This feature is part of an ongoing series of "Poker Play" articles on how owners and managers can improve their businesses.
Companies that under-perform with respect to sales or profitability have one thing in common: Employees are not focused on what it takes to succeed as a company, says Richard Voreis, CEO, Consulting Collaborative, Dallas.
Oftentimes, this is the result of poor communication between management and staff. "If you don't make your top priorities and [profit goals] known throughout your organization, employees are going to assume what they are," Voreis says.
To improve profitability, first conduct a self-assessment of your business. Identify your strengths and weaknesses, and establish top priorities for the year. Then, succinctly communicate them to your staff. "We have a one-page 'flash report' that shows sales, compared to last month, compared to last year," Voreis says. "Everything is on one piece of paper. Our priorities and action plans are on one sheet of paper as well."
Once you've established your profit goals, make your employees accountable for achieving them. "If you as the owner are the only one who's accountable for profit, that's not going to work," he says. Establish specific, measurable and time-framed objectives for all employees so they know what's expected of them.
Incentives can provide the additional motivation necessary for employees to achieve profit goals. At Glass Doctor of the Colorado Rockies, Tabernash, Colo., add-on sales affect technicians' base pay. "If they sell headlight polishing services, for example, part of [the proceeds] go to the technician," says Dan Osborne, CEO. "We give them the opportunity to see an hourly wage increase based on their sales efforts, and this motivates them."
Salary increases based on company performance can also motivate employees and increase sales. "One way to really maximize profits is to make employees know that their salary increases are based on the company's performance. All of a sudden, your employees are keenly interested in making you money," Voreis says.
Go-Glass Corp., Salisbury, Md., has a profit-sharing plan to encourage employee sales. "We distribute a percentage of pre-tax net to all of our employees based on their salary for the year," says Doug Linderer, president.
Profit-sharing plans can be tricky, Linderer warns. "Any time you tinker with salary structure, you have to be very careful. [In regards to] how you pay your people, what you pay your people, etc., change is looked upon very dimly."
Incentives do not have to be financially based, either. At Go-Glass, different locations compete for the honor of top performer. "We have five metrics that each location is rated on throughout the year," Linderer says. "[The ratings] are published on a monthly basis, so everyone gets to see where their location is ranked. I've heard comments like: 'We've got to win this thing this year.' It is a noneconomic motivator that has really worked well for our company."