The question of how to reward employees fairly and appropriately is one that constantly looms and transcends many organizations. Bonuses often become an expected and predictable entitlement that are often tied to historical benchmarks or norms, cultural mores, and other irrelevant bases.
The data used to determine these “magical” sums and means can be just a convoluted as the results. Oftentimes, there are no clear key performance indices, thresholds, or formulas used to arrive at these much-anticipated payouts. Compounding the difficulty of these major decisions is the need to maintain a positive morale and productive work culture all without undermining the need to turn a profit and to keep the future stakeholders in mind.
To see what other specialty trade contractors are doing in this area, we asked a few how they address this issue.
Andrew Mack, CFO, Converse Electric (Vice President, CFMA’s Columbus Chapter)
Converse Electric is a family-owned business located in Grove City, OH and has been serving the area for more than 60 years. They provide electrical work on projects of all types and sizes in the commercial, industrial, and residential spaces. They proudly employ about 75 employees and give back to the community through a number of charities in the area.
Andrew Mack noted that their annual bonuses are paid in February, although employee engagement events take place quite regularly throughout the year. These include happy hours, cookouts, family picnics, and even larger-scale events such as zoo outings.
Incentives at Converse come in many forms including gift cards at Thanksgiving to help offset the expense of the holiday feast as well as a Christmas party complete with raffles. The raffles include both work and fun items such as tools, televisions, and much more.
At a chapter event, Mack heard Alex Freytag, the author of the book Profit Works, speak about incentive plans and the logic behind them. Motivated to read the book, he learned how to better phase in changes, tying the amounts to more defined metrics as opposed to subjectivity.
Dan Muetzel, Partial Owner, HR Manager, & Treasurer, Muetzel Plumbing, Heating & Cooling
Muetzel Plumbing, Heating & Cooling is a second generation, family-oriented, locally-owned plumbing and HVAC company located in Columbus, OH. They specialize in private design build work, both residential and commercial, complete with a skilled, full-service department.
Dan Muetzel was happy to discuss rewarding his hard-working employees with a large end of the year Christmas celebration located in their warehouse, which is suited perfectly for such an occasion and large enough to host their roughly 120 employees.
He commented that particularly because they are a merit shop, everyone receives a bonus of some amount. The bonuses are based on performance, years of service, attendance, dedication, and supervisory reviews. There is, on occasion, an opportunity to reward members of a team who have worked on a job that has been exceptionally profitable. Muetzel said that even new hires receive something, such as a gift card.
In addition, they all receive useful, company-logoed gifts such as lunch boxes and beverage coolers. At this annual event, everyone gets a ticket that they can use for a chance to win one of 25 coveted raffle prizes. These prizes vary widely and are selected from suggestions made by the workforce.
How do you make sure everyone is a winner? Paid time off, of course! Muetzel pays everyone to take time off for Christmas Eve and Christmas Day.
In addition, holidays are a time of tradition, and Muetzel has made gifting Maple Leaf (located in Juda, WI) cheeses one of theirs. Everyone gets two pounds to take home, as well.
Additionally, the community wins with the 50/50 raffle. The company pays seed money to get the raffle up to at least $500 and then participants can purchase chances to win. Proceeds go to the annual charity of choice such as a food bank.
The office and supervisory teams participate in team-building activities throughout the year by participating in skeet shooting, bowling, cooking competitions, axe throwing, and other ideas as presented to management.
Thomas Gillies, VP Finance & Business Development, TG Plumbing & Mechanical, Inc. (Treasurer, CFMA’s Central Ohio Chapter)
TG Plumbing & Mechanical is one of the largest commercial and industrial plumbing construction services companies in Central Ohio. They are a non-union, family-owned business and have completed significant projects in the Office, Senior Living, Hospitality, Health Care, Mixed-Use, and Multi-Family spaces.
TG takes a different approach to rewarding their employees for a job well-done. When a job comes in under its initial budget, after the retention has been received, everyone on the job is rewarded by sharing in the profit. Thomas Gillies clarified that everyone on the job and means quite literally just that. The foreperson reaps the most benefit, since they are the person most responsible for the job’s profitability, but the journeypersons, apprentices, estimators, and project managers also receive a percentage of the surplus. This leads to more prudent ordering, time management, labor efficiency, and judicious decisions in every step of the project.
In addition to the monetary reward, the team members also appreciate the immediacy of the feedback. Although the actual payout occurs after retention is received, the bonuses are calculated and communicated to those involved. Gillies attributes their relatively low rate of turnover to this program.
In addition to job-based bonuses, Christmas bonuses have also become a regular occurrence in addition to useful gifts for all employees. The bonuses are based on the regular salary and wage levels, with the more highly compensated employees receiving higher bonuses. These gifts included head lamps, heated coats, and other creative ideas. Other annual employee outings such as summer barbeques at the shop are family-friendly events.