8 Creative Employee Compensation Strategies

How ironic that it took the liquidators of Tweeter — Hudson Capital Partners — to fully motivate the bankrupt company's sales staff.

In the middle of the liquidation, Hudson Capital implemented a new commission policy: Tweeter salespeople were paid 5 percent of the sale as opposed to 5 percent of the profit. One Tweeter store manager said he had never made so much money, up to $300 more per week.

Liquidation, of course, is a totally different situation compared to running a business profitably. But, as sales get tougher, integrators must become creative in how they compensate their staffs. Not only are compensation programs important for existing employees, they also need to attract new workers.

A good compensation program not only offers commissions, but it also includes:

• Recognition
• Training
• Bonuses
• Job security
• A quality work environment

"Many employees get no recognition. It is a big morale killer," says Steve Firszt of Fast-Forward Business Coaching in St. Louis. "It costs you nothing to give out recognition."

Here are eight valuable compensation suggestions.

Determine Your Local Cost of Living

Firszt recommends dealers start by determining the cost of living in their local market. The U.S. Department of Labor (DOL) has an occupational relative pay index based on where your business is located. Integrators can use the scale, as opposed to a national average, in determining a proper pay scale.

CE Pro's "2008 Electronic Installation Business Study" shows that the average entry-level technician earns $14.46 per hour. The DOL reports the highest cost of living in the San Francisco Bay Area is 19 percent higher than the national average, meaning the average technician there should earn $16.83.

Employees in Brownsville/Harlingen, Texas are on the other end of the scale, earning 24 percent below the national average, which would equate to about $10.98.

Offer Flex Time

Lynda Polk of Audio Video Guys in Houston has instituted several employee-friendly policies, including allowing technicians to drive directly to the job site rather than first coming into the office.

She has also permitted 10-hour/four-day work weeks that give technicians Fridays off (or Friday as overtime). "They really like it," she adds. "Flex time is very important for many employees."

Give Recognition

Employee recognition is certainly a key part of any compensation plan. Mikki Lantz of Mesa, Ariz.-based Automated Environments passes on all calls or letters to employees from clients complimenting a job well done.

Michael Pope of Audio Video Interiors in Medina, Ohio has two creative recognition programs:

• Monthly Awards — The company recognizes Technician of the Month, Salesman of the Month and Employee of the Month
• Annual Awards — Each year the company's management team also selects the Technician of the Year, Salesman of the Year and Employee of the Year

Each winner receives "AVI Money" that can be redeemed for 50 percent cash value or 100 percent in products and educational expenses.

Winners are acknowledged at quarterly meetings, and their names are also posted on plaques that are kept on a "Wall of Fame" in the company's lobby.