Building a Bonus or Incentive Program for your team.
Scott Maysura
Senior Consultant | Restoration Industry Educator & Coach | Helping restoration business owners achieve their goals | IICRC Triple Master Restorer
What is the purpose of performance bonuses?
Performance bonuses are any rewards outside of your employee’s usual pay or salary. These are rewards that an employee receives after they meet or exceed specific performance expectations and/or goals. Restoration companies can use bonuses as incentives for exemplary work practices, to recognize specific team or team member, and thank those employees who achieve specific goals.
These goals are often pre-established and rewarded at a specific time. For instance, a company might offer a quarterly bonus for increasing revenue by a specific percentage. Or a company might offer an annual bonus for hitting a specified Gross Profit goal. While it is possible for Business Development Associates (BDA) and certain professional positions to negotiate a performance bonus (commissions), restoration businesses may offer these incentives to the other company’s employees when they can afford to.
Types of performance bonus
Spot bonus
A spot bonus is an unexpected performance bonus that businesses award to an employee immediately after a workplace achievement. Company’s may pay these bonuses from a pre-determined and budgeted discretionary fund they control. Spot bonuses can be a gift card, cash, or a small addition to a professional's paycheck.
While there are companies that allow their managers to award spot bonuses whenever they deem appropriate, other companies may prefer to use spot bonuses during designated times. For example, you call in a technician into work on the weekends or afterhours to respond to an emergency call, they may earn a spot bonus. This could be something simple like a “$65.00 emergency response incentive”. If a company prefers to offer spot bonuses during specifically set times, they may award spot bonuses to their technicians who stay productive and helpful during a busy work season. An example of this could be a $250.00 bonus for those who do not take vacation during the months of June – October (Hurricane Season).
Commission bonus
Commission bonuses are most common in sales-based careers like we have for our Business Development Associates (BDA). This bonus can reward professionals who exceeded their performance expectations by sharing a portion of a sale's profit. BDAs typically calculate commission bonuses by subtracting a pre-determined percentage from the final sales price and awarding that amount to the employee. While this is most common there are sales driven restoration companies that have a commission structure for their entire organization.
For example, if a technician persuades a family friend to use your company’s service and the revenue that came in from that project is $10,000 and the set commission rate is 2.5%, they may receive a commission bonus of $250.00 from the sale.
Mission bonus
A mission bonus is a performance-based incentive that employees can earn after achieving a specific goal. Managers can set the same standard goal for all employees or individually based on each position, skill level, or work expectations.
Mission bonuses often specify deadlines the employees must meet their goal by. For example, an accounts receivable manager may receive a mission bonus if they collect on a specific number of “bad debt” invoices by the end of the month.
Profit-sharing bonus
Restoration companies may award profit-sharing bonuses when they earn a higher-than-expected profit. Though companies often reward team members with profit-sharing bonuses at the end of the year, they can also earn these bonuses by helping the company exceed its goals throughout the year and on a quarterly basis.
For example, if a BDA has a goal to sell a certain number of water mitigation projects and the production team helps meet and surpass that goal, the company may choose to share a portion of the profit with its employees for exceeding expected revenue and profits.
Gain-sharing bonus
Gain-sharing bonuses are most common in manufacturing industries but can apply to the restoration industry. Factories may pay these bonuses to employees who help improve the quality or quantity of the factory's production and can earn a performance-based bonus during seasons where the product they manufacture is in high demand. Restoration companies may pay these bonuses to their team during times of Gain during storm season, hurricane season, or a regional weather event.
For example, a restoration company may offer a gain-sharing bonus to its team if they can produce 2x’s more than expected during the month February due to an event. Or 3x’s more than expected revenue during the months of June – October during hurricane season.
Steps in building a successful incentive program
?1.?????Get the right people involved from the beginning. Your leadership team, HR representative, and even a representative of the production team. Involving the input of the stakeholders that this will affect could be invaluable.
