positive and negative incentives

Discussion in 'Business Operations' started by Stonehenge, Oct 26, 2001.

  1. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Messages: 1,276

    I coulda swore there was a thread or two on the nuts and bolts of employee incentive programs, but I couldn't find one.

    I want to put together a foreman's incentive package. I want this package to include incentives for:

    Completing work on schedule,

    Completing work in a quality manner (as measured by site reviews and customer callbacks),

    Not breaking tools.

    Here's the way I think it'll go:

    They will start the season with $500 imaginary dollars in the tool account. For everything they break, levels, hammers, trucks, etc, there will be a fine against this account. I will have some general guidelines as to what is worth what, but ultimately the decision of the value of a broken tool will be mine. I plan on docking this account about 50% of the replacement value of the tool, or the $s lost fixing it.

    For completing work on schedule, I think they'll start with $0 and build based on on-schedule completions.

    For the quality part I want to account for quality as measured by me on post-install site visits, and by customer callbacks. And I want these 2 items to have flexible values for each project, because a screw-up might take a lot to fix, it might take almost nothing. But I'm not sure how to fairly assign values to this one.

    What do you think, and what can you advise?
  2. Guido

    Guido LawnSite Silver Member
    Messages: 2,087

    Its all a great idea, especially with the way people are running in and out of companies all the time these days. But its one of the hardest things to set up in a small outfit I think. Its hard to keep it on their minds all the time and keep them working for it.

    I like the idea about the tool account deal but I think it could work for you either way.

    If they see that account going down or if it goes down all the way, they have nothing to work for (as far as this benefit goes) and may stop caring about the tools because you took their bonus away. I know and you know that this is more than generous (to give a bonus for not breaking stuff! ;) ) but they may not see it like that.

    I know there is a good book about this, but I can't seem to find it. It focused a lot on how Microsoft takes care of incentive packages. If I remember I'll let you know. There are also many articles about it in the trade mags every month.

    Good Luck with it, let us know when you start coming up with more ideas.
  3. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Messages: 1,276

    I had given some thought to that, what happens if the $500 gets drained before season's end?

    One idea is to make a statement that if the $500 goes away, so does their job.

    The other is to make the 3 accounts related, so when they run out of $$ in the tool account, the other accounts start getting tapped.
  4. Guido

    Guido LawnSite Silver Member
    Messages: 2,087

    The key for this thing to work (for you, not just them) is to make it encompass the whole nine yards (like you said). This will ensure they're not going downhill in one area, to make sure they are better at another. Do you know what I mean? I don't think this applies to your size company, but its a good example.

    There was a larger company I was friends with the owner. They installed drains and did some minor excavating and landscaping, etc. He gave his foreman a bonus ( x %) of money he saved them on a job. This was with the intent that they would watch more carefully the time and materials they wasted.

    Well it turned around on him and he had to pull the program (and 1 of his foreman) because they were skimping and doing a piss poor job, cutting corners to lower cost.

    I think this is why many people, including myself, don't want to get big enough where we are not in control of things like this. I would be scared to leave purchasing up to someone, but some companies are so large they have to do it.

    Well I'm babbling now, so its time to go!
  5. Lanelle

    Lanelle LawnSite Bronze Member
    Messages: 1,361

    I know of a large landscape company that compensates the foreman based on each day's numbers. The bonus is based on coming in under the # of man-hours bid on the job. You guessed it, they don't have a great reputation for quality work. But they still do a lot of work. Part of the program to make up for that weakness is to assign a manager to look after client jobs that are above a certain dollar amount. Seems like a combination of efficiency and lack of callbacks could make a good program.
  6. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Messages: 949

    The bonus incentive for equipment is a great idea. I currently give a weekly bonus based on % profit. I haven't had problems with customer call backs because of bad work but I could see how this could happen. I don't do much mowing so if I get a call back the guy who screwed up has to go back and fix it which usually nulls or lessens their bonus and pisses me off. Instead of giving out the weekly bonus this year I was thinking of adding it to the equipment bonus pot and keep it visible to them each week. This does two things: One gives them one big bonus at the end of the year instead of between $0-$100 per week and Two, helps me pay for big damages they may cause in the future. The thing you would have to make clear though to the worker is the difference between accidents and wear and tear. Could be some issues there.
  7. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    I believe all the negatives just come with the business and the ultimate negative incentive is to fire someone with too many negatives against him or her.

    The positives are very tough. Sometimes though when I see someone do something very good and come in WAY under budget. I find a way to reward them with a gift cert. for a nice dinner or something like that.

    I don't think positive incentives or commissions are good for my business because I do not want the negative implications of them striving for their bonus/commission check i.e., hurry up on jobs causing problems, selling the customer something they really don't need.

    I have though a lot about this sort of thing and decided that getting 100 per year from a customer for the life of my business is worth more than getting 500 one time. Just my thoughts.
  8. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Messages: 1,276

    SG -

    You have a valid concern with the timely completion bonus. That's why there's also a quality bonus. And so far, I'm planning on the quality bonus to be worth up to $1K, the on-time bonus up to .5K. This would put a priority on quality, which is what I want.

    I'm thinking that it won't be given out weekly, just because the tool one doesn't lend itself to that. And callbacks may take a few months to occur. I'd like to include a bonus status report for each person along with their paystubs, so they see where they stand. But the bonus won't be paid until year's end.

    As for breakage vs wear and tear...I'm a reasonable guy, and can recognize the difference, but the deal I'm giving them is - I am the final arbiter of what's broken, and what the charge is. That's that.
  9. Utah Lawn Care

    Utah Lawn Care LawnSite Bronze Member
    Messages: 1,560

    14.5 years later I am curious if anyone else has implemented some sort of incentive program. What do you do? How is it working for you?
  10. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Messages: 15,285

    I wonder what ever happened to Guido, forgot all about him. I know what happened to Stonehenge.

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