looking for a bonus formula which would reward emp. incentive for work harder/smarter & also encourage watching profitability. keeping employer accountable also. ….. very easy to cook the net if one wants too. ideas?
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To be truly equitable to the guys in the field there must be a way to take Management screw-ups out of the equation.
No matter how hard the labor busts A$$, no amount of work can compensate for $hitty estimating and ineffective management.
next you need to tie it to rewarding the guys who actually make the profit. this is where it can get difficult.
A carp who spends alot of time on a certain job may be a performer or just a slacker.
probaly the best way would be, If money is made start divying it up and encourage input from the crew as to who got what they deserved and who didn't.
after a few jobs it will hopefully become apparant who is performing and who is slacking.
Adjust accordingly and tell everyone why.
keep ecouraging feed-back and eventually you will get a reasonably equitable system.
Jerrald Hayes recommended som good books: A Stake in the Outcome and the Great Game of Business are two.
A lot of the best ideas stem from the open book management approach, which lets the employees see the books and help make the decisions.
Unfortunately most Contractors(not the ones here mind you) are to greedy to let the crew know just how big the pie actually is.
they would rather just give them as small a slice as possible and keep the rest.
You may think I a an overly cynical view, but after 20 years in this business I have yet to come across an Totally honest employer.
They all feel that the $$ should be thiers and the workers should just be thankful they have an unsteady job with minimal benies, that requires them to Have a truck and tools and risk personal injury on a daily basis for wages that will barely get them out of a trailer park!!
Well I got to go make the bossman more $$ while he is on Vacation!!
Later.....
Mr T
Happiness is a cold wet nose
Life is is never to busy to stop and pet the Doggies!!
Much of the issue is determining how big of a slice of the pie the employee gets.
Two problems with letting the employees see the books.
1. Some employees will then think they are quasi-partners and feel entitled to a bigger slice since the boss has it. They may not take into concideration the time when the boss went w/out a paycheck for 4 mos.
B) It's proprietary info. It invites criticism from Monday morning quarterbacks, let's employees - and their friends - have intimate details of how the biz is run. Sometimes it's important that the diners don't know how their meals are prepared.
Upshot - there is no hard formula to predetermine bonuses. It's an equation which developes over time and incorporates non-tangible aspects as a significant portion. Where in a hard equation do you place client interaction - where the client was impressed not only by the workers experience and efficiency, but also by their demeanor? How about iniciative or innovation?
You don't get bonuses for attendance and punctuality. For that you get a job.
F.
The boss I had as a framing carpenter gave us bonuses.
We were 1099 employees, and at the beginning of each job, he would give us a contract to sign that had the prescribed number of hours to complete the job. If the boss thought the job would take 300 hours, he would give the three of us each 100 hours to complete the job and multiply that number by my wage. Say I was making $15.00/hr., I stood to make $1500 on this job. I would make that $1500 whether the job took 250 hours or 500 hours total.
He would then add a bonus of, I believe, 10% of his estimated profit. He would divide this between the three of us if we met his goal of 300 total hours. If the lead carp and I each worked 110 hours, and the third guy only worked 80 hours, the lead carp. and I would get a larger percentage of the bonus. It was a pretty simple system.
Flaws: If the bossman didn't estimate the job very well, and I never thought he did, we didn't get the bonus. He had unrealistic expectations...
With his system, the employees did get a little more information about his bottom line, which is good and bad. As someone who wants to learn about the construction trades, I found it interesting, but he let every employee know what the other employees were making with his contracts. That never works out well...I can remember my Dad telling me before my first job to NEVER discuss pay with a co-worker. Nothing good ever comes of it. It's fine to know that a lead makes $7/hr more than you do because he probably deserves it, but if the other bum who has been around longer makes more... I've never been in the situation, but I can see where it would be bad.
With all due respect to Frankie, I couldn't disagree more with him, as I believe completely in open bookkeeping.
If you look at the problems in business, lack of communication is invariably #1. Being completely open and honest, whether about the books or decisions made, is the key to a healthy organization, not a recipe for dissent.
If you want to read an excellent article on an open organization, where EVERY employee knows the salary of every other employee and the profit of every store in the chain, read this article about the Whole Foods company.
As for paying for attendance and punctuality, well...it's the carrot and the stick issue. The hardass in me agrees with Frankie, you get a job for showing up. The more liberal side of me acknowledges that a carrot accomplishes more than a stick. If I want a concrete example, I look at http://www.mars.com - one of the largest privately held companies in the world, that pays for attendance and punctuality, and has a significantly higher profit per employee than ANY of their competitors. Check out their website for more on their excellent employment practices.
Now, onto specifics. Bonuses should be tied to performance and pay scale. Your most valued employees are making the most - if they're not, you've got other problems. However, use a multiplier based upon performance to determine bonus. This is only an example: Say your bonus is 40 hours pay. An average employee has a multiplier of 1, a star performer 1.5, and a below average performer 0.5. Understand that it should be at least as tough for higher level employees to achieve the 1.5 multiplier because their job expectations are that much greater.
Should you want to reward performance over shorter time periods than once or twice yearly, then make it an award. Nice, fast, quality job framing that gambrel - here's an award check for $100, presented in front of the crew, of course. Also, of course, awards handed out are typically indicative of overall performance and therefore of future bonus.
Regards,
Tim Ruttan
Still considering your opinion and at the risk of sounding impolite:
Sometimes employees aren't interested enough to interpret all the open book info with regard to the company and not themselves - only.
More later. Gotta work and then read the links you recommended.
F.