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Pay for Current Performance, Not Past
How much we pay and the process of how we pay our people are equally important in getting superior performance. The formula for fixed and variable compensation in a company can make your staff act more like business people and less like employees.
The construction industry has traditionally paid management personnel a majority of compensation in salary and a minority in bonus. This should be a concern to most contractors.
Salary historically has risen with inflation or because of it. The reason isn't important. There are not many years when compensation hasn't increased. It is expected. If most of your payment to people is in the form of a monthly salary then, it must rise regardless of job or company performance.
It is not a given that fixed compensation has to increase every year. If your compensation plan is more variable then, there is less pressure for salaries to rise.
Bonus or incentive compensation makes employees think and act like owners. A welcome change for some contractors who have an uninspired staff.
Smart contractors know that it better to pay for current performance (bonus) than to pay for past performance (salary). Sports teams would do well to follow this advice.
For the remainder of the article, please email us at mstevens@stevensci.com. To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "Current Performance, Not Past?" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
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Matt Stevens is a management consultant who works only with construction contractors. He has performed training and business consultation for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.
Posted by Matt Stevens at July 14, 2005 3:27 AM
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