Masonry Magazine August 2016 Page. 52
Motivate
I get asked about employee incen�tive and profit sharing programs by every contractor I coach. Construction business owners seem to be looking for the magic bullet that will motivate their people to work harder and pro�duce more. Some hope that providing a financial inventive will improve their bottom line. Others hope more money will make people work harder or faster. And other business owners feel they should give away some of their profit to earn employee loyalty and respect. Whatever your decision regarding in�centive compensation, the results will vary based on how your program is designed, implemented and managed.
Which type of bonus works best?
Incentive compensation, profit sharing or bonuses can be broken down into two types:
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Arbitrary compensation bonuses are gifts based on what the boss feels is the right amount to pay for good work, reward for a positive attitude, or a thank-you for a job well done. It is often based on what the boss thinks is expected to keep employees happy.
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Earned incentive compensation is based on a specific formula that rewards for actual results based on tasks, accomplishments or milestones you want to measure.
Arbitrary compensation does not encourage employees to do their jobs faster or better. Often it's expected as part of the overall employee compensation package because other
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companies do it or employees feel entitled to something at year-end. Arbitrary extra pay is no more than a gift of generosity from the employer, as it is not earned or required. It's a nice gesture and will keep some employees from looking for jobs elsewhere until after they get their year-end bonus check. While gifts might build a small amount of employee loyalty, they won't have much effect on finishing jobs faster, ahead of budget, or improving your bottom-line profit.
Earned incentive compensation, based on achieving specific targets and measurable results, will produce positive bottom-line improvement from employees. If people know what's expected, see regular weekly results, get feedback as to their ongoing performance, and are compensated for hitting their targets, they will hit them on a more regular basis. For example, salespeople who get paid on a sliding scale for increasing profit margins typically sell higher-price contracts than those with the same commission percentage, regardless ofmargins. Field tradesmen who are paid by the piece of work they install usuallywork faster than hourly workers who don't have clear goals or production targets to shoot for. Field crew foremen who ( 1) know crew hour targets before they start work, (2) are responsible for hitting total crew hours, ( 3) receive weekly feedback, and
(4) are compensated for achieving or improving crew hours, typically spend fewer crew hours than those who are told to try and do their best without any knowledge or feedback as to their results. And project managers who get
By George Hedley
Giving bonuses and incentives without targets is like playing football without end zones or scoreboards.
a percentage of the gross or net profit on jobs they manage will push their foremen and superintendents harder, and generally try harder to save more money and negotiate harder with subcontractors and suppliers.
Motivation without measurement doesn't work!
When employees don't know the results expected and don't have a rea�son to achieve them, why should they want to go the extra mile? When the boss sets clear milestones for managers and employees to hit, the company will make more money. For example, ifyou want an eight-month project finished in seven months, a generous bonus for the crew or superintendent will keep the team focused on achieving the goal and motivate them to hit the early completion target. Without a financial incentive, the target is a nice idea, but it is ofno benefit to the crew to finish early or work harder.
Years ago, my company's workers' compensation insurance rating was suf�fering due to field employee claims for careless jobsite injuries. We implemented a "Safety Bucks" program to motivate the crews to work closely together and
50 I MASONRY � August 2016 � www.masoncontractors.org The Voice of the Masonry Industry