Aligning Company Employee Goals Through Compensation v4

8/6/2019 Aligning Company Employee Goals Through Compensation v4

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What s it worth?How to align company &

employee goals


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P resenters

Marty Conte Diamond Springs WaterEstablished 1990Market Virginia North & South CarolinaBottled water, coffee, filtration80% commercial accts.100 employees

Diane Drey - SnowBird Corp .E

stablished 1921Market New York/ New Jersey metroBottled water, coffee, filtration90% commercial accts.

100 employees


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A gendaWe will cover

Compensation Systems - choicesSteps to Designing a Result Oriented P lanS.M. A .R.TImplementationReward Criteria for bottled water industryOur contact information for follow up


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Compensation SystemsHOURLY - If you pay by the hour employees are motivated towork a lot of hours

S A L A RY - If you pay a flat salary employees have limitedmotivation for incremental sales.

T A RGETED RESULTS - If you pay by rewarding results you aremost likely to get those results . A nd your employee will be

motivated to achieve those results.

IF you elect to compensate for results you must first define what results are important


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Step # 1

What makes the Company profitable?

For a every position .Make a list of the desired targets(Criteria) that will make your companyprofitable

Consider the activity in direct relationship to its impact on the bottomline.


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Step # 2

Focus your team on P rofitabilityMeet with your team and communicate the need to

focus on Profitability

STRESSThe need to remain fighting strong and competitive

THENA sk them for the criteria by which they would like to be

measuredEncourage them to suggest both individual and grouptargetsLead them to define criteria in terms of S.M. A .R.T.


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S.M. A .R.T.S

Specific/Simple

Criteria must be simple to understand and VE RY easy to demonstrate.

You should not need a slide-ruler, complicatedformulas or in-depth explanations to haveemployees understand what is important.


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S.M. A .R.T.

MMeasurableCriteria MUST be OBJ E CTIVE and quantifiable.Be very S PE CIFIC and measure!

A bsence Miss fewer than X days from work during X timeframeSales Sell X dollars of product at avg. rate exceeding X dollars

Safety During X period have no truck accidents/parking ticket Receivables Reduce days outstanding on receivable by X daysP romotion In X period get X customers to buy a new product Service Complete X % of your daily work orders


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S.M. A .R.T.T

Timely

Criterion MUST have a time period associated with it. i.e.Completed stops in a dayA ttendance by quarterSpecific product placement over the next 6 months

TIPS!

Make measurement periods short Have reward close to performanceA void cumulative results so that if any employee misses a target they can start fresh in the next cycle


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Step # 3

Design a new compensation plan A fter building consensus on the CRITERI A DESIGN a New Payment plan

Eliminate or drastically reduce base salaryRedirect prior salary to established criteria

A LW A YS A sk What is it worth to me???Make certain employees C A N earn more

TIP!Buy in will be hard unless there is a real upsideIf you must pay a base salary or draw have itchange every X period based on results.


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# 4

Share the new plan with your teamSTRESS

Everyone will have the same opportunityHigh achievers can make more moneyThis system replaces prior review methodsCompensation changes are continuousCompensation is now in the employees control

. Just think no more annual reviews what a relief!

TIP !When making a change from an hourly or salary plan to a results

oriented system offer a 80-90% guaranteed for the first 3 monthsto get buy-in


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Step # 5

Run plan for a test period TH E N implement

Post Goals and Reward CriteriaIf possible have employees measure their own progressHave same compensation rate all employees for a given goalA pply without bias (no favorites)

Implement test periodHave Employees calculate their earnings as if the plan hadbeen in effect to see if it exceeds their old style earningsInform employees in advance date the program will go liveStick to your guns this works

TIP!Make changes if you set unrealistic goals


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Step # 6

P ublicize results & keep it fresh!Encourage healthy competitionGive plan management attentionCelebrate achievements

TIP!Be prepared some people will earn see significant increases in their

compensation as it is now in their interest they may be happy.

