Frank Blau gave me these words of advice 21 years ago, I remember it like yesterday.
Your employee compensation package should identify you as the company of choice. Make your compensation package stand out, over and above the competition. Make it so the employees can’t afford to leave you.
With that said, it doesn’t mean hold on to the folks that do not perform! Set clear expectations, and hold people accountable. No reason to keep the run-of-the-mill employee and pay them exceptionally well.
I ask myself the following question when developing a compensation plan: “Would I work for me?” If the answer is yes, then you’re on your way to a good plan.
What owners need to understand:
- Your employees have a personal budget, just as you have a company budget.
- Your company needs to bring in X, or your will be losing money. Your employees need to bring in X or they can’t pay their bills.
So what do you do to make it work for everyone? Build it into your price!
The good news is this: If you are using the Nexstar Profit Pricer to determine your selling price, then it’s done for you. The Nexstar Profit Pricer builds in 40 hours per week in direct cost for your technicians.
So what if you are still asking, “How can I afford to do this?” I ask this: How can you afford to hire people who are mediocre? If you hired them with the intent that they will be great and then you find out differently, REPLACE THEM with people who are worthy of your compensation plan.
Be slow to hire and quick to fire. Find the right person.
But, Jim, I need someone now! I get that, but you should have never stopped looking for great people. Recruiting is a full time, 365 day a year, process. Always be recruiting. Build yourself a database of potential employees. Make it known that you are the company of choice.