I am often asked, “How do I get my staff to care?” or “How do I get them to be more productive?” Let’s also turn this around and ask “How can I make my employees feel valued?” When employees feel valued, they will care and they will be more productive.
There are a few key factors to consider in increasing productivity. In his writings on management, especially productivity, management expert L. Ron Hubbard stated, “Production is the basis of morale. If one can get a unit producing and actually accomplishing worthwhile production, then their morale will rise.” It follows that the employee who produces a lot, which results in high morale, will feel valued. Often they don’t even have to be told how valuable they are, they can see it for themselves by observing their production. Now add to this acknowledgement by management of their accomplishments, and you have employees who feel even more valued.
Often I’m told that employees can’t be expected to work as hard or care as much as the business owner. Although there is some truth in that statement, it doesn’t have to be that way. One way to increase production is by implementing an incentive plan. This plan doesn’t have to be complicated, and it should not cost you money to do so. In fact, it should result in more profit for you.
Using these, we should be able to implement staff incentive systems that will result in increased production and the resulting increased morale. By tracking production and combining increased profitability, we can actually create a high- producing, high-morale team. You can create the feeling of ownership by letting the staff know how they can earn bonuses. As they produce more, they will experience the increased morale that results from their increased production.
The best way to implement an incentive plan is to determine what you want to reward. Make sure that the accomplishment of the goals will benefit both your staff and your business.
There are many different kinds of rewards. Although most employees would like to receive money as compensation, some would rather have something else. Some examples include a weekend get-away, a dinner for two, maybe a party or even just an extra day off.
Examples of more in-depth incentive plans include monthly bonuses based on exceeding daily projection goals, bonuses based on completing a project is less time than projected or bonuses based on exceeding quarterly gross profit percentage goals.
One of my clients chose to create his incentive plan based on exceeding daily production goals. He chose this method because, due to the nature of his business, most jobs were small with varying crews that changed from project to project. This client reported that the individual employees actually encouraged each other to produce more each day because they quickly realized their bonuses were partly based on the productivity of the entire crew. Excel spreadsheets were created to record the daily production figures for each employee. Although not all employees received bonuses at the end of the first month, the excitement for the program continued to grow along with productivity.
Another company chose to implement their incentives based on man hours saved for various projects. In addition to crediting the team with man hours saved, they also subtracted man hours over budget. The totals were calculated at the end of each project—after all punch list items were completed and the job was closed. The bonuses were calculated using a specific dollar amount for the total hours saved. Jobs were entered into their Excel spreadsheets in the quarter the job was completed. In this case, matching dollars were put into a fund for year-end bonuses. To protect the company, the plan allowed for the subtraction of money from the year-end fund in case of project overages. This was important to the business owner because there had previously been labor overages on jobs.
A third example is a client who established their bonus plan based on quarterly gross profit percentages. This incentive plan included the project managers and other key employees. Just as in the previous example, all projects were entered on a spreadsheet for the quarter in which the projects were fully completed and paid in full.
To allow for differences in employees, skill levels were defined and used for the distribution of bonuses.
Communication is key
In order for such a system to work, you must inform your staff of what you want and what they have to do to earn their bonuses. The goals should be realistic and within reach. Encourage your staff, but don’t hide the fact that they will have to work harder—or smarter —to obtain their goals.
Just like with any new initiative, planning and communication are critical to your success. Although you may want to create an incentive plan that includes all employees, it may be easier to start small. This might mean creating an incentive plan for key employees, such as your project managers, lead carpenters, sales and key office staff.
If you are thinking about doing a simple ad hoc bonus, a meeting with key employees to discuss their ideas will work well. However, if you are planning an ongoing incentive program, advanced planning—including job costing and financial projections is important. Your planning should include what-if analyses and review of your production and profits for the last few months. The use of spreadsheets for planning and tracking incentives will make the process much easier.
Whether your incentive plan is a simple game or a more in-depth bonus plan, you will need to communicate your plan to all eligible employees.
A good way to do this is with a staff meeting or brainstorming session with key staff. You need to determine and communicate your goals—such as what you want to see done with the business in terms of increased new clientele, reduced waste or increased total production— and just as important, you want to find out what your employees want. By brainstorming with your staff, you find out what they would like to see changed, get some new ideas on how to accomplish those and get increased buy-in to the overall company goals because you’re making them feel part of the process.
Keep in mind that if you continue business as usual, you will probably obtain the same results as before. By giving your employees a chance to really shine, you give them the opportunity to help you and themselves. In essence, what you want to do is to give your staff the feeling of ownership and the ability to control their jobs and their income. Giving them that little feeling of ownership of their destiny may be exactly what is needed to change an average group into a group of shining stars.—Lorraine Hart
Lorraine Hart is the president of Ideal Consulting Services, a business consulting firm. Lorraine is a past president of the NYC/LI Chapter of NARI. Lorraine can be reached at email@example.com.