Achievement-Based Bonus Programs That Don’t Stink – Part 3

Achievement based programs help you make things happen.

Achievement based programs help you make things happen.

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:

  1. It is easier to design and carry out
  2. Your employees want their rewards sooner rather than later
  3. 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:

  1. Motivating your employees to excel beyond their base job descriptions and regular duties.
  2. 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.

  • Determine the objectives

 

  • Decide who will be eligible to participate (consider team or individual based)

 

  • Develop the achievement criteria

 

  • Devise the reward levels

 

  • 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.

Further information

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.

  1. 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.”
  2. Their determination is that presenting a single objective is preferred over multiple objectives.
  3. Further, they advise a monetary program measuring group performance is somewhat preferred over a non-monetary one measuring individual performance.
  4. They say high quality of management contributes to a high likelihood of program success.
  5. 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.

Performance-Based Bonus Programs That Don’t Stink – Part 1

bonus programs and incentives that don't stink

bonus programs and incentives that don't stink

Some bonus programs stink

Bonus programs based on the wrong parameters or instituted poorly can be really yucky for everyone. Your team loses, you lose, and you throw your hands up in despair thinking bonus programs are a waste of time and (more importantly) a waste of money.

Yet, if you get it right, the win-win effect takes place bringing everyone (including your clients) into a much better place. Instituting bonus incentives in your construction contracting or service business is worth the time and effort.

A bad example

One of the best companies I ever worked for made a honking mistake when they first instituted a bonus program which offered a rather stunning reward. I mean, who do you know who wouldn’t want to have an all-expense paid, eight-day vacation with the person of his or her choice in a foreign land while the paycheck continued to roll in?

In case you’re wondering if I’m calling sour grapes simply because I never achieved the bonus, think again. I did achieve the bonus. My hubby and I were delighted to be a part of the group which arrived in Thailand ready for an adventure. Yet, we were only able to go because the company realized after the first disastrous year they had made a parameter mistake when instituting the bonus.

There isn’t reason to go into all the details, but you’ll understand what went wrong when I mention that the goal which was set the first year could only be reached by a limited number of employees. It had to do with location. The folks who could reach the particular goal set for that year all lived in metropolitan areas. Those of us who had no hope for reaching the goal lived in rural areas. And yes, you guessed right. When we first learned what the goals were, we looked at each other, smiled, and mentioned that we weren’t possibly going to reach that goal. So, nothing in our behavior changed.

The point is, when setting goals for your team, be sure they are attainable. That doesn’t mean make it easy, it just means the goal should be one everyone in your employ can see hope of achieving. Which brings me to my next point.

Achievement rather than performance

Ah, words. Words can mess with our minds. This report from the University of Michigan will give you more insight into the validity of choosing words which are more in line with what you want to convey.  So, there is every reason to choose the correct word when determining what it really is that you want to accomplish. The word performance tends to remind us of a stage. When a person is asked to perform there is the concept of getting it right for the sake of the audience (in this case the boss.) But, when a person is asked to achieve the idea inherent in the word is that of making ones-self better. You can see how that simple change in words will set the right tone for introducing bonuses to your team. It will also aid you in determining parameters that are highly advantageous for all involved.

Achievement-based bonus program

Perhaps stating what an achievement-based program is NOT will be helpful. It is not:

  • A freewill gift (for instance a Christmas or Chanukah present)
  • Delivered randomly without a plan
  • A tenure bonus (although this is close)
  • An employee referral program (yet it will add juice to your attempts to gain employable referrals)
  • A signing bonus

Now, let’s talk about what a well-executed achievement-based bonus program IS. While you can make a case for “a job well done is its own reward,” you must admit raising the bar with extra incentives is a useful tool in your management toolbelt. When you reward accomplishment, you help people achieve more (sometimes more than they thought themselves capable) and you:

  • Increase teamwork and camaraderie
  • Decrease unsafe practices
  • Escalate productivity
  • Improve customer service
  • See your business improve

Results are what count

After all, incentives are all about achieving specific results rather than simply doing a good job.

In part two of this 3-part post we’ll talk about how to determine which bonus initiatives will be most advantageous for your construction contracting company. There will be information on how to implement the program. And there’ll be the part about “which incentives to give.”

 Contact us here or call 866-629-7735.

 

Implement a “Give it Away” Policy with Your Construction Team

Develop an above and beyond policy your team uses for dealing with clients

Develop an above and beyond policy your team uses for dealing with clients

Last time, I talked about making decisions concerning whether a change order is necessary when dealing with requests from clients. If you haven’t read that post, take time to do so. Otherwise, what I’m saying from here on out might not make much sense to you. Because, this time I’ll tell you how to go one step further in the process.

Ever thought about telling your team to give time and service to your clients at no additional charge? Ever thought about implementing a Give it Away policy?

Whoa, I know what you’re thinking. “I can’t possibly allow the crew to give it away, I’ll go broke!” That would possibly be true, unless you have a specific strategy in play concerning what and when to give away.

There are 3 levels involved in developing a Give it Away policy

Model the behavior

Model the behavior you want your team to emulate. Be the man or woman of integrity, conscience, and kindness you want every person on your team to be. When at all possible go the extra mile, give your clients more than they expected, be the guy or gal they want to recommend to others.

Teach your team

Teach your team what is acceptable in the give-more-than-expected category. Each trade will have its own set of approved above and beyond measures. Take the time to think about what will be on your “yes we can” list and make sure your team knows what they are. You’ll also have to let them know there may be things which pop up that aren’t on the list. Give them the metrics for discerning which are worthy. Should it be added to the list? You decide. And yes, there are likely to be mistakes made. Learn from it, teach your crew from it, and move on.

Reward the team

Reward those of your team who follow your guidelines and your model. Consider having a once a week Tattle and Reward session during your morning huddle. Fridays are a good day to practice this as events will be fresh in your team’s minds. It will likely take a few weeks to get the idea rolling, and its likely you’ll have to do much of the initial “tattling,” yet your crew will catch on. Encourage people to tattle on themselves also.

Here are some examples of what you want to hear from your team:

“I saw Dave helping our client unload some heavy boxes from his pickup.”

“I noticed Leslie installing a door knocker on Mrs. Smith’s new door.”

“I fixed the catch on the electrical box, so the client could open it from his wheelchair.”

You get the idea. The reward could be as simple as a round of applause for the person who is being tattled on. Or, you may wish to have a number of gift cards ready to be handed out to the hands who excelled. A five-dollar coffee shop card, a ten-dollar fast food card, a fifty-dollar gift card for a department store, or even higher denominations to a tool store might be in order. Some other rewards you may wish to include are branded coffee mugs and water bottles, lunch with the boss, books, lottery or movie tickets, a car wash certificate, or any item you know would be appreciated. It is up to you or a supervisor you designate what you’ll be giving, depending on the level of engagement from your crew members.

More for you to consider

The actions involved as well as the rewards given can range from the humble (screwed a latch back on a window) to the impressive (saved a client’s life.)

Training your team to be thoughtful won’t happen overnight.

The rewards you and your team receive by practicing going above and beyond won’t always be easily measurable.

Be sure to bring your sense of humor to the Tattle and Reward meeting, because . . . well you know, construction hands “just wanna have fun.”

If a mistake has been made, remember rewards take place in public, yet admonishments are taken care of in private.

Consider your social marketing angle and think about asking your team to provide pictures as often as possible. A phone and a specified email address could be all the tools they’ll need.

You can reach our construction accounting specialized team by calling 866-629-7735 or getting in touch here.