difficult job which is not
listed in the book, I am lucky to be working with a store owner
who is also a bench jeweler. We discuss the job, as we do all
jobs where sales people may have a question, and decide what is
the best approach. We we consult the book we decide if we think
it is fair compensation for what has to be done. Our agreement
is, that if we find we need to modify the payment, I then use my
hourly rate which I had dictated upon being hired, or we come to
a mutually agreeable figure. It has worked very well and the
owner, customer and myself have been very satisfied.
As Mr. Huffman stated, “greedy store owners”, this is something
that you as a professional will have to work out. I may be very
lucky to work with a man that has come from the bottom up and had
the experience. He understands my worth to his business and in
not about to lose me by filling his wallet at my expense.
I think overall, no matter what system and method of
compensation is used, pride in workmanship and great customer
service will allow you a liveable career in any chosen
profession.
Lawrence M. Silva
Da Gama Designs
I agree totally with MR. Huffman… as far as being paid by the
piece, who exactly is it that is going to set the prices?? I
haven’t read Mr. Gellars book and I don’t know if he has a way to
determine what prices are set… One thin not mentioned here by
anyone yet is this… First off let me say that I put my time in
doing bench work that is to say ring sizings repairs and that
sort of thing. I have since gotten away from that to do nothing
but manufacturing, design and model making… So now about the
topic nobody has brought up… What happens when the bench
jeweler getting paid piece rate comes up on a job that should be
fairly cut and dry, for example something as easy as changing a
head for a princess cut mounting with some channel set stones on
either side… Now that we have the example, what happens when
the jeweler doing that job on a piece rate scale discovers that
some buthcer that has worked on the ring previous to him has used
the lowest karat solder possible to repair or if they were that
much of a hack use the solder to tighten the stones in the
channel. Now while working on this ring the thing falls apart,
now he has to waste his time fixing some hacks’ work. What does
he get paid for this ultimate waste of time??hmmm??? I have seen a
TON of other people’s work, let’s face it for every great
jeweler there are 100 butchers. I think if anybody should get
paid a piece rate, it should be the butchers and those of us that
are worth alot more should get paid for our skill. I guess this
can be agrued till everyone is blue in the face… But I know of
at least 15 butchers in my area of the country who I would trust
with a garbage truck let alone doing quality work… and they are
all overpaid… fixing other jewelers mistakes is one of the
reasons I am so glad that I don’t have to do repair work on a
daily basis anymore. So for all of you out there that know you
are worth alot more, don’t settle for anything less. And don’t
let anyone dictate to you how much you will get paid for one
piece, especially if the guy paying you has absolutley no clue
what it takes to sit there and do the work… Marc Williams
To Orchidians on the thread of pay systems; I’m going to shut up
after this, promise!
My final word on this (I’ll bite my toungue if need be) for the
sake of expediency in moving on to fresh issues.
Gellers system, like most systems of compensation, is dependant
on the honesty and fairness of the employer. (Just as the glue
issue is dependant on the mysterious “internal sense of
integrity” of the jeweler).
I thought that, in our business, productivity was dependant on
the honesty and fairness of the employee. I forget about the
diversity of workplace situations in our trade. I thought
people who needed to be “motivated” or watched were working in
production situations. Factories. We were skilled trade, even
artists.
And when we were allowed to keep our pride, we put that same
pride into the job, into your reputation.
In my time, I’ve seen million dollar deals done on a hand-shake.
I work partly on commission. I don’t even expect an accounting
on it. And my boss knows I don’t meet his customers after work.
I never use drugs (don’t even drink or smoke, no it’s not a
moral thing, it’s a healthy survival thing). But I would walk
out in disgust if someone expected a drug test. I expect people
to know me better. I guess I’m a dinosaur. Here’s my final
critique of the commission system. 2 points:
1.) Why, if this system provides more money for the employee,
would any employer be interested in it? Simply because there’s
"incentive" involved? Why not just set the base wage at
"OK-to-substandard" and use commissions as a way of making more
for more work? I suspect it takes some of the risk out of
hiring people. Wasn’t that always the employer’s risk? Are we
trading in the risk of hiring unproductive workers (references
should tell that) for the risk of hiring dishonest or addicted
ones? If you check their references thoroughly, shouldn’t you
find out if they are good workers? Is the idea of making sure
they work hard enough keeping you from looking at the workplace
situation? Are they being constantly interrupted? Are they
near “chatty” co-workers? Is the lighting and ventilation
causing fatigue? Are they properly equiped?
2.) In my opinion, we are risking good faith bargaining here,
not to mention encouraging that “line worker mentality” American
labor is so famous for. Are the benifits, holidays, etc.,
going to leave the table one day and go to a “cafeteria” plan
that’s also based on commission. How do your heavy hitters feel
about having to take time out of their money making to train
people? Or do the newbies just languish in the backwaters of
low-skill-low-pay?
Before I’d elect this system I’d take a good, hard look at
businesses that have used this system for a long time and see
what they’ve become. Is that where you want to be? Hasn’t auto
repair become mostly a subcontractor/commission based system?
You’ve also got to think about how your customer is going to
percieve your business. Example; stores without jewelers have
always sent out work. Didn’t mean you didn’t get good work, but
customers didn’t like the idea. They felt we were making the
decision for them.
