Compensation Plans That Actually Drive Performance
Are you incentivizing performance effectively? Most pay plans look good on paper but fail in the real world because they’re too slow, too complicated, or reward the wrong things.
On this episode of Cracking the Code, Paul Kelly, Former Owner of Parker & Sons, unpacks the no-ceiling compensation model behind Parker & Sons’ explosive growth. From instant rewards to simple structures people actually understand. He outlines what truly drives performance at scale and how to build a team that wins consistently!
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00:00:00:06 – 00:00:12:23
Not paying enough. Paying too much. Being too cheap. If you want the best, you’re going to have to pay for the best. When you.
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Welcome to Cracking the Code where we make Hvac success clear, simple, and stress free. I’m your host and contractor, University general manager David Holt. This episode is part of our epic 2026 speaker series. Your sneak peek into the incredible minds taking stage at the Bellagio in Las Vegas February 12th and 13th, 2026. Today, we’re honored to be joined by Paul Kelly, retired President of Parker and Sons and former Southwest Region CEO for the group.
00:00:44:17 – 00:01:16:06
A true Hvac industry goat. Paul grew Parker and Sons into a $250 million powerhouse, and he continues to coach, mentor and inspire leaders nationwide. Paul’s epic 2026 breakout session is titled Pay to Play How no ceiling pay can lead to no Ceiling performance. He’s pulling back the curtain on how to design pay for performance systems that actually drive performance, attract top talent and reward excellence at every level of your company.
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So grab your notebook because this one’s packed with gold. So let’s get cracking. So welcome to cracking the code, Paul. Good to be here. Good to be on this with you, David. Appreciate it man. It’s good to work with you on this and a lot of other programs we’ve got going on right now. It’s, it’s a good time to be involved in the Hvac industry, isn’t it?
00:01:37:17 – 00:01:59:18
There. You betcha. A lot of people had tough years, but, yeah, this is the best time to be in the industry. It’s no doubt about it. So you said that compensation drives crazy growth when it’s done right. You know, what are the biggest mistakes that you think contractors make when they move to a pay for performance type model?
00:01:59:18 – 00:02:40:11
And how can they avoid those mistakes? That’s a good question. They, I’ve seen a lot of mistakes. I’ve made a lot of mistakes. So, you know, from anything, from paying hourly and not paying for or rewarding for high performance to, making, pay programs too complicated. I’ve been to locations and ask technicians to describe their pay program, and and they can’t do it, or they don’t feel like the pay program that was described to them, and they’re actually getting paid the right amount, or paying for deliverables.
00:02:40:11 – 00:03:08:06
That should be nonstarters. I was at one location not too long ago where they paid, technicians to show up to meetings on time. You know, can you imagine? Crazy. Not paying enough? Paying too much. Being too cheap. Look, let’s face it, if you want the best, you’re going to have to pay for the best. Too much time between activity and reward.
00:03:08:08 – 00:03:35:09
That can be a mistake. People make that lack of expectations or lack of delivering. I mean, I I’ve seen it all. What works the best that I’ve seen and experienced is simplicity. Right. They need to be able to describe their pay program in 1 or 2 sentences. And, and feel comfortable and share that with people or whatever.
00:03:35:11 – 00:04:03:11
But being able to describe their pay program and know exactly how they’re paid and be able to figure out what they just got paid very easily. Right. No cap on what you can make. Reward for the right things. Right. And then become one of the highest paying companies in your market. And paying doesn’t always just mean compensation, money wise.
00:04:03:13 – 00:04:27:15
It can be other things as well. So those are the mistakes I see, along with a bunch of others that we’re going to cover in in the session in Vegas. But it, that I’ve seen, I’ve seen a lot and I’ve been through a lot. Well, it’s interesting you bring up the, kind of the the time between production and reward.
