Steven Cesare, Ph.D.


An impressive business owner from Oregon called me the other day to talk about moving his company, his culture, and his executive team toward a more merit-based, capitalistic approach, leaving behind the path that got them where they are, instead, looking forward to where they should be.

This is where we stand up and applaud!

As part of that ambitious plan, we discussed multiple factors including organizational rebranding, IT infrastructure, internal systems alignment, and results-based accountability. Fundamental to any serious business plan are the detailed roles that goals, valence, and incentives play in defining, motivating, and sustaining empirical success. The traditional tactic of dangling an annual five percent pay raise in front of a Department Manager is insufficient, insincere, and insulting. By way of contrasted necessity, a more strategic, systematic, and seismic plan is warranted.

Here is the basic Landscape Maintenance Manager Bonus Plan I recommended to the business owner.

First, in accordance with the Balanced Scorecard, the business owner defined four goals:

1) Financial: New Maintenance Contract Revenue.
2) Employee: Crew Leader Retention levels.
3) Process: Gross Margin Percentage of all Maintenance Department jobs.
4) Customer: Job Quality Ratings of all Maintenance jobs.

New Maintenance Contract Revenue, Crew Leader Retention, Gross Margin Percentage, and Job Quality Ratings will be assessed on a monthly basis. All metrics will be reset on the first day of each successive month; no carryover from one month to the next month will occur. For example, the monthly Crew Leader Retention metric for March will be reset for April on April 1st, and so on thereafter.

Second, the metrics for each goal were determined by reviewing the monthly data from the previous three-years to secure accuracy, legitimacy, and buy-in. Thus, each goal, had a different monthly standard that must be attained to receive a bonus. For example, hypothetically, the New Maintenance Contract Revenue goal could be $40,000 for February and be $62,000 for August. For the sake of completeness, the Crew Leader Retention goals hovered around 75% each month; the Gross Margin Percentage goal was approximately 50%; and Job Quality Ratings had to attain an absolute monthly goal of 85%.

Third, Bonus Potential was premised on each payout being “self-funding” underscored by new gross margin dollars (e.g., sales, production rates, cost containment). Within the context of the company’s annual business plan, it was decided that a $300 monthly bonus would be paid out for each goal being achieved. In other words, if the Landscape Maintenance Manager achieved his New Maintenance Contract Revenue goal every month during the fiscal year, he would receive $3,600. Likewise, if he only met his monthly Job Quality Rating goal for seven of the 12 months, he would receive $2,100. Thus, each goal had a maximum annual payout of $3,600; $14,400 in total, across all four goals annually.

Given that it’s the “Balanced” Scorecard, a $500 monthly “kicker” was included into the bonus plan for each month that all four goals were met simultaneously. The “kicker” added $6,000 to the total possible bonus payout, now equaling $20,400. Given that Departmental Managers should be eligible to receive at least 20% of their annual salary in bonus compensation, that $20,400 potential bonus payout tracks well, given the Landscape Maintenance Manager’s annual salary of $90,000. Funny, how planning works out.

Finally, to keep the Department Manager’s constant focus on point each month, the bonus payouts are scheduled to be paid by the last payroll run of each successive month. Rhetorically: Do Managers really think about their Christmas Bonus in March, when they have bills to pay in April? Think about it.

Would this Bonus Program motivate you?

You won’t be able to stand up and applaud for yourself, until you first, step up, yourself.

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Steve Cesare Ph.D.

has more than 25 years of Human Resources experience. Prior to joining The Harvest Group, Steve worked with Bemus Landscape, Jack in the Box, the County of San Diego, Citicorp, and NASA. Steve earned his Ph.D. in Industrial/Organizational Psychology from Old Dominion University, and has authored 68 human resources journal articles. As a member of The Harvest Group, Steve’s areas of expertise include: staffing, legal compliance, wage and hour issues, training, and employee safety.  Read Steve's full bio.