Compensation in a nut-shell should revolve around “Incentives.”
What motivates you to perform an action? Design your Compensation approach with Incentives that support Profitability of your business.
Seems obvious. Yes?
Ahhhh. But what does that look like? The million Dollar Question.
There is no universal answer here. But what I can tell you is that when you discover it – it will change your ownership experience – forever. Getting this right is worth the time it takes to discover it.
Personally, I spent 6+ months developing a compensation strategy that would:
- Allow my staff to have unlimited earning potential
- Would always produce Profit for the business
- Created an environment of loyalty, satisfaction and results for my employee AND my customers
What does that look like for your Service Business? (click here for examples of my compensation strategies)
A successful compensation Strategy almost always includes some type of “Pay for Performance”
Incorporating “Pay for Performance”… into your businesses comes with some risks. Existing employees who were attracted to/by a flat payment structure may not feel comfortable being at the helm of their own financial destiny. Many employees are not interested in accountability at that level nor are they interested in being “measured” by their literal contributions. However if you can orchestrate the change to a Performance based pay structure that rewards superstars…in the end… that’s all that will be left of your original staff. And what a wonderful experience that is. Trust me.
That said, it’s your responsibility to provide clear direction. Crystal clear. Crystal Clear direction creates a roadmap for your business.
Success happens when you have proven systems and strategies in place for:
- successfully winning over unhappy customers
- top notch training and new hire coaching in place
- an obvious career path within your organization,
- enough new customers walking through your doors (this is usually your job – see marketing)
- technology in place that supports and streamlines your staffs tasks and allow them to quickly perform the services that make the business money
- well developed job descriptions, policies and procedures
- in-house and outside training expectations & opportunities
- strategies for handling unhappy customers, and other disputes.
If you create the right environment for your staff to make money for themselves & YOU free your staff to make unlimited income. They will be free from merely trading their hours for dollars and free from a life of drudgery.
Paying your employees a flat hourly or salary rate (no matter how high that rate) can result in attracting the the least enthusiastic and least motivated people you can imagine.
Can you imagine a staff that was more energized than you were when you first began your businesses? Creating a compensation approach that rewards performance either with monthly, quarterly or even weekly financial or rewards attracts the best talent and keeps them!