In This Episode
One of the most common questions we hear from business has to do with paying their people. More specifically with how to pay their people. What most owners are really asking here is how do I structure a compensation plan that is going to properly incentivize my team to maximize profits for our business.
This compensation question is key whether your business is blue collar vs. white collar. The plans themselves might look a little different but the core is the same. Most owners are looking for their people to take as much pride in their work as the owners do in addition to getting stuff done as quickly as possible.
When we have the compensation discussion with our blue collar clients it usually starts with a discussion around hourly vs. salary. Most blue collar companies compensate their people on an hourly basis. Eventually they start to pay some people on salary, typically either managers/foremen or key folks in the office (e.g. office manager). Then we start to introduce ideas like paying people per job or giving them a percent of the profit on a job. That’s when minds usually start to melt!
On the white collar front, most people are paid salaries to start so we usually don’t have too many discussions on hourly vs. salary. Instead the compensation discussion gets into other areas like profit sharing, bonuses, additional time off, etc. as the owner tries to find the right magic formula to properly incentivize their team.
Compensation and pay are important in any business, but other factors need to be included as well (e.g. being included in decisions, developing the team, etc.) and we covered many of those in the show today. Enjoy!