Monetary incentives for employees may help boost their accountability and help them feel more invested in the businesses they work for—especially if the incentives are tied to tasks or goals that employees feel can be accomplished.
Mark Witte, owner of DreamMaker Bath & Kitchen of Colorado Springs, has had an incentive system in place for his lead carpenters for nearly 15 years. He developed the program to encourage his three lead carpenters to buy in to the company’s mission and culture. “You can talk ’til you’re blue in the face about being efficient and profitable, but unless you have something that rewards [employees], you won’t get buy in,” Witte says.
In Witte’s three-part program, the three bonus segments for the lead carpenters are interdependent. For part one of the program, if the LCs work harder, smarter, faster, and bring in a project on time (or earlier) and the project is on or under budget, they each receive a percentage of the project’s sales price. If they come in at 103% of the sales price, there’s no incentive; 103% to 100% of the sales price gets them 0.5% ; 100% to 98% is 0.75%; 98% to 95% is 1%; and if it’s less than that they get 1.25% of the sales price.
Part two involves customer satisfaction surveys. Witte uses GuildQuality to survey 90% of his clients, and the LCs’ incentive percentage is based on the number between 0 and 4 that the LC receives on questions pertaining to his on-the-job behavior: whether he was professional and organized; communicated well; took care of dust and dirt control; ensured a high level of construction quality; handled problems quickly and professionally; and whether clients were “likely to recommend” the company.
There’s also this question: “Was the whole remodel easier than expected?” If the LC gets a “yes” in response, he earns an extra point. If he gets recognized by name, he gets another bonus point. The incentives are as follows: an average customer satisfaction grade of less than 3 gets the LC 0.5% of the project cost; 3 to 3.25 gets 0.75%; and 3.25 to 3.75 gets him 1%.
All in the Timing
The third element is based on the LC’s schedule. There’s a simple +/– $25 per day on projects that come in before or after the estimated time. If the LC says a job will take 20 working days to complete and it takes 21 days, he loses $25 off his other incentives. If he beats the schedule by two days, he gets an extra $50. All incentive pay is based on quarterly efforts.
If there is something unforeseen that requires a change order, the LC brings it to Witte to estimate new costs. They’re not punished for something someone else missed. Witte feels the incentive has made a difference. Even though some people’s primary motivation is not money—and the system didn’t work for every LC he’s had—Witte says, “They all appreciate the system and like that it’s something they can go after themselves.”
Beyond Money as a Bonus
Tim Faller, owner of Field Training Services (and a REMODELING columnist), says he often finds “many owners don’t have the psychological ability to say to an employee, ‘You didn’t meet your goals, so you’re not getting x.’” He encourages business owners to be better managers so that the core incentive is “This is a great place to work, and we all have fun getting the job done.”
Faller says he has learned that what employees really want is to feel appreciated for their efforts. He cites a 1946 survey from the Labor Relations Institute of New York comparing what employees say they want versus what employers think employees want. The top three things employees say they want: full appreciation of their work; being “in” on things; and sympathetic help on personal problems. You can still offer money, but call it a “bonus” rather than an incentive, Faller suggests.