Topic: Build an Effective Leadership Incentive Plan
Guest: Dan Gordon + Donnie Shelton
In this episode we discuss:
Why you should consult an attorney and HR professional before implementing a leadership compensation plan
How building your business depends on your ability to attract and retain great leaders and why management compensation plans are part of that
Dan's/Donnie's list of 6 things to think about when building an effective leadership incentive plan:
Make sure your plan is designed to retain competent managers who will help you achieve your goals
Ensure your plan is competitive both inside and outside the industry
Plans should be easy to calculate, including base salary, commission and bonuses
Dan recommends incentivizing gross margin, not net profit
Donnie recommends ensuring you're incentivizing the right things that are not leading to unintended consequences
Make sure your plan provides secure year-round employment and compensation
Why your plan should be self-funding
Consider a plan that rewards loyalty, competence and performance
Ensure your plan accounts for the company's goals, including financial indicators that lead to profitability
How management labor expenses should be 5-12% of revenue (compensation only, not benefits or payroll tax), according to the PCO Bookkeepers Pest Control Industry Cost Study
Why it's vital that your managers have complete control over the factors they're being incentivized on
How and why Triangle Home Services shows employees their Total Compensation Statement, including salary and benefits
PCO Bookkeepers Pest Control Industry Cost Study
Show notes from Episode 65, which links to a sample version of Triangle's Total Compensation Statement
Notable: "The plan needs to be aligned with where you're going as a business. That sounds so obvious, but it's easy as you're growing really fast to get down the road and realize 'we're not quite as aligned as I thought we were.'" —Donnie Shelton
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