00:04:27:17 – 00:04:53:08
Right. That distance between I accomplished one of the tasks that has a reward attached to it has as pay attached to it. And, and the time I actually see it and it’s interesting, when I first went to work for my dad, he had a little spiff program that rewarded service technicians for selling a maintenance agreement. You know, that’s a definite activity that we’d like to reward.
00:04:53:10 – 00:05:21:06
And he thought that it was better to pay them right before Christmas. A bonus for maintenance agreements right before Christmas, because that way they’d have, you know, Christmas bonus, in essence, that they’ve earned. And I watched the numbers when I first looked at it, slightly, you know, it’s like they they sold that maintenance agreement in January. You’re not paying him until December.
00:05:21:07 – 00:05:39:04
And it’s like it was sold a lot the first of the year. But then they just tailed off and I said, dad, what if we do this? What if we paid them each month? They sold them. So instead of it being this big sliding thing, we would see a compensation. We would see a reward. We would see a discussion about behavior.
00:05:39:04 – 00:06:03:05
In fact, we even paid out our our spinoffs for our maintenance agreements. We paid them out in cash. They were still recorded on their check. But just to make it, make it feel and visual, we paid those spin offs in cash and we paid them in a meeting with our service techs. Right. So the whole service department is sitting there and we’re peeling off $5 bills at a time.
00:06:03:05 – 00:06:24:13
Five, ten, 15, 20. I’m counting them out. Everybody starts counting long. And the way we did it always did. The guy that only got the smallest amount first and then the largest amount guy always got his last. And it might be 3 or $400 that month that he earned at $5 apiece. We did all of our increments were $5 increments, just made it easier to count stuff out.
00:06:24:15 – 00:06:41:21
So if he got a $15 bonus or our reward, you know, 15 bucks was it. But if you sold 20 of them and a 300 bucks, boom, he’s happy. And, it was so fun because people were like, cheering people on and said, oh, we know where we’re going out to get some beer tonight. And Herbert’s paying for it, right?
00:06:41:23 – 00:07:06:19
So but it engaged the entire team. And what we saw was we saw that, you know, there’s still going to be some spikes and stuff, but it’s like the spikes kind of were always there each month instead of once a year. And so we grew our maintenance agreement a whole lot, our maintenance agreement program a whole lot faster by paying monthly instead of doing it once a year.
00:07:06:21 – 00:07:38:16
Yeah. But you you just described, one of the, you know, pages out of the playbook that, that, I mean, and, I didn’t invented the math. Maybe you all invented it. It doesn’t matter who invented it. It’s just, the the faster you can reward the behavior, even with your kids, the more apt you are to change their behavior.
00:07:38:18 – 00:08:01:22
Make it something that they just do naturally, and so and so. Yeah, that is, that is one of the tricks, speak. Very cool. So you call this session pay to play, right. So what does that phrase really mean in the context of building a winning culture? And how can owners use it to attract and keep the best people?
00:08:02:00 – 00:08:29:16
You know, it’s, well, I’ll talk real quick about, you know, I do a whole seminar on shortages that are industry and there’s, there’s shortages of, you know, technology. I think that’s picking up lately. There’s shortages and real good companies. There’s shortages and and equipment sometimes we’ve all, you know, witnessed that, shortages are good training.
00:08:29:16 – 00:08:55:18
A shortage of women in our industry. We need more women, shortage of implementation of ideas, a shortage of great service, shortage of maintenance agreements, which you just mentioned. We just went through a shortage of refrigerant. There’s all kinds of shortages, but the one that comes up the most when I ask audiences is a shortage of good technicians.
00:08:55:20 – 00:09:32:08
And another one that’s less than that shortage of technicians is something we’ve been talking about. Excuse me? Ever since I’ve been in the industry, and that’s been about 40 years now. There’s a shortage of good technicians. 40 years ago, there’s still those. But what comes up more often than not is a shortage of great leaders. And if you’re a company that wants to get to that next level where you want to grow at a really high pace, it can’t be just you anymore sometimes.
