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Incentive Plans

1. Employee Relations Assessments

If you are an owner or key manager, you are probably one of the last to know how your employees/coworkers feel about the company. It doesn't have to be that way. Have you ever wondered why your employees don't seem to be motivated or care about your company? The reasons why may surprise you. Consider conducting a confidential survey that evaluates the conditions that may be affecting the overall attitudes and motivation of your employees.

Drake Baron Management Consultants' employee relations assessments identify those issues that may be preventing your employees from being peak performers. Our reports also include any recommendations that may be needed to meet the motivational needs of your employees.

2. Incentive Plans

Drake Baron Management Consultants has analyzed the many different types of incentive plans tried by contractors. While a few have been effective for a short time, many have failed to produce the types of results that upper management expected.

While we have certainly seen many different plans, there are probably only three in common use profit sharing, job-by-job plans, or discretionary bonus distributions.

Profit sharing plans prove ineffective time and time again for many contractors. While a profit sharing plan is certainly a nice perk or employee benefit, it hasn't proved to be a performance driver. There are numerous reasons this is so. Among them is not sharing any financial information until the end of the year. This delay prevents the employees from seeing what effect they have on the company's success. However, the major problem with profit sharing plans is lack of trust in the final numbers. There are too many things beyond the employees' control that affect the bottom line, such as the cost of office overhead. Most employees believe that upper management can and will manipulate the numbers to the owners' benefits.

Job-by-job plans are usually based on sharing a job's excess profits. The problem with this type of plan is that the company distributes all the excess profits but has no choice but to absorb all the losses. This plan brings a definite risk that the company will be paying out bonuses on a job when, as a whole, it is losing money. Job-by-job plans also do not reinforce teamwork throughout the company.

Discretionary distributions may make the owner feel good, because he knows that he is sharing excess profits with the employees. But the employees often don't fully understand how their own performance affects the amount of the bonus that they receive. Because the connection between performance and reward is not well defined, performance is not maximized.

Drake Baron Management Consultants custom designs each incentive plan based on the goals and objectives of the client Company. However, all the plans include the following criteria:

• The Client's operations must be profitable.
• The plan focuses on what that particular group of employees controls.
• Benchmarks are established against which performance is measured.
• Performance numbers are shared with all employees on a periodic basis.
• The plan drives field productivity to make the client Company more profitable and competitive. 

3. Sales Compensation Plans

If you are looking for an incentive program to reward top sales performers and/or to provide additional motivation to others, consider one of our compensation plans. This may be particularly necessary if you are currently paying your salespeople on pure sales volume without consideration to the project's gross profit. Each of our compensation plans is custom designed to meet the objectives defined by the particular client.

4. Skill-Based Wage Classification Plans

Have you heard your employees complain about the rate you pay a new employee who has better skills than they do? Do you find that some of your field employees have lost the connection between their skills and the value of those skills as it relates to how much they are paid? Is the pay scale a constant complaint from your employees?

Drake Baron Management Consultants can help you install a defined skill-based wage classification that places the burden of acquiring the skills and the pace at which they are learned on the employee. These types of defined plans help remove any perceived inequities in your compensation system and place the burden of how much each one earns on the employees' shoulders.

5. Key Performance Indicators

Are your employees' performance expectations clear and measurable? Our philosophy is based on the following:

"When performance is measured, performance improves. When performance is measured, reported, and shared, the rate of improvement accelerates."

• Does management provide enough information to the employees so that they can measure their performance or the collective performance of the company?
• Do your field employees know what is expected of them other than to "do your best"?
• Do your Superintendents/Foremen know how much time or money was estimated to perform each phase of the project?
• Is the performance measured or tracked throughout the project against the estimated time?
• Do your field employees know at the end of the day whether they performed at an acceptable level as compared to the estimated productivity level?
• Are your Project Superintendents involved in forecasting the costs to complete the job on a monthly basis?
• Do you know how the company is performing, based on timely financial and operating reports that are meaningful?
• Do you measure the financial performance or your company against an annual plan?

If you answered "No" to any of the above, then you are not reaping the financial rewards of a measurement managed company! Peak performance requires methods to measure performance and provide feedback on that performance.

6. Job Descriptions

It is difficult to hold employees accountable for their performance if their areas of responsibility are blurred. Many companies' job descriptions are no more than duty/task lists. Drake Baron Management Consultants' job descriptions are functional in nature and broader in scope than any duty/task list. Each job description is integrated with superior/subordinate positions and includes specific measures of performance for the critical aspects of that position.

7. Performance Reviews

A primary complaint of employees is that reviews are either not held at all or are not held on time. Most employees tend to perform to the level of known expectation. They want feedback from their managers regarding their performance.

Performance review forms should be integrated with each position's job description. Generic forms are difficult to complete. If a form is difficult to complete, it will most likely lie on the manager's desk and the review will be conducted late.

Drake Baron Management Consultants designs all review forms around the responsibilities of a particular position. Review forms are integrated with our job descriptions. This increases accountability and furnishes a better tool for managers when they are providing formal feedback to an employee. Guidelines are also furnished on how to conduct an effective review.

More in-depth training is also available through Management Training Institute on how to conduct an effective employee review.

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