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Incentive Games and Bonuses
Increasing Your Dividends
Your business is currently operating at a strong and comfortable level. Looking at your financial sheets, and information which gives you industry standards, you find your business to be among the more profitable businesses. However, you did not get to this level by resting on your laurels. Today, as you examine your financial sheets, you want to find a way to take your business to the next level and realize doing so requires the efforts of your employees. You already have an attractive benefits package and a profit sharing program. What do you do?
Your pay scale, benefits package and profit sharing program may be exemplary, but as with human nature and any business there must be constant challenges and incentives to maximize performance. Again, what do you do?
Where do you feel your business could improve? Would your employees respond to a short term challenge? Are there any problem areas you would like to resolve? Take into consideration these questions and from there we will be able to develop the combination of incentives to enhance your bottom line and challenge your employees into action.
One sizeable music store reported an ongoing problem with their cashiers frequently having registers which did not properly balance at the end of the day. This caused the office manager to spend an additional part of her day interviewing cashiers and resolving problems. "I'd give anything to not have to chase down all of these corrections", was the comment she made. However, the "anything" necessary turned out to only be the cost of one hour of pay.
As the office manager was able to perform the daily register check without errors and within a dollar each day of the work week, the cashier was allowed to go home early one hour, with pay, on Friday, Saturday, or Sunday. This incentive allowed the office manager to perform other duties for which her higher salary was more suited.
From a standpoint of positive actions, there are several examples of incentives businesses have implemented which we will detail for you.
For his sales staff, one store front owner calculated the size of the average sale and then challenged his staff to increase the average sale by $1.00 each month. In months where this was accomplished, the owner had a party at his home where he served a meal to all employees. While the cost of the meal was a couple of hundred dollars, it was far outweighed by the additional profit created by the one more dollar goal.
Another dealer created a simplified version of his financial statement to share with his sales staff. In the abbreviated financial statement, all of his staff could see his gross margin. As an incentive to his outside sales staff, who were calling on wholesale customers and too frequently brought in orders with low margins, he established a goal for the monthly gross margin, and provided a cash incentive when the goal was accomplished.
From this goal, he began to see his outside sales staff concentrate more of their sales pitch on the quality of the products and the quality of service his company provided. And like the previous example, the cost of the incentive was far outweighed by the increase in net profits.
A fourth dealer, who sold only higher quality products was concerned about his employee's perception of the margins and profits his business was achieving. To emphasize the cost of what he sold, he changed his employee discount purchasing program from a discount off of retail to a cost plus calculation. The price his employees paid was approximately the same, but they gained a clearer understanding and appreciation for the cost of products and services.
As he, like a previous example, gave employees an abbreviated financial statement, he found employees better understood the cost of doing business as well as understanding a pay raise was more than just an item of discretion for the owner.
There is also the dealer who devised an effort to increase the number of school accounts his business serviced. He knew he could increase his chances of gaining a new school account if he could gain a referral from an existing account. During a staff sales meeting, he offered a bonus for each letter of recommendation his outside sales staff could obtain from an existing account. With letters in hand, he created a new sales tool for his sales staff. And with the job half accomplished, he offered to double the commission for the first month for each new account that was opened.
While certain members of his outside sales staff were better at one part of this incentive program than another, the multi-faceted bonus allowed all of his staff profit from their efforts. This idea was witnessed by the occasion when the office manager was able to solicit and receive letters of recommendation through her contacts with the various existing accounts.
Two of the oldest incentives for the employees are still viable when you adapt them to your situation. An example business offers their employees a bonus based upon sales with a special twist; they begin with their sales for the same month of a previous year and establish a goal of a 5% increase in sales. In each of the months in which the 5% increase has been accomplished, all of the employees share in a bonus which is equal to 6% of the sales in excess of the goal. In addition to this unique calculation, all of the employees receive their share based upon the number of hours they work, and all employees - from sales staff to office help to delivery staff - are a part of the program.
This dealer reports as he posted the daily sales goal and sales to date, all of the employees kept a close watch on the results. Did the sales increase incentive work for him? During the third month of the program, the bonuses paid were equal to a week's pay for many people, as a result of a double digit percentage sales increase.
The last example is a new twist on a bonus for selling certain items. This incentive, often called p.m. items or spiff items, had a bonus of a set amount of money paid for each one sold. While many businesses have traditionally offered a bonus for selling sizeable products, such as a new instrument, our example dealer utilized combination items. During one month, the bonus was on the combination sale of an instrument and case; a customer would come into the store needing to purchase a new horn, with the bonus being paid if the customer also purchased the case.
As the bonus combination was changed frequently, the dealer explained he saw combination sales continue long after the bonus was removed. He saw employees getting into the scheme of creating add on sales and mentioned one employee as an example.
His business had one of the 5 cent copy machines on the sales floor, and the employee was asking him for an idea of how to create an add on sale for a customer that came into the store to make copies. The add on sale they created was to have the receipt for copies become a coupon for their next visit to their business.
Our examples are all from businesses which have found the way to make a calculated investment pay multiple dividends. Dividends in increased profits, as well as dividends in employee participation and morale.