Volume 36, Issue 9, September 2001
Working for Incentives
Rewarding Superior Performance
- by Robert Tunmire
Incentive-based compensation can take on many forms, shapes and sizes. In the glass industry, incentive-based compensation is usually not common. The typical compensation plan in the glass industry is X amount of dollars per hour. There also may be a bonus in cases of exceptional performance.
There are a lot of misconceptions about incentive-based compensation. One of the biggest myths is that it is a way to get more out of people and pay them less. In reality, it is the complete opposite. Incentive-based compensation allows employers to compensate employees properly for their efforts and puts the responsibility for quality where it belongs—to the one providing the service.
Here is what I mean by that. When it comes to installers, if you use incentive-based compensation based on an hourly rate and/or incentives based on volume, any callbacks decrease productivity, which may also affect the volume of those sales. If an installer knows his callbacks affect his productivity, which affect his bonus, he is more apt to get it right.
Incentive-based compensation also allows people who want to achieve more to also earn more. Any incentive-based program should be designed so those people who really perform make extraordinary incomes. Conversely, those who perform on the bottom rung should make the minimum income.
We encourage you to set up incentive compensation for your inside sales reps and installers. You should also have an overall bonus program for achieving the goals that you have set for your organization as a whole. This ties everyone together and keeps everyone playing on the same team. The more you use incentive-based compensation, the more you’ll see people pulling together and achieving superior results.
When it comes to behavior, the more you reward a certain behavior the more you will have of that behavior. Incentive programs allow an employer to reward the behavior he wants, while allowing those who perform at a superior level to earn an excellent income.
One of the keys to incorporating a new franchise organization is a lot of up front communication with the existing franchisees. Make sure they understand the strategy clearly, what’s in it for them and who the acquirer is. The more information they have, the more they can support the endeavor. What I really want to stress is honesty with the franchisees. If there is not a lot of honesty, the relationship never gets off to a good start. Any relationship that is not built on trust and communication will struggle. We all know that a struggling relationship is not one to build on.
Robert Tunmire serves as president of the Glass Doctor, based in Waco, Texas. His column appears bimonthly.
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