Incentive Plan Ideas

[DTWDSM]

Hello all,

I was wondering what type of incentive plans you may offer for your framers. We have had a plan for a while that gives my framers a portion of a "bonus pool" if sales reach a set goal each month, otherwise they are paid a hourly wage. The money in the bonus pool is then divided according to the # of hours each framer works during that month. They also get spiffs for add on's if they help a customer on a framing order (Conservation glass, fillets, stacked moulding, ect)

I have been trying to come up with some sort of plan that would be based on production instead of hours worked. I have tried to come up with a point system for different types of framing orders but am having a hard time in creating a "fair" way to do so since each order may take a diffent amount of time/skill. Even a project that is considered a sew down with 3 mats and a wood frame could be a 1 hour job or a 6 hour job.

Any ideas on how to create a points system or any other suggestions on a new type of bonus plan that has worked for you?

Thanks

 

[David Waldmann]

I would suggest thinking about making the bonus based on actual profit compared to expected profit. Maybe in your business the relationship between sales and profit is a constant. If so, congratulations!

Of course, basing it on profit is more difficult, because it requires accurate and up-to-date record keeping, or can your current POS do it for you?!!

Our incentive plan is based on profit. The individual employees percentage is based on their review scores, with a factor added in for their length of service. We also do it only once every quarter. This ties it in with their quarterly review and our quarterly financial statements. However, all that being said, our business is manufacturing, and most of our employees work in production, rather than sales, so it is possible that basing it on sales IS better for your business.

Regardless of what approach you take, one thing should be constant. That is, you should make it clear that success is the result of, and thus rewarded to, the entire "team", though in proportion to the efforts expended. No one individual can make the difference by themselves.

As I see it there are three main layers to the successful operation (and therefore, profitability or sales goals attained) of a business. There is the General Manager who decides WHAT is to be done, there is the Departmental Manager who decides HOW it is to be done, and the Worker who DOES it. If there is a mistake at any level there will be a reduction of success. In some businesses there may be the wearing of two, or even all three (!) of these hats, whereas in others there may be even further stratification, but the results are the same. It takes a team to have success, and there is no "I" in "team".

Good Luck!

 

[B. Newman]

Originally posted by David N Waldmann:


you should make it clear that success is the result of, and thus rewarded to, the entire "team", though in proportion to the efforts expended. No one individual can make the difference by themselves.

I just read a great article in INC Magazine on teamwork. I don't have the magazine here at the shop, but it's toward the end of the magazine. One of the best approaches I've seen. None of the "cutsy" "teamwork" stuff. Nothing like Wal-mart does with the "rah rah rah" stuff on Monday Mornings. (Man, I hate to be there when they are doing their cheering...)

This article is really good.

Betty

 

[JRB]

I keep it as simple and easy to uderstand as I can. I pay a good hourly salary and I also pay a percentage of the GROSS sales of the entire operation. This keeps my (at this time one) employee interested in the well being of everything, from production to retail display. She gets a good bonus check every month.

I worked for Aaron Brothers many years ago, and that is how they payed me, worked for them, works for me.
Keep it simple, less paperwork, more sales, more production.

John