By REMODELING Magazine Staff. Tie it to performance
We have distributed performance-based bonuses for the past year and a half. We have several of this type of bonus that we feel reward and reinforce our company ideals and principles, such as excellent customer service, quality workmanship, and teamwork. The teamwork bonus is an equal amount for everyone and is based on meeting and exceeding budget goals.
We found that tying bonuses to our company culture creates a consistent set of standards and rewards. Employees know what the company values, and they work toward meeting those goals, because that is how they will receive those rewards. Furthermore, we believe that weekly pay should be adjusted to reward those who are performing to a higher standard than their peers. These adjustments are made throughout the year.
We tried discretionary bonuses but found they were viewed as "entitlements" rather than as what they were: a bonus. When the economy or the company doesn't perform as well as anticipated, our staff would be disappointed for weeks if the bonuses were the same or lower than the previous year. In addition, discretionary bonuses tend to reward employees for their performance within the past month or two rather than throughout the year. So, the employees would always work harder the month or two before the bonus was to be given.
It was for these reasons that we opted to shift our focus from subjective (discretionary) to objective (performance-based) when rewarding employees.
Deimler & Sons Construction
Discretion is the better part of valor
I have distributed discretionary bonuses every year for 15 years. It allows me to give all that the company can afford to give. We are open book, so everyone knows that amount.
I believe in starting my staff and project managers off with very attractive compensation packages. If incentive bonuses are given per job, then there is no way of getting that bonus back if the job fails unless you "book" bonuses per quarter or per year.
I think performance-based bonuses make it difficult to maintain compatibility between sales and production. We like to think that we are working for the good of the client and the company, and financial rewards will come if we work together as a team throughout the year.
Reward, not punishment
An incentive-based bonus based on project success locks your company into promises it may not be able to keep or sets your employees up to fail if the goals are too high. The unattainable or uncontrollable goals can become punishment for a job well done or an excuse for cutting corners.
We do have some incentive rewards that are in our company policy. We put $2,000 into a safety pool that I divide among the labor force for those who have not had a reported injury claim. We are a union shop, so our apprentice carpenters must attend two apprenticeship sessions per year. They do not get paid during schooling, so we set up a reward system that gives them an incentive to attend.
Riggs Construction & Design