What we can learn from Andy Roy’s failed bonus plan

Over the past couple of years, our Contractor Dilemma contests have evolved beyond a simple prize giveaway to something much more. Certainly, the generous support of DeWalt is wonderful and has encouraged participation, but what’s really noticeable is the quantity and quality of responses. We receive several dozen each time and, in almost every case, they are well-considered and articulate proposals based on past experience. There are important lessons to be learned from them, even if they weren’t ultimately selected as the prize winner.

The overall idea behind employee incentive programs is to get everyone pulling in the same direction

Andy’s employee incentive program was counter-productive
Andy Roy’s year-end employee bonus plan is an example of a good idea that went wrong. Andy wanted to motivate and encourage his employees by introducing bonus scheme based on points under various criteria. Problem was, it was complex. Many of the measurement criteria were not within the direct control of his employees. As a result, they felt it was an unfair system. Instead of motivating them, it made them a bit angry.

There’s no silver bullet for every company
Each company is different. Some are large, some small. Some have office staff calling the shots while others are managed in the field with mobile devices. Some are general contractors dealing with several trades, some are sub-trade operations that are more task-specific. There is no silver bullet. Each company requires a plan tailored to their operation.

Common threads: Start with a plan that involves the employees
That being said, there was clear commonality to the proposals submitted. Let’s start with one of the many good points made in the winning entry from Bob Zimmerman of Calgary, AB. Bob suggested any “corporate objectives” should be made clear to employees in advance. That’s certainly a good start for any program. Let’s look deeper at some of the other ideas that came forward.

“Seek input from the staff as to how the calculations should be made the following year,” suggested F.S.. This needn’t be too complicated. “All staff need to be brought into for a group discussion so they understand the changes that Andy needs to put in place to make the bonus fair and fit each staff members contributions more evenly,” said J.B. The plan should not feel imposed from above, added J.F.B.. “Validate that the program’s parameters are realistic, well defined,  and agreed upon by the supervisors and/or staff.”

The bonus plan should go hand in hand with regular evaluations
“The shepherd needs to know his sheep”, said T.H.. Consider employee evaluations as an opportunity for a two-way dialogue. “An individual performance evaluation is the time to acknowledge strengths, weaknesses, and to provide useful ideas,” explained another respondent.

This, in fact, was a suggestion shared by many — ongoing evaluations are central to both a successful incentive plan as well to the long term success of the company itself. “It takes time and energy, but the best course of action is to invest in authentic performance evaluations, said G.K.. “Coercing employees into performing in order to compete for a bonus, you miss out on the value of evaluations: professional development and strengthened motivation.”

Evaluations and review should be positive in nature. “Ensure that employees understand how the evaluations will benefit employees, crews, and the company.” Their importance needs to be explained, says D.M.W. “By involving each employee in the process of evaluating their own performance with their direct supervisors, you’ll ensure they know exactly where they stand, and what they need to do to earn the financial rewards that come with strong performance.

How often is enough?
“We aim to do this quarterly as opposed to annually, as a lot of things are forgotten,” said H.T.. “We try to have these reports done on a weekly basis. They go into the employee’s personnel file to ensure that we are on top of the quality of their workmanship and their dedication to our company.”

Are weekly reports too much?
Yet, weekly reports may be too much for your company to absorb. Look for a balance that works for your operation and your supervisory abilities.  “Be careful with not overdoing it and involving too many people too often, to avoid the potential flood of input and paralysis by analysis,” suggested J.F.B.. “However, the more input and the more solutions, the better the decisions and actions that will result. There is a sweet spot to be found.”

“Semi-annual performance reviews conducted by crew supervisors only take a few minutes of everyone’s time, but they give employees an opportunity to identify areas for improvement, and time to make those improvements,” said D.M.W. “By involving each employee in the process of evaluating their own performance with their direct supervisors, you’ll ensure they know exactly where they stand, and what they need to do to earn the financial rewards that come with strong performance.”

What should be measured
Almost without exemption, respondents felt the elements forming the bonus reward system must be within the employee’s control. “To have a bonus program where others have influence in the outcome, or where the variables are many, is not an incentive,” said P.J.. “Attendance, punctuality, referrals brought to the company, and demonstrated ways of saving the company money,” were inputs suggested by H.T..

Other ways to reward and motivate
The ideas expressed above would tend to question the benefit of profit-sharing schemes, although reward systems based on the company’s financial success was suggested more than once. Another respondent detailed a concept where a pre-determined total amount would be distributed to employees in proportion to their annual earnings —higher amounts directed to higher paid individuals.

Then again, others suggested granting the occasional day off work, or regular corporate social gatherings, might be sufficient motivation and encouragement for employees.

In summary, while is there is no one-size-fits-all program, clear and honest communication at all levels are obviously important. Andy’s plan went off the rails early on, perhaps because of his failure to talk to his employees in advance of drawing up his program. Hopefully some of the ideas expressed here will result in a review of your incentive programs, to ensure a happier outcome than poor Andy Roy!

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JBleasby@canadiancontractor.ca

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