Performance-Based Bonus Programs That Don’t Stink – Part 1
Updated: Jun 23, 2020
Some bonus programs stink
Bonus programs based on the wrong parameters or instituted poorly can be really yucky for everyone. Your team loses, you lose, and you throw your hands up in despair thinking bonus programs are a waste of time and (more importantly) a waste of money.
Yet, if you get it right, the win-win effect takes place bringing everyone (including your clients) into a much better place. Instituting bonus incentives in your construction contracting or service business is worth the time and effort.
A bad example
One of the best companies I ever worked for made a honking mistake when they first instituted a bonus program which offered a rather stunning reward. I mean, who do you know who wouldn’t want to have an all-expense paid, eight-day vacation with the person of his or her choice in a foreign land while the paycheck continued to roll in?
In case you’re wondering if I’m calling sour grapes simply because I never achieved the bonus, think again. I did achieve the bonus. My hubby and I were delighted to be a part of the group which arrived in Thailand ready for an adventure. Yet, we were only able to go because the company realized after the first disastrous year they had made a parameter mistake when instituting the bonus.
There isn’t reason to go into all the details, but you’ll understand what went wrong when I mention that the goal which was set the first year could only be reached by a limited number of employees. It had to do with location. The folks who could reach the particular goal set for that year all lived in metropolitan areas. Those of us who had no hope for reaching the goal lived in rural areas. And yes, you guessed right. When we first learned what the goals were, we looked at each other, smiled, and mentioned that we weren’t possibly going to reach that goal. So, nothing in our behavior changed.
The point is, when setting goals for your team, be sure they are attainable. That doesn’t mean make it easy, it just means the goal should be one everyone in your employ can see hope of achieving. Which brings me to my next point.
Achievement rather than performance
Ah, words. Words can mess with our minds. This report from the University of Michigan will give you more insight into the validity of choosing words which are more in line with what you want to convey. So, there is every reason to choose the correct word when determining what it really is that you want to accomplish. The word performance tends to remind us of a stage. When a person is asked to perform there is the concept of getting it right for the sake of the audience (in this case the boss.) But, when a person is asked to achieve the idea inherent in the word is that of making ones-self better. You can see how that simple change in words will set the right tone for introducing bonuses to your team. It will also aid you in determining parameters that are highly advantageous for all involved.
Achievement-based bonus program
Perhaps stating what an achievement-based program is NOT will be helpful. It is not:
A freewill gift (for instance a Christmas or Chanukah present)
Delivered randomly without a plan
A tenure bonus (although this is close)
An employee referral program (yet it will add juice to your attempts to gain employable referrals)
A signing bonus
Now, let’s talk about what a well-executed achievement-based bonus program IS. While you can make a case for “a job well done is its own reward,” you must admit raising the bar with extra incentives is a useful tool in your management toolbelt. When you reward accomplishment, you help people achieve more (sometimes more than they thought themselves capable) and you:
Increase teamwork and camaraderie
Decrease unsafe practices
Improve customer service
See your business improve
Results are what count
After all, incentives are all about achieving specific results rather than simply doing a good job.
In part two of this 3-part post we’ll talk about how to determine which bonus initiatives will be most advantageous for your construction contracting company. There will be information on how to implement the program. And there’ll be the part about “which incentives to give.”
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