A local service firm wanted to develop a payroll bonus structure to properly motivate employee performance without putting an unnecessary financial burden on the firm.
Develop a program that meets the following criteria:
Relevant – Applicable to the client’s actual business environment/practices so as to not disrupt the firm’s culture.
Easy – Can be measured easily and is able to be forecast and be understood by all employees.
Private – Quantifiable by each employee without having to divulge any payroll information to the other employees.
Motivates – Spurs on each employee behind the common goal of the organization.
Fair – Is not subject to an “opinion” by the owner and thus would be fair to all employees.
How We Helped
We were able to determine that a major business need of the firm was to grow employee motivation to do more work on their own and therefore reducing the need for outside contract labor help. This would keep project cost in check and increase the profit per project.
By using this metric, we are able to publicize an ongoing progress report firm-wide showing financial progress toward their goal and the resulting bonus (shown as a percentage of salary) that each employee could expect if the goal is achieved.
By using this method (percentage of salary), it allows each employee to compute the relevant amount themselves in private without creating any conflict over different pay rates.
The owner has reported that the employees have openly embraced the structure and are actively trying to keep outside contract labor down by going the extra mile on client projects as they feel that they are personally benefiting from this extra effort.
By keeping the relationship between client profitability and outside contractor costs in check, the owner is able to increase his profit on each client far more by paying the bonuses to his employees rather than paying outside contractors.