In Minor's League: April 2000

EDITOR'S NOTE:
One of the most popular speakers at the 2000 Lawn & Landscape School of Management was David Minor, founder and former president of Minor’s Landscape Services, a $12-million company in Fort Worth, Texas, that Minor sold to TruGreen-ChemLawn in 1998. In this monthly column, Minor shares his thoughts and suggestions for managing a lawn and landscape business with readers.

In addition to serving the industry as a consultant and speaker, Minor is professor and director of The Entrepreneurship Center at The M.J. Neeley School of Business at Texas Christian University. Readers with questions they would like to ask Minor can e-mail them to bwest@lawnandlandscape.com or fax them to Lawn & Landscape at 216/961-0364.

QUESTION: What do you think about incentive programs?

ANSWER: An incentive program, if done correctly, can be a tremendous asset to a landscape company. But programs can do more harm than good if they are not well thought-out or if they don’t have quantifiable measurements.

If you are not currently providing an incentive plan, the steps you go about to initiate one are important. When designing your program, you should involve all the company's shareholders. Building consensus in an entrepreneurial environment is oftentimes overlooked, but is a process that must be given full attention. There is nothing wrong with senior managers giving input on the incentive plan or sharing their opinions on the direction in which to take it, but making sure all parties buy into the program is important. Ultimately, someone, usually the president, will make the final call.

I have a personal bias where incentives are concerned for field people. As I have mentioned in the past, I think payout needs to be done on a regular basis. Regular could mean weekly or monthly. I always chose to pay monthly because our system accommodated this process, and I thought this timetable was immediate enough.

Remember that paying field people at time intervals that are further apart is difficult. In a perfect world, we could motivate our field workers by dangling the carrot of an annual profit sharing plan in front of their faces. In the real world, that is hard to do. Focusing on monthly rewards is much easier because you can keep that carrot dangling within reach on a regular basis. A monthly payout plan also gives management leverage when performance is not acceptable. Positive changes in performance happen more frequently if rewards for the performance are given regularly.

Tying field staff incentive programs to all the critical aspects of your company’s mission is also important. If delivering a top quality product or exceptional customer service is at the top of your company’s mission, then these aspects should certainly be tied into your bonus program. Of course, from a production perspective, you must tie in efficiency and meeting or exceeding goals.

The obvious problem with focusing only on production is the fact that your field people will only focus on that aspect and not on quality and/or customer service. The flip side of that equation is that if quality is the only concern, then production may be overlooked. Tie quality, customer service and efficiency to your incentive plan and you will create a quality program.

I like to use the analogy of a finely tuned engine when explaining how a successful company operates: If the oil is changed, the filter is clean, and the spark plugs are new, then the engine runs well. If any one of these aspects is ignored, then the engine will not run well. The same relationship exists in business. If you deliver a quality product and excellent customer service in an efficient manner, then everyone wins. Your employees are compensated for their hard work, the company profits and the customer pays a lower price for your service.

With incentive plans for managers, I think you can have the payout annually with some type of profit- or gain-sharing plan, but you need to keep the criteria in front of your staff on a regular basis. Hold monthly meetings to discuss revenue, quality, customer service and profitability. Also, set goals and monitor those goals.

I’ve tried both team and individual incentive plans and, quite frankly, have not been successful with individual incentives. Having people in various departments on different plans is difficult. My philosophy is either you succeed as a team or you fail as a team.

Needless to say, there are many schools of thought on incentives. The programs I described have worked for me. There are many good books available on incentive programs. The best advice I can give you is make sure your incentive plan is well thought-out, that employees buy into the program and that the plan’s focus satisfies your company mission.

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