This week on the podcast, Terry Barrett Joins Chris Elmore to discuss Performance Pay. This remains a controversial topic for most everyone in the trades mainly due to the uncertain nature of it. Many companies implement performance pay for any number of reasons, but mostly because of an issue they are having. Terry and Chris go through some of those and give you the guidelines they’ve seen work the best when it comes to performance pay.
Before implementing performance pay, ask yourself these questions:
What are you trying to accomplish?
- Are you trying to give your team the opportunity to earn more?
- Are you trying to control costs?
What results do you expect from the position?
- Are you trying to get a higher average ticket?
- Are you trying to get more sales in general?
Can you provide the opportunities to hit the expected production and KPIs of the position?
- Do you have a marketing plan to get the opportunities needed?
- Are you tracking KPIs consistently and accurately?
What are you trying to manage?
- Are you trying to manage hours?
- Are you trying to change a behavior?
What will you have to manage?
- What new things will you have to manage?
Here are the required elements of a great performance pay plan:
- Good management and training in place.
- Easy to calculate.
- Easy to understand
- Visible.
- Easy to track.
- Reward and discipline.
Before launching a performance pay plan:
- Calculate the pay for different technicians on multiple past pay periods and seasons.
- Calculate it concurrently with your current pay plan.
- Include the spouse or significant other in the announcement.
Whichever performance pay plan you choose, be sure to answer the questions above and do your homework. Remember that its very sensitive when you change a person’s pay. Reach out to Chris or Terry if you have any questions.
