“Win – Win” Incentive plans work! My client was seeking to boost the morale and production among employees by providing an incentive bonus plan. He paid employees for exceeding their weekly goals which should have stuck to percentages – not straight up dollars. This company was designing, manufacturing and installing hurricane shutters on residential homes and commercial building in Florida.
My client had set up an incentive system for their installation crews based upon production. If the installation team completed $11,000 of installs in one week, the installer received a $100 bonus. When the team installed $13,000 for the week, the installer received a $200 bonus. If they installed $15,000, the technician received a $300 bonus.
The company used this bonus plan for approximately nine months. The owner thought it was working since the crews were regularly hitting the $15,000 benchmark to receive their maximum bonus amount.
“Win – Win” Incentive plans work!
I “hands-on” investigated the production of the installers. They were working hard enough to reach their maximum weekly bonus of $300. Then they slowed down or stopped working for the rest of the week because they reached their maximum possible compensation. The owner’s bonus plan was working against him because the installers figured out how to cheat. They made their maximum weekly bonus while the company gets hurt by the lack of production at the end of the week. The resolution to the problem was simple to solve.
“Win – Win” Incentive plans work! I created a new “Win – Win” Incentive plan that worked well for my client.
- The installers would receive a 2% bonus if the crew reached $25,000 in installations in one week or $500.
- They would also receive 2% for every dollar over the $25,000 benchmark.
- If the team did not reach the $25,000 in installed hurricane shutters, they did not get a bonus for that week.
The installers loved the new incentive bonus plan because the average weekly production for all the crews went from $15,000 to $34,000. My client was satisfied with the new program because the company’s productivity and profits materially increased. The installers were happy because their compensation grew based upon their weekly production totals.
“Win – Win” Incentive plans work! When you create an incentive plan, the bonus system creates a “win-win” situation for the company and the employees.
If the employees can cheat and maximize their income while the business suffers, change the plan. If you find that the employees are cheating, fix the problem immediately. I firmly believe in incentive plans to maximize sales and production, but both parties must win. If the program is not “win-win” for both parties, it is not a good plan.
My name is Robert Curry, and I am an Author, CEO Coach, Keynote Speaker, and Turnaround Specialist. Over the past 20 years, I have worked with more than 70 companies taking their businesses from Loses to Profits.
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