Build the bonus program
Building an achievement-based bonus program will take some effort on your part, yet it need not be overly complicated. As a matter of fact, simplicity can be key to success. While there is room to base an incentive program on a quarterly or annual basis, it is likely shorter-term situations will be easier to design, build, and carry out.
Even if you do intend to incorporate long-term bonus programs it is a good idea to start small. Here are 3 reasons why:
- It is easier to design and carry out
- Your employees want their rewards sooner rather than later
- Successful bonus programs build interest amongst your employees making them eager for the next challenge
The size of your construction company, the typical length of your projects, and the number of employees you have will all factor into the length and frequency of each bonus program.
Just like building your construction business takes time, building your achievement-based bonus program will take time to establish and function properly. Eventually, your company may become known as the great place to work because of (such-and-such) annual bonus program. In the meantime, start developing bonus bits which will fit into the overall concept which is part of your company culture.
The 6 Ds
Remember this from the last post?
At the highest level of implementation are two considerations:
- Motivating your employees to excel beyond their base job descriptions and regular duties.
- Exceeding your client’s expectations in both small and big ways.
Thinking of the above two considerations, use the 6 Ds to design your program.
- Decide who will be eligible to participate (consider team or individual based)
- Develop the achievement criteria
- Derive the funding formula (Where’s the money coming from to pay for this?)
- Decree the method of payment
We’re going to break it down step by step.
Determine the objectives
What do you want your team to accomplish? Raise productivity or efficiency? Drive teamwork? Improve customer service? Increase safety habits?
Consider: It is easy to see that a team which works together will without fail be more productive than one that doesn’t. If your team is filled with a majority of workers speaking a foreign language, steps to improve their English skills will inevitably improve customer service. Improving safety awareness and habits is bottom line good for all involved.
Decide who will be eligible to participate
Will this be a company wide initiative, or will only persons performing particular job types be in the running? Will all your field crews be involved or one specific team? Will the office staff be the only ones eligible?
Consider: Devising a scheme which is available to every employee can be tough. Yet, in order for all in your employees to get in on the fun you may decide to have one plan running for field hands and a different one for office staff, or some derivative thereof.
Develop the achievement criteria
What must be accomplished in order to receive the bonus? What are the parameters involved? Will there be levels of reward based on levels of accomplishment?
Consider: Developing the criteria concerning reaching the goals may be the easy part, yet if parameters are left to chance there is room for great error. For instance, if speed is the only criteria, both craftsmanship and safety may be neglected.
Devise the reward levels
Setting attainable benchmarks along the way to the final goal eases the tension which might arise from seeing a big hairy objective. Even if the final goal isn’t met, at least some amount of achievement will have taken place and be worthy of reward.
Consider: Use hard deadlines, percentages, frequencies, or volume as units of measurement when determining the levels which can be achieved.
Derive the funding formula
Just how are you going to pay for all this stuff? Sure, the entire, overall, sweeping objective of having achievement goals in the first place is to improve your operation thereby improving the profitability of your construction company. But you have to start somewhere, right?
Consider: 1) Dig into your own pocket if you must. 2) Give low or no cost rewards with integrity, letting your crew know their part in the effort will pay off as you grow. 3) Contact Schulte and Schulte. We’ll show you how to begin now preparing for fantastic future achievement bonuses your crew will rave about.
Decree the method of payment
Tell your crew exactly what they can expect for each benchmark they reach. Then when they reach it – give it to them.
Consider: Have a party – onsite or elsewhere. Make a razzle-dazzle of the presentations, keep it humorous and fun while at the same time making sure your people know you really do care about them and you appreciate their effort.
A simple example
Before I get into the example I’ll give you a bit of background concerning where this story came from. I’ve recently become a bit of a construction-centric podcast junkie. (A topic which I’ll likely share with you in the future.) The following story came from one of the podcasts I heard early in my podcast adventure.
On the podcast I was listening to, a fellow who is a construction business owner was being interviewed. This guy believes wholeheartedly in incentive bonuses and he shared the story of the first time he tried it. He said that he looked at the jobsite, looked at the scheduled completion date, looked at his crew and came up with his plan.
He told his crew that if they could complete the job three weeks ahead of schedule he would take them all to a local steak house where they would all be treated to a first-class meal. If they could complete the job two weeks ahead of schedule he would have a big pizza party for the entire crew. If they completed the job one week ahead of schedule he would take them all to the fast-food joint and buy them each a hamburger, fries, and a soft-drink. As it turned out, the pizza party is what took place. He said it cost him a couple hundred bucks and came out of his own pocket.
How it worked
So, here is how his story breaks down in accordance with the 6 Ds.
He determined the objective of finishing early (I don’t know if he had the added parameters of safety and workmanship in his objective, but it would have behooved him to do so.)
He decided the entire crew would be eligible and it would be a team effort.
He developed the achievement criteria based on the measurement of time. One week, two weeks, or three weeks.
He devised the reward levels by establishing just what the crew could expect determined by when they reached the goal of early completion.
He derived the funding formula by looking at his checkbook and deciding it was worth it to him to see if his experiment would work.
He decreed the method of payment by letting his crew know exactly what they could expect based on what they achieved.
The Project Management Institute produced a rather lengthy study and article concerning Incentive Programs in Construction Projects.
Here are a few of my take-aways from their article.
- They strongly recommend the participation of employees in planning and implementing an incentive-based program. They say, “As for the ‘participation’ parameter, previous studies demonstrated that employee involvement contributes to the amount of information employees have about what is occurring, and to the feeling of control over and commitment to what is decided.”
- Their determination is that presenting a single objective is preferred over multiple objectives.
- Further, they advise a monetary program measuring group performance is somewhat preferred over a non-monetary one measuring individual performance.
- They say high quality of management contributes to a high likelihood of program success.
- My final takeaway — they say, “Under some conditions, participation may lead to higher-quality decisions.”
This has been the third in a 3-part series. You can catch the first here and the second here.
Now that you see the potential in developing an achievement-based bonus program it is time to get in touch. We can help you analyze and develop the financial end of the process. Click here or call 866-629-7735.