By: Zeb Smith, Zebulon LLC
Outfitters face a lot of unique workforce pressures right now. From federal minimum-wage changes to fewer housing options for seasonal workers to employees needing more pay and benefits; these pressures put a bind on operations and your pocketbook.
Before adopting a bonus plan, or really any new initiatives within your operations, you need to consider the effects on your people, your finances, and your future. Too often outfitters adopt initiatives that address one or two of these focus areas but neglect the third. This leads to short-term fixes that do not deliver on sustainable long-term successes.
One initiative I’ve discovered to deliver on all three is an intentional and thought-out bonus plan. I’ve helped multiple outfitters put bonus plans to use and boy do they work. A bonus plan provides an opportunity to award your employees in-line with the desired outcomes you want for your outfit, such as employee retention.
Some Considerations Before You Get Started
It is important to define who your bonus plan is for. Will it be for all employees companywide? A targeted group of employees? Or a single employee?
I suggest starting with a smaller, highly influential group to test the waters, see how things go, and build on it from there. I encourage owners start with the most loyal employees who have shown dedication to you and your business. They will be the most honest and most willing to try something new.
It is important to understand your audience. What motivates your employees and how much compensation is needed to change their behaviors?
Don’t be surprised if individual employees are motivated differently. Tenured employees generally require more financial benefit and are less willing to work additional hours. Newer employees often appreciate non-financial benefits such as flexibility, time off, and small gifts. Cherry-pick your top employees and discover what they value.
You need to consider how much will be paid out. Just like customers want to exchange money for a good experience, employees want to exchange their efforts for money.
At the company level, the plan needs to drive more profit than is paid out. Most do-it-yourself adopters’ approach this the other direction, they pay-out more in benefits than the profit it drives. This feels good but is a quick-fix band aid that eventually implodes on itself.
From the employee’s perspective, the money an employee receives needs to feel greater than the sacrifices he or she makes to deliver on your desired outcomes.
You want to clearly define and communicate your expectations on the front end. Make sure each bonus ties directly to your desired outcomes. Use metrics and milestones to define your pay outs and share the plan with your employees before the start of each season.
I like to build plans using a tiered system. Tiers show employees how much money is available in exchange for clearly defined outcomes. This gives employees an opportunity to decide how hard they’re willing to work in exchange for the extra money.
One Example of a Tiered Bonus System:
The first tier calls out what does not qualify for a bonus. The bonus amount is $0. I design this tier to say straight up, “If you do not do the bare minimum of what is required of you as outlined in your job description, then you don’t get any bonuses.”
The second tier qualifies an employee for the minimum bonus. This tier says, “You met expectations for a small bonus.” The amount an employee receives is generally the same amount he or she received in the past. What’s new is you now introduce the outcomes an employee needs to focus on to qualify for a bonus.
The third tier is the delivery of your desired outcomes. The bonus amount needs to be enough money to motivate him or her to change their behavior and deliver results. The amount needs to be a no-brainer, from their perspective, in exchange for the extra work.
The fourth tier says, “Oh-my-gawd my employees did way more than I could have ever expected of them!” This tier gets employees thinking bigger and sets a new high standard.
Set a consistent pattern to share your employees’ progress within the plan. Communicate their bonus progress often, consistently, and through every stage of the season. Overtime you will discover who are your star employees and those who are not.
The biggest trap I see when building an incentive plan is owners are not familiar enough with their finances to appropriately fund their plan. If you fund it too much and the plan ends up being too costly for the organization and sets unrealistic employee expectations for the future. If you don’t fund it enough and employees don’t take it seriously.
This is when owners say, “Bonus plans don’t work.” Yet I’ve built plans for many outfitters who do it successfully. But before you get started, you must take the time to systematically look at your finances and your operation to make the best choices for you and for your employees.
A Note From the Author
If you want my help to adopt a bonus plan, or if you want an expert to discover and adopt other initiatives better suited for you, send me an email at firstname.lastname@example.org.