Total dollar value for foreman's incentive package
What a reasonable dollar figure for an incentive package for a foreman?
I'm not looking for a break down of how it's earned, I'm just wondering how big a carrot do you use or do you think is needed so that a foreman keeps this incentive package on his mind every hour, every day?
I am not 100% sure if dollars are that much of a permanent incentive. Now money is important but it won't be on his mind all of the time. Some thoughts that come to mind are things that a special. How about a paid vacation trip if certain expectations are met. Company vehicle if performance up to par. Television, stereo or lazy-boy if up to snuff. I have always found money motivates for a short while but things that they normally wouldn't save for and be able to afford go a long way in motivation. You have to find the things that "click" with your foreman. You may also find that this type of reward in cheaper for you monetarily as well.
Overall, I had originally thought of offering $1-2K in annual incentives, but when I broke it out into dollars per day (as I'm sure they would), it wasn't a motivator at all, at $10-20 per day.
Just another thought is going with him to a trade show in a far away city. You go with him, and treat him right when you are there. Pay all the expenses. Have him schmooze with all the contacts that you do. It really opens up the lines of communication and respect in both directions.
I think that you have to put yourself in his shoes. It is hard to do when you are a business owner because you are much more motivated than any of your help. A lot of times you are more sophisticated than your help as well.
While you understand that the vacation, holiday bonus, or trade show break is an incentive to motivate, it does not usually sink in on a day to day basis with the employee. He thinks of his bonus as a qualitative thing - "I generally do good, and he rewards me". Another mentality is "this is the size bonus that foreman get" as if it were a standard. Neither of those are going to raise the focus of your foreman to prioritize production above everything else. I do think that they are better than nothing, but not going to get you that focus. (speaking from being there and amongst them).
Just recently I had someone tell me that his boss "got cheap" lasr year and did not come close to giving the bonus that he, and others in the company, got used to. He never questioned if business was down, he never questioned if he was less productive, he never said he was going to kick it up a notch to earn a better one this year.
I think that you need to a carrot that is bright orange and just ahead, if it is going to focus someone. I think this is important until they establish that focus. Once they understand and make productivity a habit, you can do the longer term things like annual bonus and extra paid vacations.
You can start by saying that you cut a bid a little close and need an extra effort to rescue it and that they can share in the profit if there is any. Start with a compliment on what they did when you get to the job, but kick it up a notch when you get there. Compliments elevate people and they don't like to fall once they are elevated.
I know of a company that pays their foremen a daily bonus based upon certain performance goals. As I recall, the manhours used vs. bid is the basis for the reward. I'm not saying that it would work for your situation but it certainly motivates some of their foremen (and women) to work quickly. There always needs to be a 'quality' factor in the equation so that call-backs and shoddy work don't get rewarded.
I had a roughly-sketched, 3-measure system from a few years ago that I never implemented. It had some flaws to it, so maybe I can address those and the issues here. I still am liking the idea of the three measures:
One of things I worry about for productivity is down time. I'm not sure how to work eqpt maintenance into the system, and I also am wondering how to approach a situation where, say a truck breaks down, through no fault of the foreman. It causes delays. Do I stick to the original man-hour bid, do I loosen it up, or do I just not count that part of that project?
Incentive programs can take many forms. You want a program that benefits both the employee and company.Production based bonus are really the only true bonus systems there are.
Bonus based upon net profits, gross margin, customer service are hard to quantify and the employee is often unable to control or contribute the input factors that make these bonus's ACHIEVABLE and SUSTAINABLE, from the employees view and then become unworkable in the employees eye's, when something outside of their sphere of influence impacts their bonus earning potential.
If we set up bonus programs and systems that reward increased production while holding quality totally consistent, keep company costs under control and does not incur overtime, then we have created a partnership with the employee, where the employee has total control of the amount and types of bonus's they receive.
Bonus's are only as good as your base human resources program is as well. Learning to earn as a basis for job classification and pay grade change upon completion of specific skill set levels should be in place rather than a pay raise because some one shows up on time, or has been there for a 100 year's.
A bonus system that resembles the book rate system in auto repair works very well in landscape production.
Remember that a bonus system is one part of a operations and management procedure, or system that contributes to a smooth running, stable company economy that produces consistent operations performance, predictable and consistent net profits.
I cannot go into the specifics of this particular system because the overall system and management process is a proprietary product, that is basically a combination of a number of good business practices into one system, and because I am not here to market a product, but to contribute and learn from you guys, which I have learned a lot about stone work, which stone work would lend itself to production based bonus system very well.
I guess ultimately I'd like to have one or two people next season earning $25-35K for the year, with them completing a volume of work comensurate with that pay, as a combination of wage (or salary), benefits, and bonus.
I believe that for me to grow this business, I need some career people. And to get some career people, they need to earn pay that will allow them to make this their career. $10/hr will not make a house payment, pay for kids braces, send a kid to college, etc.
In order to retain a good employee and perform at its best, is to treat'em as part of the company, a moment of laughts during lunch goes a long way to motivate an employee, sometimes just the fact to tell'em they're doing great (when they're actually doing) does it too.
My main business is lawn care, we pretty much have a daily route and at the shop I have one of those white boards, where I have the names of each employee, and I run a points kind of thing, every employee gets a point for every day they get on time and we also deduct a point for every day they get late, crews get points for every week we don't hear a complaint, and deduct also, points for working late if it rains during the week and they finish all the route, points for every customer that compliments their work, (I even post the letters that the customers send, bad or good) points for finishing a project early than expected, points for maintaining their equipment and trucks clean, deduct point for not wearing uniforms or safety equipment, the list is very long.
Then at the end of the year each employee gets a dollar for every point, the foreman of each crew gets his share + 25% of what each member of his crew got, that way they're making sure the other guys perform 100%
One other thing I have found employees appreciate is healt insurance and 401k plan, I'm planing to implement that next season, I always pay my guys as much as I can, specially my foreman, but it gets tought when you really don't make that much money mowing lawn.
I always try to give my foreman a week vacation in the midle of the season or at the end, they really appreciate that and when I don't have much work I cover for them and pay them the day, this doesn't work for everyone tought, some times they try to take advantage of it, you just have to figure who will appreciate.
on and all the main focus for them is money, how much they're making a year, can they affor to support their family or buy that nice sports car? after they got all that cover they really appreciate the details, I might be given good bonuses, vacation, days off or whetever, but if the guy is making $10 per hour it wouldn't be long before he looks for something better.
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I like Dan's idea, but Lanelle & Dale also bring up some good countering points. I often have tried to figure up a way to factor in all of the variables to develop a "good fit" plan for both the company & the foremen concerning incentive programs. I still am pondering that exact fit. Job site superintendents were easier to figure on a profitable/non- profitable, or time line/dead line type basis. But the 2nd tier management is where my tripping stones laid. They are the hands on motivators that see the job details through to their completion. Scheduling, material availability, weather, absenteeism... all of them can have a negative impact on performance possibilities. I plan to watch this thread with great interest. I am anxious to see some more of the old tried and true methods that have worked for everyone else listed here. Tim
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