00:09:32:08 – 00:09:59:21
Right? So getting great leaders and, these shortages and let’s face it, to get the best tap and whoever wins that war, you know, there’s a war on talent. Whoever wins that war ends up with the business. And so you have to think about how to win that war. And one of the ways to win that war is to have a pay to play mentality.
00:09:59:21 – 00:10:26:12
You’re going to have to attract and retain great people. And to do that, you should want to pay more than anybody else, provide certain things that other companies can. There’s all kinds of forms of payment and not just money. And, you want to attract and retain the very best things. So that’s what that’s what it means to me.
00:10:26:12 – 00:10:51:07
And you’ve got to of course, if you’re going to pay the most, you’ve got to offset some of those cost us. And so you’ve got to be priced right. You’ve got to, make sure that you’re doing the right things on each job. So your average ticket is higher, all the things that can help pay for those things and make sure that you’re reducing the waste that’s in your business.
00:10:51:07 – 00:11:25:06
So, yeah, pay to play is, you know, and that’s an old, an old phrase. But, in the HPC industry, I don’t think people think about how I pay someone in the total compensation program that I hear can influence, in fact, I would say directly affect the success of your company and how fast you grow. And it’s a good place to start is, you know, making sure that you’re set up.
00:11:25:06 – 00:11:58:13
Right. So the whole idea of, of, you know, different rewards that go really beyond money, we know all these rewards and, and recognition. And so forth. They all cost something in some way. But it’s not always stuff that shows up on the W-2. Right? It’s not always something that shows up on the paycheck. So what are some of the creative or low cost ways that you’ve seen leaders, pay their team, recognize their team that that actually build loyalty from a team standpoint because, you know, once we finally get someone in the business, it’s great to keep them, right.
00:11:58:13 – 00:12:16:20
So, I mean, Ron Smith used to always talk about get and keep customers. Well, get and keep good team members is another huge thing we need to do. So so what are some of those kind of creative or low cost ways that that folks can, can recognize their team and build that loyalty and motivation without breaking the bank?
00:12:16:22 – 00:12:50:13
Yeah. Great. Great question. We spend we spend three things in life time, money and energy. It all those those three things are kind of finite too. And in some sense there is only 24 hours and a day certain people only make so much money, or have so much money to spend or have so much effort or, you know, energy that they have, and they have to decide where they spend this time, money and energy.
00:12:50:15 – 00:13:26:13
And so what I’ve found, partnering the Suns and the wrench group, is that there are other things other than money that people value. And I know people are starting listening to this. They’re starting to think through some of those things already. Benefits is one of those things that is a form of payment. And as you’re calculating somebody’s hourly rate, you’d be well, to add what you’re paying in benefits on their behalf because a lot of companies don’t pay, you know, benefits.
00:13:26:13 – 00:13:59:16
So benefits is one thing. World class training is a form of payment, to train at a high level. People don’t want to. You know, I always say that people in this industry, they spend, you know, five, ten years getting really good at their craft and, and the training, what they do, then they spend the rest of their life trying to get out of this because it’s a tough getting, you know, especially in Phoenix, Arizona, to be in a 160 degree a do you want to do that when you’re 60?
00:13:59:16 – 00:14:28:03
Probably not. There are there are some, but but they’re always trying. They go on to the next thing we get out of this industry. And so world class training to get you to the next thing is something that people value a long time. Think of time as a benefit fund. If you can give people time, especially younger people, they value time as much as they do money.
00:14:28:05 – 00:14:58:02
In the old days it was you worked 60 70 hours a week. You worked overtime, you worked 2 or 3 jobs. You had to support your family. Making money was the thing, right? Nowadays, that’s not so true, right? Time is what’s so important. The people time to do the things that they want to do, whether it’s with their kids and their family or a hobby or, or, you know, other things that they want to accomplish.
