Green Guides features a rotating panel of LCOs sharing their real-world experience on how to build and grow a successful lawn care business.
Pay is not everything when it comes to employee engagement and performance. Research and my experience show that things like company culture, management, leadership, co-workers, job duties, expectations and others play a big role.
Salaries do matter though, as employees expect to be paid fairly and with enough money to meet their needs. Having some type of incentive pay or “pay for performance” helps keep employees loyal and engaged, and can play a big part in driving company performance. Winners enjoy working under incentive pay, and we like to attract and keep winners.
Lessons early on.
Our philosophy of paying was born out of my years as a public school teacher in my 20s. The guy across the hall from me made more money than I did, simply because he had about 25 years of experience and I had only five years at that time. I was the better teacher, but he made more money, and that just was not fair. So years later when it was me deciding upon a fair salary structure, paying for performance with incentive pay was a big part of our system. Plain and simple, you get what you measure and what you pay for … usually.
Many lawn care companies pay hourly, salaried and maybe with some commission on production for field staff and sales commission for salespeople. We’ve taken it a lot further, by incentivizing not only production and sales, but quality and profits as well. If you incentivize only the amount of production done, that’s generally what you’ll get: a lot of production. Quality, sales, profits, etc., may or may not be there.
We pay a solid base, but more than about 34 percent of a route manager’s total annual pay will come from incentive pay, based upon how they personally perform, their team and the company. Better performers make more money, up to 25 percent more than average performers. And if an employee is not earning at least 60 percent or more of the projected amounts of incentive pay, they probably won’t be around for long, as their performance would not be up to standards.
We have about 15 different metrics or goals that are measured and paid for based upon hitting goals and performance. Some are production-based, some sales and some are on quality metrics that we measure. Production is easy to quantify, as are sales, but it’s the quality part that is more difficult to quantify and measure. For us, the three main areas we measure on quality are Net Promotor Score, customer retention and re-sprays versus production stops. Customer net gain is both a sales and a quality metric, as employees are rewarded as new customers come in, but if they leave that comes back out of their pocket. And all employees are also paid a bonus based upon profits, the most complete indicator of service quality and performance.
Know the score.
At the beginning of each season, we provide a spreadsheet for employees showing the breakdown of the monthly, quarterly and annual goals in each category, with the projected financial incentives for each. Some are paid out with every bi-weekly paycheck, some monthly, some quarterly and some, such as profit, are paid annually. This incentive pay spreadsheet is a template for their monthly goals in all areas, serving somewhat as their game plan for the year. And employees are kept up to date constantly during the season with scoreboards as to where they are and how we are doing individually, as teams, and as a company.
The base salary is there no matter what, so our employees appreciate the assurance of that. Our staff likes the incentive pay portion also, as it allows the best performers to earn more. If their team does well, and if the whole company does well, all employees will benefit financially. So this helps provide some sense of ownership also to all team members, by being able to share in the good performance and profitability of the company.
Our incentive pay system is somewhat complex, and is not easy to implement and track, but it’s worth it. It is a substantial factor in helping us to grow, hit our goals and perform well.