Incentive Compensation for Contractors - Audience Question: Starting?

When getting started with a plan, it is usually better to start with something more general and the distribution criteria being weighted more heavily toward management subjectivity.

Courtney Stearns Profile Picture
Share
Contributors Sue Weiler-Doke David Brown

You can add in additional criteria and metrics to help with this process over time. For most roles, however, it is nearly impossible to have a calculation that spits out the right distribution in both good times and bad.

Programs that unite everyone around a single pool of money will tend to work better. If you have a village and a single farm, everyone will share when the crops are good. When the crops are bad, everyone still shares. Too many times, we distance people from that simple reality.

Think about a percentage of pretax profits or some other bonus pool calculation that makes sense. Don’t start too high. It is easier to improve an incentive pool than it is to lower it.

Consider adding in “windfall” caps at some point to the program. When grain crops are exceptionally good, we store some for the inevitable bad times.

Consider that if your top management does not have the ability to sit together and openly discuss performance and setting relative bonus amounts for each person they are managing, there are likely deeper trust issues.

Consider that if something “feels” wrong in your gut about the distributed amounts to an individual, to deeply dig into the topic with rigorous discussion.


In this video series, Courtney Stearns, Sue Weiler-Doke, and David Brown discuss the most common questions we get from contractors about incentive programs, including a bunch of great questions from the audience.

This is Part 14 of a 20-Part Series


Topics Covered in the Series Include:

  • Union vs Open
  • Succession
  • Prerequisites
  • Types of Programs
  • Culture

All relationships start with a simple conversation. Let’s schedule some time to talk about your specific challenges and opportunities.


Incentive Programs for Contractors
Every successful and profitably growing contractor we work with has a comprehensive and integrated set of incentive programs in place at all levels of the organization. These programs reinforce the daily actions and behaviors that make them successful. ...

Incentive Programs for Contractors
Every successful and profitably growing contractor we work with has a comprehensive and integrated set of incentive programs in place at all levels of the organization. These programs reinforce the daily actions and behaviors that make them successful. ...

Improving Team Morale
If morale on your team is low then it’s probably your fault. Those words sound harsh but let’s unpack them a little bit and see if we can improve team morale.
Changes - Early Identification is Always Better
Early identification of changes and conflicts is the first key to success. The capability to identify changes and conflicts early in the process is a combination of organizational structure, systems, management, training, and coaching.
Lean Principle - Value Stream
A contractor’s value stream is every step required to take raw materials and information then deliver a completed project to the waiting hands of a customer. Deep understanding of this value stream is the foundation for major productivity improvements.