You get what you pay for. This age-old
business truth applies to builders’ pay systems, which define
the focus of your employee and team performances. Pay systems
can be an effective method to reward performance excellence and
reinforce everyone’s alignment towards company goals. It
is a key link between the company’s strategic direction
and the people that make it happen. This ensures that high-performance
workplace practices become part of your company’s coordinated
organizational development.
More than written declarations and mission
statements, employees look at what affects their pay to see what
the company management feels is most important for business success.
Because customer satisfaction and performance excellence is critical
to the success of the organization, bonuses and incentives that
reward these values will facilitate their achievement. Paying
for anything else creates mixed signals that can undermine the
company’s overall success strategy.
Pay incentives awarded strictly for short-term
profits send the wrong message. Instead, try putting profit incentives
into a bonus pool, then awarding performance bonuses contingent
on the company mission and key factors for business success,
such as customer satisfaction. Suddenly the importance of the
company’s mission, value, and vision statements takes on
new meaning. Tune up these statements to remove elements not
important enough to reward with compensation so that your pay
system ‘walks the talk’ of your leadership system.
"Employees need to care about more
than the bottom line to be a high performance company,"
says Diane Rivera of Shea Homes San Diego, a 1996 NHQ winner.
At Shea Homes, everyone shares a single bonus pool. The amount
of the bonus pool is based on the company’s performance
as measured by key business drivers they feel are critical to
the success of the company, including home buyer satisfaction,
trade partner satisfaction, home quality and operating profit.
In 1997, employees were eligible for a bonus of 10 to 16 percent
of their salary, depending on their job grade. The key business
drivers also form the foundation for the employee performance
review process—each person’s accomplishments are evaluated
according to the elements of the key business drivers that pertain
specifically to their job.
In another approach, Neumann Homes, a 1998
NHQ Award winner, has a profit sharing plan that offers up to
20 percent of employee’s income as a bonus when net profit
is in the range of 6 to 15 percent. The bonus is adjusted by
a factor from 0 to 1.4 when customer satisfaction ratings range
from 80 to 98 percent. Each associate’s bonus is then adjusted
by 0 to 120 percent based on achievement of personal goal objectives.
Bonuses are paid quarterly.
Properly designed pay incentives can reinforce
a clear and consistent message that can align everyone in your
organization to work together toward a common vision and goals.
Examine your company’s pay system to see where it is leading
your company.