Motivate with incentives

August 1, 2008 By    

Of all the useful managerial tools available to retail propane distributors, none may be more underutilized than a well-designed, performance-incentive compensation plan.

Carl Hughes
Carl Hughes

Sadly, many retail propane companies today have no meaningful incentive program in place. However, some of the most successful retailers have developed remarkably effective performance-incentive plans that create excitement among employees and drive their businesses forward.

The old thinking that remains prevalent in our industry today is that employees are paid according to hours served. There is no reward for increasing the amount of work done per hour. There is no intent defined by the employer for improvement and no direct benefit for the employee to improve.

A more effective model says that employees provide hours plus ideas and effort and receive regular pay and incentive rewards. The role of a performance-incentive plan is to align the employee with the specific desired goals of the company. As specific goals are achieved, employees obtain financial rewards for their participation.

The company provides a means by which employees can improve areas of the company’s performance. To be motivated, employees must understand how their roles can have a positive impact on the company and then obtain rewards when they help make it happen.

Define company’s focus

Is it your desire to add new customers, to increase productivity or to cut out unnecessary costs? Do you have a specific project that requires a special focus in order to be implemented effectively? Are you attempting to change the culture of the company to create more of a growth mode? The success of these objectives will be directly linked to your employees’ ability to carry out the tasks.

These are some basic foundations of a plan:

  • Cause-benefit link must be in place. An example is that landing new customers adds to a measured goal that when attained pays a financial reward.
  • Simplicity over complexity. The plan should measure only one or two objectives. Too many times a plan will have so many parts that an employee can’t understand the company’s priorities, and in the confusion, focus is lost, energy is wasted and none of the goals is met.
  • Provide measurable results. Report progress on a regular weekly or monthly basis to the employees. The data reconnects the link of incentives to performance.
  • Be consistent. Don’t make major changes in your incentive plans every year. It can create anticipation by employees that the current incentive “flavor of the day” will go away.
  • Set reasonable goals. The objectives that the rewards are built for must be reasonable and obtainable by the employee. If not, there will be no link between company objectives and the motivation you desire.
  • Align goals to the appropriate roles. All roles can have an impact on a measurable aspect of the company. Here are some roles along with sample company objectives:
  • Salesmen – new customers or net new customers
  • Customer service representatives – new customers, customer retention
  • Drivers and dispatchers – increased delivery efficiency
  • Installers and service technicians – new customers, increased efficiencies of service or productivity, growth in service income
  • Managers – increased profitability
  • Managers – project completion

It’s all about motivation

Formerly unenthused employees become energized and focused when they are motivated to do more and can be rewarded for their performance. The performance-incentive plan is the employee link to the end game, which is to improve and add real value to your company.

Carl Hughes is senior vice president of business development for Inergy LP. He can be reached at
Chughes@InergyServices.com
or 816-842-8181.

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