A SHIFT IN COMPENSATION

Steven Cesare, Ph.D.

A successful business owner from Florida called me the other day to talk about his increased anxiety regarding his field managers’ compensation. With annual revenue of $7,000,000 and 67 full-time employees, the owner has been a relentless champion for market share growth for many years, each time achieving desired company sales, gross margin, and job renewal metrics. Expectedly, the business owner has rewarded his Maintenance Manager and Construction Manager handsomely each passing year.

While generous to a fault, the business owner has relied more on his personal thoughts about managerial compensation, than precise departmental measurement when determining annual pay raises and bonus payouts. More often than not, the business owner has chosen to allocate pay and bonuses based extensively on double-digit annual company revenue increases.

Sustained year-over-year success has not only inflated key employees’ base salary it has also translated into the expectation that annual bonuses would be paid out in larger sums than the previous year. This seemingly unlimited spiral has manifested employee expectation, causing significant anxiety to the owner. Predictably, albeit unfortunately, his generosity has allowed entitlement to creep into the company culture.

Case in point, the Maintenance Manager now makes an annual salary of $145,000, and received a year-end Christmas bonus of $20,000 in 2024. Guess what? The Maintenance Manager began dropping hints about the size of his anticipated year-end bonus back in July. The original hint, caught the business owner off guard due to its presumptuous tone. To make the business owner even more uncomfortable, the hints have not stopped since then. Hence, the spiraling effect causing the owner’s increased anxiety level.

To be clear, the Landscape Maintenance Manager does a good job. His portfolio “does well,” but “it could do better.” Likewise, the Maintenance Manager is exceedingly strong in keeping his department fully staffed, all the while conveying a positive spirit indicative of a successful organizational culture.

Conversely, the Maintenance Manager has been slow to master the operational skills associated with his annual Development Plan that identified increased technical competency and functional supervision of the five Irrigators who were assigned to him in January of 2025. Similarly, he has consistently lagged in his ability to grasp basic Business Acumen concepts (e.g., gross margin calculation, drivers of gross margin, maximizing revenue per employee, controlling hourly average wages and overtime) that all Maintenance Managers in the Green Industry fluently understand and can apply on a daily basis.

He expects more than $145,000 in base pay, and more than $20,000 in his 2025 Christmas bonus stocking.

The owner sought my advice on how to handle that imminent, stressful conversation with his Maintenance Manager. As a capitalist, I suggested a dramatic shift in the managerial compensation plan, built around three key components. First, I would not give the Manager a merit-based pay increase to his 2025 salary. Second, based on a projected “slightly successful” 2025, due to customary expectation necessary to preserve the company culture, I suggested he give the Maintenance Manager a $25,000 bonus. Third, I told the owner to be more empirically explicit with the Maintenance Manager regarding his 2026 bonus plan.

Regarding 2026, In keeping with industry norms, I suggested the business owner establish a 20% of salary bonus (i.e., $29,000) potential to the Maintenance Manager for 2026, across two performance categories: operational and organizational. 75% of his bonus potential would be based on exceeding clearly-defined operational expectations (e.g., departmental gross margin, irrigation revenue and gross margin, staffing levels, job quality scores), pro-rated on a monthly basis. Given the Maintenance Manager’s role as a leader in the company, I then suggested the business owner offer the remaining 25% of the bonus payout if the company’s 2026 EBITDA metric exceeds expectations. In my mind, the Maintenance Manager must stop thinking like an operator by expecting an annual pay raise and a bonus, and start thinking like an executive-team member by focusing on contributing annual value to the company’s overall success.

Instead of solely trying to grow his base salary, this blended bonus plan will help the Maintenance Manager grow his Business Acumen skills, total compensation, and strategic alignment with long-term company success; which should increase his accountability, and decrease the business owner’s anxiety level.

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