Compensation that actually retains people
Pay matters. It just isn't the only thing, and raising it without changing the rest doesn't work.
Pay at or slightly above the local median
Below median, you bleed your best people quietly. Way above, you create resentment when their output doesn't match the pay. Aim for the 50-60th percentile of your local market and reinforce with non-cash.
Tie variable comp to one or two clean metrics
Bonus plans that depend on 'overall performance' get gamed or ignored. Pick one or two numbers the employee directly controls: revenue per ticket, callback rate, closed jobs. Pay against those.
Raise the floor, not just the ceiling
Annual reviews with 2% bumps signal 'we don't really value you.' A bigger move every 18-24 months, paired with clear new responsibilities, retains better than steady tiny raises.
Take your version of this question further
This is one operator-tested angle on the question. Your shop, your size, your trade, and your team change the answer. Ask your specific version inside Ask a Shop Owner to get a response grounded in how owners like you actually handled it.