?2.?????Use the KISS principle – Keep It Simple & think it through. Keep the rules and stipulations to qualify easy to understand so there is no confusion.
3.?????Make it measurable. What is it that you are trying to achieve? What are your objectives? Use the “SMART” principle to set your objectives.
It needs to be clear what employees need to do to earn their bonus. What is their ‘goal’? It should be simple to calculate the final bonus based on that goal.
4.?????Ensure your employee has control. If you are asking your employee to work toward a specific and defined goal, you must make sure they have direct influence over this goal and the outcome.
5.?????Account for quality assurance. In service-based businesses, bonuses are usually based on speed, so the ability of an employee to get more work done in the same amount of time. Consider Revenue versus profit. An example would be photos in Fusion in accordance with standards. Call backs:
a.?????Are you charging call back time toward the labor budget?
b.?????Percentage of call backs on total jobs produced over an “X” period
c.?????Customer service ratings. If your complete survey’s is their score weighted
d.?????Efficiency weighted
领英推荐
e.?????Leadership or Tier weighted based on position
6.?????Make the bonus amount meaningful. Think about it this way: If you are paying someone $20.00 an hour, approximately $40,000 a year, and they receive a yearly bonus of $1,000. Will they look back at all their demanding work and feel like it was worth doing it again for $1,000 next year?
7.?????Tracking and monitoring. In other words, a good employee bonus program needs regular monitoring to ensure it is still a good employee bonus program and a good fit for your company financially. If it is not working to achieve the goals that you are looking for. Cut it.
Do’s and Don’ts of a Bonus & Incentive Program
As with any compensation best practices, it is essential to begin with the right intentions in mind. Offering an incentives and bonuses that will keep your team in the office longer is a negative approach to offering incentives. While the list of do's and don'ts for an incentive program best practices can be a long one, here is a compiled list of the most significant things to consider when instituting a bonus & incentive program:
Don'ts:
·???????Do not rely too heavily on them. They are not meant to take the place of your company's mission, vision, values, or meaningful work. While bonuses are great, the culture and leadership of the company is what keeps your people with you.
·???????Do not give out bonuses without reason or achievement. This can cause confusion amongst the ranks as to what behavior a company rewards, lead to unintentional favoritism, and a company losing the trust with their employees and in leadership.
·???????Do not give awards for behaviors for like best attendance or the lack of sick days taken.
·???????Do not add too many stipulations. A reward program becomes meaningless if a bunch of rules and fine print strip away all the benefits.
·???????Do not underestimate the cost of the program. Do your research and budget for the program!
Do's:
·???????Do create your spot bonus program around organizational goals, culture, and success metrics. Additionally, link rewards to organizational success.
·???????Do make the criteria for receiving or winning a spot bonus clear.
·???????Do make sure you are rewarding exceptional behavior that goes beyond that you are expecting from them.
·???????Do make sure you reward behavior immediately and with an appropriately sized reward.
·???????Add an individualized touch with your interactions. Employees want their leaders to treat them like individuals, so personalize your messaging for each of them. It will make them feel acknowledged and valued, which pays a larger dividend than the bonus itself.
There you have it! If you follow these guidelines, take the time to think it through, and have a purpose behind it, building an employee incentive program is not difficult or hard and the benefits will outweigh the costs.
Scott V. Maysura
Restoration Pro, Industry Consultant, Educator & Coach, Triple Master Restorer
Phone: (815) 908-3797 | Email: [email protected]
About Floodlight Consulting Group:
Floodlight Consulting Group is a leading consulting firm specializing in the Disaster Restoration industry. Floodlight provides full service consulting to restoration owners and their team, as well as coaching and live workshops within the industry. Floodlight’s professional consultants have over 50 years of combined insurance restoration experience. To learn more, visit?www.floodlightgrp.com?
Follow me on LinkedIn:?Scott Maysura | LinkedIn