Finally, and I mean finally! I have looked deeply into my own
issue here, and here’s what I find. I DO have an ax to grind,
based on my experience of being a dedicated employee for people
who’s own self interest got in the way of thier being fair and
honest. It’s a long story, and no, I’m not completely innocent.
But I have never gotten used to people not coming through with
their end of a bargain. I just don’t know if this system holds
the employer to enough responsibility. I’m not questioning
anyone here using this system, just the one’s who will
inevitably miss-use it. But I still believe that we need to
fight like hell to maintain our ethics, wherever that may be. .
. in the home, the schools, and the workplace. I think that, as
hard as trust is, if you don’t painfully exercise it, one day
it’s gone. If I didn’t believe this, I would be doing something
else now, after what I’ve been through. Don’t lump your
employees into the “Them” catagory and start trying to figure
out how to outsmart them. Even good people fall pray to using
bad habits. Use whatever system works, but remember, you reap
what you sow. I’m not blind to the other side of this argument,
I’m just a leary of the “enthusiasm”. Shouldn’t somebody be?
Thanks for your patience, everyone. . .
David L. Huffman, Samurai Jeweler (Hiy-yAH!)
1.) Why, if this system provides more money for the employee, would any employer be interested in it?
Store owners are not in competition with the help. The help is
not the enemy. The store across the street might be, but not
suppliers or help.
I suspect it takes some of the risk out of hiring people. Wasn't that always the employer's risk?
Even in Vegas there is no risk for the casino. They are running
businesses. If they wish to gamble, casino owners would walk
across the street and spend more time with the competition. All
businesses need to minimize risk.
If you check their references thoroughly, shouldn't you find out if they are good workers?
What good are references in a world as litiguous as ours? Lible
and slander are the biggest scams running these days. How could
references form any type of pay scale anyway? Besides, there are
hardworking, loyal and trustworthy people out there that aren’t
smart enough to solder a charm. That’s not to mention the
newcomers to the trade.
Is the idea of making sure they work hard enough keeping you from looking at the workplace situation? Are they being constantly interrupted? Are they near "chatty" co-workers? Is the lighting and ventilation causing fatigue? Are they properly equiped?
Important responsibilities but not really germaine methinx.
2.) In my opinion, we are risking good faith bargaining here, not to mention encouraging that "line worker mentality" American labor is so famous for.
!?! Seems to me that “good faith bargaining”, “line worker
mentality”, “American labor” and unions have been very closely
associated for about a hundred years. What are you trying to say?
Finally, and I mean finally! I have looked deeply into my own issue here, and here's what I find. I DO have an ax to grind, based on my experience of being a dedicated employee for people who's own self interest got in the way of thier being fair and honest. It's a long story, and no, I'm not completely innocent.
I’ve had a few of my own axes to gring for a long time. Weird
part is that I have ground my fingers to the bone on imaginary
axes. More than once. I can’t read that other guys mind. It seems
to be best to just step back and re assess what is happening in
that relationship. David’s book is good in that it can get
everyone onto the same page. All prices are still negotiable.
Larry was telling me that Mr. Geller will even it to your own
needs.
It is late. I suspect that what we all want is a living and a
little time and resources left to exercise some creativity. Here
is to a more profitable year for all Orchid participants.
In response to your situation Re: pay by the job or by the hour:
I have been in business for twenty years, operating both a retail store and a small manufacturing business, and have always paid my bench people by the hour. I now find myself in the position where I would like to pay by the job rather than the hour, as it becomes more and more obvious that people will "adjust" their schedule based on the desired end pay rather than by the work load.
I believe that given your description of the situation you are
facing, that it will not make a difference whether you pay your
employees by the hour or by the job, because your basic problem
will still exist. That is, being able to determine approximately
how long a given job should take and incenting your employees to
work diligently to finish the job.
If you pay by the hour and it seems to take longer than “normal”
or expected - simply change your process for how you work with
your bench employees. Work with them up front to establish a
“time budget” for how long a project should take. If something
goes wrong, or there are unforeseen circumstances that affect the
length of the job, have them tell you BEFORE the time (and costs)
get out of control.
If you pay by the job, you have the same problem. Someone still
has to determine how long the job will take, because time=money,
and will need to work to that schedule. Just manage the process
more closely and make the employees accountable for their work.
About the tax implications - talk with your accountant, but the
definitions for “subcontractors/independent contractors” and
non-employees are tight and the definition has more to do with
how your employees perform their work for you vs. how they are
paid.
Hope this helps! Good luck and I hope you find a solution… Lori
Bugaj One-Eyed Collie Jewelry Design (a Human Resources
management consultant, in my prior work life, which, thank God is
over…)
I was wondering if anyone could give me a clear definition of
sub-contract work vs. employees in the state of California and
Confusion. I may have missed this earlier on in this
discussion, and if so, apologize for the duplication of effort.
Thanks so much.
I also would like to express my appreciation to Orchid. I can’t
believe how much I have learned and routinely recommend it to
other metalsmiths that I meet. (I hate to say this, for fear of
putting the idea into ganoksins head, but I would even p-p-pay to
particpate in such a forum.) Thanks again. Wendy