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Incentive Plans That Drive Accountability


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Presentation given by Warren Dietel, President/Owner of Puff 'n Stuff Catering & Events, at The Special Event conference on January 25, 2011.

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Incentive Plans That Drive Accountability

  1. 1. Incentive Plans That Drive AccountabilityPresented by: Warren Dietel <br />
  2. 2. About the Speaker<br />Family business began in Trinidad as pastry shop<br />Entrepreneurial from the start <br />Professional Experience<br />Car Detailing, Puff ‘n Stuff Catering, Disney Weddings, Disney Institute, Scott Kay, back Home!<br />Industry Involvement <br />ICA Board Member, Regular Speaker for Catersource, The Special Event, and NACE<br />What drives me<br />
  3. 3. The Puff Story<br />Opened in Central Florida in 1980 as a family-owned business<br />Purchased in 2003, annual sales of $1.8 million, at operational limit<br />Antiquated infrastructure with inefficient space & poor equipment <br />Tremendous potential + aggressive growth plan = 267% growth in 3 years<br />
  4. 4. It’s all about People & Culture<br />40+ Full-Time Team Members and 200+ On-Call <br />Diversified business segments and multiple markets<br />“When employees think, act and feel like owners… everybody wins.” - Jack Stack<br />
  5. 5. Build a culture of employee engagement<br />Acknowledgment of individual contributions<br />Trained leadership delivers supportive feedback<br />Collaborative working relationships<br />Empowerment that promotes success<br />Expectations that set clear challenging and attainable performance goals<br />Show you/the company cares<br />Trust and get out of the way <br />Before We Get to Carrots and Sticks<br />
  6. 6. Inspiration<br /><br />
  7. 7. The Principles of The Great Game of Business<br />Every Employee…<br />Should be given the measures of business success and taught to understand them.<br />Know and Teach the Rules<br />Should be expected and enabled to act on their knowledge to improve performance.<br />Follow the Action & Keep Score<br />Should have a direct stake in the company’s success, risk or failure.<br />Provide a Stake in the Outcome<br />
  8. 8. Open Book Management<br />Running a company in a way that focuses everyone on helping the business be successful.  <br />Employee goals and accountabilities are tied directly to the success of the company.  <br />All employees are taught the Critical Numbers and how THEY can make a difference – both individually and as part of a team.<br />
  9. 9. Additional Inspiration<br />
  10. 10. Building a Case for Incentive Plans<br /><ul><li>Why do them?
  11. 11. What motivates employees?
  12. 12. Money
  13. 13. Performance pay
  14. 14. Recognition/Appreciation
  15. 15. Placing value on the behaviors driving company objectives
  16. 16. Incentive programs are usually viewed as positive
  17. 17. Accountability can be a negative
  18. 18. Balance of both is critical</li></ul>The role of a good manager/leader is to guide employees to work on what is most important in the most efficient manner. <br />
  19. 19. How to do it ... EFFECTIVELY?<br /><ul><li>Clear expectations – upfront
  20. 20. Make it measurable
  21. 21. Make sure it is right the first time – difficult to change
  22. 22. Review by labor consultant/attorney
  23. 23. Easy to calculate
  24. 24. Campion to manage the process
  25. 25. Begin with the end in mind – what is your desired result? </li></ul>Wouldn’t it be great if everyone in your organization had a real stake in the outcome and understood how they were individually impacted by company success?<br />
  26. 26. KISS<br />Keep it simple and special (KISS)<br />Good plans = easy to implement and follow <br />Be clear about what incentives are and how employees can earn them<br />Plans that require tracking performance indicators that are too detailed waste management's time and confuse employees<br />
  27. 27. What Not to Do!<br /><ul><li>Programs structure is targeted too broadly/ not focused on individual people or teams
  28. 28. “All for one” style programs
  29. 29. Unmotivating
  30. 30. Enttitlements
  31. 31. Causes productive employees to resent poor performers</li></ul>DO: <br /><ul><li>Provide clear understanding of links between effort and incentive compensation
  32. 32. Motivate each department or individual to focus on things they can control
  33. 33. Encourage behaviors that create successful results</li></li></ul><li>Incentive Plans Discussed Today:<br /><ul><li>Sales Incentive Plan
  34. 34. Event Supervisor Incentive Plan
  35. 35. Department Manager Incentive Plan
