May 1, 2026
Restoration compensation design should align each role’s incentives with the metrics the company needs that role to drive: estimators incentivized on gross margin (not just revenue), project managers on job close margin and cycle time, sales roles on new account revenue with clawbacks, and production roles on throughput and quality metrics. Misaligned comp structures consistently produce the wrong behavior.
Every compensation structure is a behavioral directive. When you pay a PM hourly with no margin accountability, you’re telling them their job is to show up and do work — not to close jobs at target margin. When you pay an estimator a percentage of revenue, you’re telling them to close jobs at any margin, not the right margin. The comp structure doesn’t just pay the employee — it teaches the employee what you actually value, regardless of what you say you value.
Most restoration companies inherit their comp structures from habit and competitive pressure rather than from deliberate design. The result: comp structures that reward activity rather than outcomes, create perverse incentives that cost the company margin, and fail to retain the high performers the company most needs to keep.
The common mistake: Hourly or flat salary with no margin accountability. The PM is incentivized to keep jobs active (more hours) and keep clients happy (scope concessions) — neither of which necessarily serves job margin.
What this breaks: Closeout discipline. A PM paid hourly has no financial reason to push for fast closeout. Supplementing. A PM paid regardless of margin has no financial reason to do the extra work of identifying and submitting supplements. Cost control. A PM paid regardless of sub and materials variance doesn’t feel the cost of approving inflated invoices.
Structure that works: Base salary (market rate for the role) plus performance bonus tied to job gross margin on closed jobs above a threshold. Example: base $70,000; bonus of 2% of gross margin dollars on jobs closing above 42% gross margin. This aligns the PM’s income directly with the company’s margin performance on their portion of the job book. High performers earn meaningfully more. Low margin performance produces no bonus.
The common mistake: Revenue commission — a percentage of the value of jobs the estimator closes. This incentivizes volume over quality and speed over accuracy. An estimator paid on revenue commission who estimates $2M in jobs at 28% margin earns more than one who estimates $1.8M at 44% margin. The company keeps less.
What this breaks: Margin discipline. Estimators on revenue commission underprice to win work. They also rush estimates to maximize volume — which means missed line items, under-scoped labor, and the estimator margin problems described in the PDR Files series.
Structure that works: Base salary plus bonus tied to gross margin on closed jobs from their estimate queue. The bonus threshold rewards not just closing jobs, but closing them at target margin. An estimator who closes $2M at 44% average margin earns a larger bonus than one who closes $2.4M at 31% margin. This is the only structure that aligns estimator behavior with what the company actually needs.
The common mistake: Straight commission on new revenue with no margin floor and no clawback. This incentivizes closing accounts at any margin — including accounts that become ongoing losses once the full cost of maintaining them is allocated.
What this breaks: Account quality. A salesperson paid on new revenue commission has no incentive to pursue high-margin accounts over low-margin ones, or to qualify accounts for fit before closing them. They’re financially indifferent to whether the account is actually profitable.
Structure that works: Base salary (security for a role with long sales cycles) plus commission on new account first-year revenue above a margin floor. A clawback provision if the account’s first-year margin falls below the floor. This creates an incentive to close accounts that are profitable, not just large.
The common mistake: Pure hourly with no efficiency or quality incentive. This is better than nothing, but leaves throughput and quality entirely dependent on individual motivation rather than financial alignment.
Structure that works: Hourly base (essential — field work has variable demand and hourly pay provides income security) plus a crew-level bonus tied to jobs-per-week throughput and QA score (callback rate). This keeps the security of hourly pay while creating a team-level incentive for efficiency and quality. Crew bonuses rather than individual bonuses reduce internal competition and encourage peer accountability.
Base salary at market rate plus a margin-based bonus on closed jobs above a target gross margin threshold (e.g., 2% of gross margin dollars on jobs closing above 42%). This directly ties PM income to margin performance without penalizing them for factors outside their control. Avoid purely hourly or flat salary structures — they create no alignment between PM behavior and margin outcomes.
Revenue commission rewards volume over quality and incentivizes underpricing to close more jobs. An estimator on revenue commission who closes $2.5M at 28% margin earns more than one who closes $2M at 44% margin — even though the second estimator created significantly more value for the company. Tie estimator bonuses to gross margin on closed jobs, not gross revenue.
Base salary (for income security during long commercial sales cycles) plus commission on first-year new account revenue above a defined margin floor, with a clawback provision if actual account margin falls below the floor in year one. This creates incentive to close profitable accounts rather than just large ones, and aligns the salesperson’s financial interest with account quality.
Hourly base (maintains income security) plus crew-level bonus tied to throughput (jobs completed per week vs target) and quality metrics (callback rate). Crew-level bonuses rather than individual bonuses encourage team performance and peer accountability rather than internal competition. Keep the bonus structure simple enough that crew members can calculate their own progress without management explanation.
Paying for activity rather than outcomes — hourly or flat salary with no performance component for roles where performance is measurable and material. The second most common mistake is using revenue-based commissions (which reward volume over quality) instead of margin-based incentives (which reward profitable performance). The comp structure should answer: what behavior do I need from this role? Then design the incentive to reward exactly that behavior.
Mike McCabe is a restoration business consultant and the founder of Profit Detective. He works with restoration operators to find and fix the margin leaks that don’t show up until it’s too late.
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