Refresh the targets regularlyRaise the bar


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Let s be specificWe will review examples of Reward Criteria for:

Route Sales personnel (delivery)Field Service representatives (repair)Sales Representatives

Customer Service Call CenterP

ersonnelCollectorsA LLE mployees


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Route Sales P ersonnel

Objective - to safely maximize delivery of billable products per route day whiledelivering excellent customer service.

REW A RD Criteria:Number of P RODUCTS DELIVERY per route day - assign a dollar or point value for each product (5 gal water, case goods, cups, coffee products) andpay on completed delivery.TIP !

Reward both the deliveries & pick-up to to get back emptiesA ssign points instead of dollars to simplicity annual salary adjustments

Have two or more tiers so that after exceeding a daily target, the next deliveries are paid at a higher rate.A djust compensation rate for large Bulk deliveriesDeduct compensation if URG ENT priority orders are not completedA djust commissions if driver requests an assistant to complete deliveries


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Route Sales P ersonnel

(continued)

Number of VISITS PE R D A Y pay a bonus if totalnumber of stops exceeds a certain threshold to balancecompensation if a route includes many small stops

NEW A CCOUNTS pay for referrals which close orsigned service agreements

Number of Days Driving without an A ccident


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Service TechniciansObjective - to minimize equipment exchanges, maximize income and

increase customer satisfaction

Reward Criteria:Service calls completedTIP !P ay a higher rate if the technician s visit saves an equipment exchangeReverse the commission if customer reports equipment malfunctions again within 30

days of service call

Service calls which result in sales (filter changes or cooler cleaning)Service calls to pick up customer equipment (quits) which are turnedaround by the technician and savedService Technicians recommendations NOT to place equipment whenobserved conditions suggest client does not meet Company rental criteria.


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Sales RepresentativesObjective - to establish new customers that are committed to our service at rates whichallow Company to be profitable.

Criteria R E W A RD

NEW A ccounts vs. A DDITION A L Service to E xisting A ccounts We want newrelationships, so we pay a higher commission if it is the first time we are doingbusiness with the customer.

A GREE MENT LENGTH the longer the rental/service agreement the higher thecommission

R A TE STRUCTURE the closer the negotiated rate is to the list rates, the higher thecommission

INVENTORY REDUCTION an additional bonus is paid when specific model equipment which is In stock and Surplus is rented. (Inventory bonus changes frequently)

COMMERCI A L vs. R E SIDENTI A L New Commercial accounts are paid at a higher ratethan residential accounts


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Customer Service Call Center RepsObjective - to establish service customers promptly, courteously, and cost

effectively which allows Company to be profitable.

Criteria RE

W A

RDNumber of average daily phone calls handledCall review by manager

Was full name givenWas the customer concern addressedWas a new product introduced (even if not sold)

Sales of New P roducts/ServicesA verage minutes customer is on-hold waiting for call centerNumber of abandoned calls (customer hung up in frustration)Customer Satisfaction Rating from survey after rep contact


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CollectorsObjective - to bring in the money and reduce losses from bad debt.

Criteria R EW A RD% of accounts in arrearsNumber of accounts in arrearsA verage Days A ccounts Receivables are outstandingBad Debt write off

Collection agency referrals (reduction)Customers converted to automatic debit card payment


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A ll E mployeesLeads which result in new customersA

ttendance bonusesA dvance notification of absenceSales oriented information gathering i.e.email addresses, building real estateagents, etc.


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Contests work too!Contests generate excitement They are a great way to see what is possible

P rize should be creative it could beP aid time off Dinner on the townGifts TV s Stereos, A ppliances, & leather jackets

Vacation trips

Tickets to sporting eventsShopping spreesremind us to tell you about the $10,000 contest

A ND REME MBE R .


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E veryone Wins!If you have a well aligned

compensation systemthe more your employees earn

the more profitableyour Company will be!


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Contact UsMarty Conte, P resident Diamond Springs WaterP O Box 38668Richmond, V A 23231

P hone 800-715-2286Fax [email protected]

Diane Drey P resident SnowBird Corp.111 Thomas McGovern DriveJersey City, NJ 07305

P hone: 201-451-4000 ext 222Fax: [email protected]

Documents

Aligning Company Employee Goals Through Compensation v4