  36. 36. Employee of the Month</li></ul>Catch employees doing something right and make sure <br />everyone in the company sees that management recognizes it. <br />
  37. 37. Sales Commission Plan<br />Special Event Planners will be assigned annual goals based on market, prior experience, and company needs<br />SEPs are assigned to specific vertical markets and venues<br />Opportunity to sell outside a defined market is available through relationships<br />Commission paid at 8.5% of gross monthly sales<br />Non-profitable sales will not be eligible for commission (30% margin required)<br />Plan accommodates 2 to 1 administrative support ratio at current sales goals<br />Poor performance is addressed from a disciplinary point of view<br />Lead rotation/generation will have set parameters<br />Vacation and Leave of Absence guidelines<br />
  38. 38. Annual Bonus Opportunities<br />Additional 5% over annual individual goal bonus paid on excess <br />Additional 5% over annual team goal bonus paid pro rata on excess<br />
  39. 39. Lead Generation<br />Define where individuals can be successful <br />Creates protection for existing SEPS <br />Creates opportunity for newcomers<br />Inbound calls, leads and inquiries “filtered” <br />Filtered by market and routed to sales person/event planner<br /> <br />Relationship is EVERYTHING!<br />Outbound marketing encouraged <br />Within 24 hours, next SEP in rotation responsible for acknowledging/ accepting the lead, no matter how large or small the scope of work associated with the event<br />Dispute resolution <br />
  40. 40. Commission Reports<br />
  41. 41. Event Supervisor Plan<br />Drive behavior through opportunity to earn beyond hourly wage<br />Event labor charges must be profitable for opportunity <br />Earning opportunity based on desired behavior: <br />Staff Profitability<br />Customer feedback – survey <br />Leadership <br />Condition of returned equipment <br />Condition of vehicle <br />Creativity & execution <br />Mystery shopping <br />Balanced scorecards are reviewed by direct manager and behavior is graded <br />
  42. 42. Calculating the Incentive<br />Reviewed weekly by Director of Catering Operations <br />Events scheduled to 45% budget<br />Labor variance report generated by manager <br />30% of positive variance becomes eligible for SIP <br />An Example:<br /> Staffing sold at $1,000<br /> Budget at 45% or $450<br /> Actual labor cost of $400 or 40%<br /> Budget $450 – savings of $50 multiplied by 30% = <br /> $15 into Supervisor opportunity.<br />
  43. 43. Earning the Incentive – Driving Behavior<br />
  44. 44. Management Incentive Plan - MIP<br />The MIP incentive target is determined as a percentage of base salary <br />Management participation in the plan will be at one of three levels:<br />25% - Senior Department Leaders & Managers<br /> 20% - Mid-Level Department Managers <br />15% - Area Supervisors and Key Leads <br />MIP is based upon company annual/monthly revenue targets <br />
  45. 45. Management Incentive Plan - MIP<br />MIP revenue targets will be calculated based on the following schedule:<br />Level 1 = Flat/below 2010 revenue = 25% payout opportunity <br />Level 2 = 60% of 2011’s revenue objectives to goal = 50% payout opportunity<br />Level 3 = 90% of 2011’s revenue objectives to goal = 75% payout opportunity<br />Level 4 = 100%+ of 2011’s revenue objective =100% payout opportunity<br />For example: <br />Manager salary $50,000<br />Mid-level Manager at the 20% salary incentive opportunity or $10,000 maximum incentive <br />Company achieves 100% revenue goal - 20% of salary – eligible for $10,000 incentive <br /> - OR - <br />Company achieves 90% revenue goal – 75% of $10,000 opportunity – eligible for $7,500 incentive <br />
  46. 46. Earning the Incentive – Driving Behavior<br />Individual performance is measured monthly<br />Incentive will be paid annually using the goal classification and percentage payout outlined below<br />
  47. 47. Employee of the Month<br />Peer driven and controlled <br />Added to website<br />Announced monthly in front of peers<br />Dedicated parking space with name<br />$100 gift certificate to local restaurant group<br />
  48. 48. Final Thoughts<br />Employee incentive programs are a very powerful concept when employees can understand and see the connection between their performance and their rewards.<br />
  49. 49. “When you give a little respect you get a more effective organization, with reduced turnover and absenteeism and employees at all levels who are engaged, focused, and committed to succeed as a team. In short, you get maximum ROI from your organization’s most powerful resource: its people!” <br />Paul Marciano, Ph.D.<br />
  50. 50. Thank You!<br />Warren G. Dietel | | 407.398.6306<br />