00:14:58:02 – 00:15:28:17
And so think of time as a benefit, if you can give them more time to do the things that they really want to do, then, then you’ve got something, working from home, there’s a benefit, in working from home, you know, Covid, you know, flush this one out really well. And, now you can just let people work from home be nonproductive or less productive.
00:15:28:19 – 00:15:57:01
They have to maintain certain standards. But there are a lot of people that will give up, give up money to work from home, right? As long as they’re highly productive. But this can be a great benefit and a form of payment in some sense. We have people at Parker and Sons that would do anything to not give up that benefit of working from home.
00:15:57:03 – 00:16:31:09
We use it as a weapon. And so, so the, you know, the ease of doing your job, how fun something is for you, how fun working is, is some kind of form of payment, support for your family or the dreams that you want and that I could go on and on. And, in the session, I’ll actually go through some real life examples of how I changed Parker and Sons and how and how you can incorporate these kinds of things into your business.
00:16:31:11 – 00:16:53:23
Yeah. There’s all kinds of forms of payment. It’s not not just money. Money is a big part of it. And I always want to be one of the highest paying companies in town. Money wise. But but that’s just one form of payment. There are other payments that people value a lot. Or as much as the money. Yeah, absolutely.
00:16:53:23 – 00:17:15:13
And I was getting ready to say, Paul, don’t give away your whole session, man. Let’s, let’s, let’s, let’s say you get ready, we go on. I just gotta go I love that, I love that, and that’s one of the things that I love about you. And and I’m kind of in the same mindset right now. We’re we’re both in the, I’ll just call it the twilight years of our career within this industry.
00:17:15:13 – 00:17:34:15
And giving back to the industry and in ways like this are certainly valuable things. And I think that if we can get more people to be engaged and listening to to some of the goats in the in the industry that have been there, done that, got the t shirt, yeah, things have changed. We didn’t have I, you used to spend money on Yellow Pages.
00:17:34:15 – 00:17:58:22
I bet you don’t spend any money on Yellow Pages hardly at all compared to what you used to do. Right? And so things have changed, right? Things have changed. And they’re going to continue to change. They’re going to continue to evolve. So we really do appreciate your contribution to, to our leadership team here at EGA. I mean, for those that don’t know, Paul is a valued member of our board because it’s an important role to to help guide the next generations.
00:17:58:22 – 00:18:22:06
And that’s part of what we’re both doing here is is trying to help you, the listener, pick up more ideas about ways that you can channel the knowledge that we’ve gained over the years. I mean, Paul said he’s been in it for 40 years. Gosh, I’ve been in my first paychecks, in this industry happened in 1976. That’s a long time.
00:18:22:12 – 00:18:38:04
That’s a long time ago. But that was a brilliant. You’re you’re you’re a lot younger than me. What have you been? What? Yeah. What? You know, ten, 15 years for you? Yeah. Yeah, I don’t know. It might have been a minute, but, I really do appreciate it. And thank you for joining us today and sharing your insights.
00:18:38:04 – 00:18:53:09
I know that your epic 2026 breakout session is going to be incredible. I’m just jealous because I’ve got to be in another session teaching at the same time you are. So I’m not going to be able to sit in on yours. So we’re going to make sure that we get that thing recorded so I can watch it later.
00:18:53:11 – 00:19:19:15
For more information about Paul Kelly’s session, visit epic 2020 6.com. Check out the agenda for Friday, February the 13th. Ooh, Friday the 13th. That’s a lucky day for us at, 9:30 a.m. there at the Bellagio. And if you haven’t already registered for epic 2026, don’t wait. Because this event always sells out. It always sells out. So head to epic 2020 6.com.
00:19:19:17 – 00:19:44:13
Click Register Now so you don’t miss out. And please like and share this episode so we can help more contractors build scalable, high performance Hvac businesses just like Parker and said. So thanks for watching! Cracking the code where we make Hvac success clear, simple, and stress free. Until next time, keep building, keep growing, and keep on cracking.
