3 Incentive Programs to Boost Your Profit
4 December, 2019
4 December, 2019
Looking to boost productivity, improve recruitment, amp up sales or advance the quality of your paint jobs? Then you might consider an incentive program for your painters. There are countless ways to offer these types of incentives, which can sometimes seem overwhelming when putting together a useful program.
The key, it turns out, is clarity on what you’re trying to achieve. With that type of insight, you can structure an incentive program that helps you exceed client and profit expectations.
Incentivize great quality
At Shamrock Painting in Denver, bonuses are used to incentivize painters to meet or extend production rates and better focus on each project.
Gina Koert, owner of Shamrock Painting, explains that the company offers the possibility of a cash bonus to foremen on every project. Bonuses are awarded based on the job quality, the number of days it takes, and whether they beat expectations for that effort.
“We offer project bonuses to foremen for increasing production rates and quality. Basically, projects that come in under budget get cash bonuses,” Koert says. As she explains it, “Painters respond very well to this instant gratification bonus at the end of each project.”
Shamrock also offers a referral bonus to employees who refer a new employee. This bonus is paid after the employee joins the company and is employed for 60 days.
Attract new hires
Mark DeFrancesco, president of MDF Painting & Power Washing in Greenwich, Conn., finds employee bonuses to be a powerful aid in new hiring. “I find that if you have an employee who has worked for you for a long time, they understand what’s expected from an attitude and skills standpoint,” DeFrancesco says.
MDF encourages these types of referrals in two ways. “They can bring the person in and have them added to their direct crew. That really makes people only bring in people they want to work with, and we’ve had good luck with that,” he says. In addition, the company offers a flat $500 bonus to the person who refers a new employee, dependent on that person remaining with the company for a minimum of three months.
DeFrancesco says he’s found this bonus has had a huge impact on how his employees think about referrals.
“Sometimes there’s a scarcity mentality out there, meaning if I’m a crew leader painter I might feel if I bring other people in, I jeopardize my own job and ability to do more work for the same company,” DeFrancesco explains. To combat this, he aims for the utmost transparency with his team. This includes showing them the job calendar as far out as possible and encouraging those valued employees to select jobs that fit their schedule.
This encourages a shift in mindset, DeFrancesco says. “When they bring other people in, it means they’re a larger value adder, someone I can count on and trust and who understands what we’re trying to do as a company.”
That transparency is also key for Rick Holtz, owner of H.J Holtz & Sons Painting in Richmond, Va. Every year he talks with employees about how the company makes money. “I show them how a dollar that they save on a job goes all the way down to the bottom line,” Holtz says. “I feel like a lot of people don’t understand that.”
This understanding is critical for the company’s incentive program, inspired by the book “Ownership Thinking” by Brad Hams. Each year, the company sets goals for annual revenue, gross profit and net profit. At an open meeting, the company discusses the sales threshold they need to meet for the year. Half of every dollar made over that threshold goes into the incentive program. “To give you some round numbers, if our revenue needs to be $1 million, we may say once the business makes over $150,000 in net profit, for every dollar we make beyond that, $0.50 goes into the incentive account and $0.50 stays with the company,” Holtz explains.
The idea is to incentivize efficiency and productivity. Every employee, save the owner, is rewarded under this program based on the percentage of their payroll earnings.
“It’s totally equitable,” Holtz shares. “The people that have more responsibility are going to have a bigger percentage. And if you’re a low man on the totem pole but you do a lot of overtime, that’s going to help your percentage.”
So, if a foreman has earned 3% of the overall $1 million in revenue, that’s the percentage multiplied by what’s in the incentive account to determine their payout. The company pays out bonuses to its 50 plus employees at the six-month mark and again in December.
Holtz acknowledges that it took some time to see the program pay off in productivity.
“Some employees don’t trust that you’re going to do it. Some employees feel that they can’t make a difference. Others wonder ‘why am I going to work hard, and these other people aren’t but we’re all going to benefit?’” Holtz says. “You’ve got to get through that.”
He found that heading into the third year he started having people come to him with solutions to save more on the bottom line. Now in the fourth year, he can affirm that bonuses are a win for everyone.
Avoid incentivizing poor performance
The biggest key in offering a incentive program is being clear on what you’re incentivizing.
“In the past we’ve done bonuses for different crews,” Holtz shares. “But if one crew is killing it and you’re paying them bonuses and the other crew is not doing so well, that’s not really good for your company overall. You’re spending money while you’re losing money — it just doesn’t make sense.”
In setting clear goals, a structured incentive program can help quickly hit and then surpass those goals.
Megan Headley is managing editor of APC magazine. She can be reached at firstname.lastname@example.org.
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