Incentive Plans for Your Crew

I’ve seen a couple posts this past week where contractors were asking about how to best structure incentive plans for your crew.

Incentives for your crew members is a powerful tool to upgrade your team from “time clock punchers” to “thinking like an owner”.

I believe most human beings genuinely want to do a good job, want to excel, and want to take pride in their work.

But if the leader (you) doesn’t do a good job of leading and defining what success looks like, then forget it.

How are they supposed to “excel” and “think like an owner”?

No one has ever showed them.

It’s up to you as the owner or leader to show them.

Unfortunately, if you are an owner that says “no one wants to work”, that’s on you. Not them.

1. they haven’t been shown what success looks like

2. or if they have been shown, but have no interest in succeeding, they shouldn’t be working for you

And I say that as a longtime 15 year employee of Tussey Landscaping. Not an owner.

I’ve been there.

I’ve been the “bad employee”.

I needed to be shown what success looked like.

I’ve also been an employee on the receiving end of those incentive plans, and I’ve talked to many owners who tried plans that did or didn’t work.

I’m going to share the principles of what I believe works for incentive plans for your crew, as well as talk a bit about things I believe can prevent them from working.

Basic principles needed to make incentive plans work:

• Gotta be something they can impact or control within the scope of their role and responsibilities.

• Gotta be simple and easy to understand.

• Pay out on time every time.

Something your crew can impact

To create an incentive plan, you need to choose a metric, a number, that will drive it. Then define the target, and at what point does the incentive kick in.

That number or metric that you choose has to be something that your crew can impact.

Meaning you can’t bonus your crew on the company’s net profit, when they aren’t the ones that control the pricing.

They have a limited amount of impact on your company’s net profit.

Don’t get me wrong, they do have an impact on net profit, but what are some numbers or metrics that align with their contribution to that net profit number?

How about man-hours? Meaning, if you consistently go over or beat estimated hours on a job, yes, you’ll impact net profit. They do have an impact on man hours directly. So that is a much better metric to bonus on than the net profit itself.

Another way I like to think about this is “what does the company need from your crew to run successfully?”

For your company to run successfully, here are some things the company needs back from your crew:

• exactly how many actual man-hours were worked on each job
• every receipt, marked with which job it goes to.
• pictures, notes, and progress updates each day

I’m a fan of aligning incentives directly with the things the company needs back from your crew.

So, in that line of thinking, some ideas for how you could bonus your crew is:

• Bonus them for perfect time tracking record. Meaning if you constantly chasing them to get their timesheets, no bonus. You need to know which job every minute of payroll goes to, or you can’t job cost. So, bonus them for perfect, accurate, and on time, time-tracking. Something like $50 for every week or month that there were no mistakes and you didn’t have to chase them down for timesheets. SynkedUP makes this a breeze with the mobile app tracking time and showing real time estimated vs actual man hours on every job and work area.
• Bonus them for perfect receipt tracking. Lost or unallocated receipts are a black hole. Money going out that you have no idea what it was for. Who is getting those receipts? Your crew. Bonus them for getting them back to you, marked with which job they go to. Any receipts go missing or not marked with a job number? No bonus. SynkedUP’s mobile app makes this super easy. Simply snap a photo and it attaches itself to the job they were working on that day. Who cares of the skid loader drives over the job folder later that day.
• Bonus them for beating estimated hours on a job (as long as there are no quality issues). Now, granted, it takes two to dance, and they only control one side of this. If you are chronically under estimating jobs, you can create a scenario where it’s impossible for them to beat the estimated hours. So warning, be realistic in your estimates. Otherwise this bonus metric will blow up in your face. It feels demoralizing to be handed a job where your crew lead looks at the estimated hours and knows before they even start there’s no way they’ll be able to meet those estimated hours. I’ve been there done that. But, as long as you’re not wearing rose colored glasses when estimating these jobs, this is a fantastic thing to bonus your crew on. One of my favorite. And the side effect? It’ll suddenly make your crew think more like owners. Suddenly they’ll care when materials show up late, logistics aren’t efficient, or they don’t have the right equipment. Because they’re thinking like an owner on how to complete the job efficiently. Another tip on this one is if you do go over hours (which will happen) then no problem! You promise to not be upset. You only want to genuinely understand why the job went over hours. So, you can course correct and not repeat the same mistake the next time you estimate similar work. Or solve whatever production challenge led to going over hours, could be logistics, training, you name it.

Simple and easy

Remember… K.I.S.S. Keep It Simple Stupid. Don’t overthink it. If you’re crew can’t grasp the incentive plan, then it isn’t going to work. It can’t be a “black box” for them. They must understand it.

I’d rather have a structure that is borderline “too simple” than have one that is complex, and my crew doesn’t quite understand why the dollar amount is whatever it is on that bonus check.

Pay on time

Finally, if you’re going to do this, go all the way. It cannot be an afterthought. You can’t be forgetting to pay, delaying pay, or anything like that. Plus, this is an opportunity to link cause to effect. The sooner you pay, the more quickly your crew will feel the effects of over or under performing. And this is key to driving behavior change.

What resonated with you in the article?

What lessons have you learned in creating incentive plans?

What do you agree or disagree with?

Hit reply or comment and let me know!

Cheers,

Weston Zimmerman

SynkedUP CEO & co-founder