green industry business

5 Incentive Ideas for Your Green Industry Business

Sep 08, 2015

Five Incentive Ideas for Your Green Industry Business

By Chad Reinholz

I’m a fantasy football nerd. It’s sad that a 40-year-old would know where 20-something football players went to college, what their 40 times were at the NFL Combine, and even what their catch radius is. Yeah, I’m a geek.

One theory common in fantasy football circles is that you want players in contract years. As the theory goes, players who have reached the end of their contract are playing for a new contract, and thus incentivized to work harder so they can earn more.

There’s a lot of merit to the theory. If people are incentivized to perform, they’ll perform better. With that in mind, here are 5 incentive ideas to help you create more productive employees:

Gross Profit Margin Bonus

The gross profit margin bonus concept is simple: You set a gross profit goal for a period of time (typically quarterly), and if you meet that gross profit goal, your employees earn a bonus. Some considerations when crafting your gross profit bonus:

  1. Only pay a percentage of your overage as a bonus. For example, if your gross profit margin goal is $100,000 and you end up at $120,000 in gross profit, don’t pay the entire $20,000 as profit. Instead, shoot for 25% or 50% as the bonus to be paid.
  2. Use a sliding scale to pay your employees instead of splitting it evenly. Businesses commonly pay managers and leaders more than common laborers. You may also want to work tenure into the equation so that you encourage people to stay at your business.


Net Profit Margin Bonus

The net profit margin bonus is similar to the gross profit margin bonus, though it’s a bit more exact. In this scenario, you only pay a bonus annually after you’ve determined your annual profit. The benefit is that, unlike the gross profit bonus, you’re paying after you’ve determined your annual profit. The downside - unlike gross profit bonus, you’re only paying it once a year, which may make it less effective at motivating employees.


Piecework

Piecework is an idea that’s been around for a long time. In theory, it seems great: You pay employees for the work they accomplish, instead of the time they put in. So if you own a lawn maintenance business, your employees would get paid a set amount for every lawn they mowed, regardless of how long it took.

In theory, this is a good way to incentivize your employees to work faster. But for many green industry businesses, in practice it doesn’t work well. In many cases it’s hard to attract good employees because they want to know how much they’ll make. Plus, employees may rush through jobs - increasing accidents and potentially worsening quality.

A mix of piecework and hourly or salary pay is probably a better solution than piecework alone. For example, you could set a quarterly goal of work to be performed. If your technicians or crews meet that quarterly goal, they get a bonus.

Small Bonuses

Another way to incentivize your employees is through smaller bonuses for doing things that you want them to do. Examples include:

  1. A safety and attendance bonus - If your team arrives to work on time and has a clean safety record for a month, give them a bonus
  2. Percent of materials sold - Want to incentive your field crews to sell - and track - a specific material like a controller? Give them a percent of each item sold.
  3. Great work bonus - See your employees doing something great? Give them an on-the-spot bonus. It’s best if you outline the types of behaviors you want (great customer service, meeting production goals, etc.), and then reward them when they do.

Surprise Bonuses

At HindSite, we incentivize a lot of our employees based on license growth. The only issue: They’ve come to see it as part of their pay, instead of an incentive for doing good work. That’s a risk of any kind of written bonus - initially, you’ll get the behavior you want, but over time your employees will see the bonus as part of their compensation, and will fail to do the behaviors you’re incentivizing them to do.

So the best course of action may actually be eliminating written incentive plans. Instead, use your judgement as a manager to determine who is exhibiting the behaviors you want and then pay them based on how much they’re exhibiting those behaviors.

Got a great bonus idea you’re using in your business? Drop your great idea in the comments!

 

 

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