Performance Incentives
Objective: To structure a simple yet comprehensive incentive plan that will encourage people to make the most profitable decisions for the Company.
Step 1
Identify the desired results for the Company in terms that each individual can understand.
Service & Maintenance:
- Daily Revenue
- Revenue per time ticket hour
- Agreement Sales
- Replacement Leads
Replacement Operations:
- Daily installed revenue
- Revenue per crew per day
- Average installed sale
- Completed one day install %
Replacement Sales
- Daily sales volume
- Completed presentations
- Closing %
- Average sale
Opportunity check
- Maintenance calls scheduled
- Demand service calls scheduled
- Replacement leads scheduled
- Replacement jobs scheduled
Step 2
Identify who will have a direct impact on those goals
Service / Maintenance manager
Customer Service Reps
Dispatcher
Service Technicians
Maintenance Technicians
Operations manager
Installation schedule coordinator
Replacement crews
Job staging
Sales Manager
Lead coordinator
Customer service representatives
Salespeople
Customer Service reps
Dispatcher
Sales lead coordinator
Installation schedule coordinator
Step 3
Design a simple plan that will reward results: Our work associates need to be rewarded for team results. The concept is to encourage them to be the best for the team rather than the best in the team.
Example:
If you implement an incentive plan that rewards individuals for every agreement sale that’s made, you may create an environment whereby each person competes against each other or department for their own personal gain.
An incentive plan that rewards team results will encourage the team to work together.
(Let me explain)
Betty, Joe, and Rob are Customer Service representatives. Their Company put an incentive plan in place whereby the team would put $1.00 in a “fishbowl” for every maintenance agreement sale made. The “Bowl” would be divided evenly between these three at the end of the month.
Betty, Joe, and Rob put together a game plan:
Rob and Betty were good at discussing the benefits of agreements over the phone and positioning technicians to discuss the value of agreements with customers.
Joe was good at coordinating schedules and handling administrative functions.
They put together a strategy that would maximize Rob and Betty’s time with customers while Joe spent most of his time handling administrative functions.
The result: Each member of the team applied their time and skill in the area that would benefit the team.
At the end of the first full month, the team divided a $395.00 bonus.
(even though the names have been changed, this is a true story)
If a plan that would simply pay Betty, Joe, and Rob $1.00 for every sold agreement, Betty & Joe would not have had any encouragement to work together. They would have been encouraged to compete with each other while Joe might have felt left out or guilty for not having the passion or desire to participate.
The “Fishbowl”
Customer Service & Dispatch
Result – Reward
Agreement Sales – $1.00 for every year sold
Replacement leads – $3.00 for every lead turned over from service or maintenance Sold job from Service
Maintenance leads – $5.00 per motor bearing piece of equipment sold
Overachieving Daily revenue target – $2.00
Overachieving Revenue per time ticket hour – $5.00
The Fishbowl is designed to position the Company for a positive result given any situation.
You would be hard-pressed to imagine any business day where there would be no opportunities to put a bonus in the bowl.
Furthermore, this type of plan will teach your team to shift their thinking and actions based on profit opportunities at any given time.
For example:
If demand is high, and your team has an overabundance of service calls, the focus should shift to revenue per time ticket hour (efficiency & Gross margin management), revenue volume (Getting the right price), replacement leads and agreement sales.
If demand is low, your team should focus on scheduling service and or maintenance calls (make sure you have enough work), revenue per time ticket hour (efficiency & gross margin management), replacement leads and agreement sales.
In the second scenario, even though it may be difficult to hit the revenue goal, the Company still has an opportunity to win by scheduling maintenance visits, selling agreements, turning over leads and managing direct labor by ensuring that the revenue per time ticket hour goal is achieved.
If this team had an incentive-based upon service or maintenance revenue alone, they would not be motivated to turn over leads, sell agreements or worry about revenue per time ticket hour. They WOULD become the best IN the company by accomplishing the revenue goal. By doing so, they may not be doing the best thing FOR the company.
Replacement Operations
Result – Reward
Replacement Operations:
Installation schedule coordinator
- Daily installed revenue – $10.00 for every day above target (for the department)
Operations manager
- Completed one day install % – $10.00 for every day above target (for department)
Replacement crews
- Revenue per crew per day – $10.00 for every day above target
Replacement Sales
Result – Reward
Lead coordinator:
- Daily sales volume – $3.00 for every day above target
- Completed presentations – $3.00 for every day above target
- Closing % – $3.00 for every day above target
- Average sale – $3.00 for every day above target
Tracking results
By now, you may be asking yourself this question: How in the world am I going to find the time to track all of this?
That’s the great part of this process. YOU don’t have to.
Every one of the opportunities your associates have to make a bonus supports everyday performance indicator your company should be watching and controlling every day.
You should put a process in place whereby all performance results should be tallied and on your desk no later than 10:00 the following day.
If you were to tell your associates to “tally” this information and put it on your desk by 10:00 every day, it would be perceived as just another annoying task.
When you put an incentive plan together that enables your associates to be rewarded and recognized for accomplishing goals and objectives, that so-called “annoying task” turns into a “reward voucher”.
Keep it simple
There is a lot to be said for simplicity. Beginning with a notepad and pencil is good enough. You don’t need a fancy computer program or glorified goal board (even though a lot of good comes from publicly posted goal boards). Simply have the dispatcher tally results after each call and total them at the end of the day.
