8 Creative Employee Compensation Strategies

Offer Employees Free or Discounted Gear

One of the perks for working in the custom electronics field is cool electronics. Lantz gives his 20 employees the chance to experience some of that cool equipment. The company holds a free raffle for employees to win the various pieces of equipment taken out of homes.

Provide Educational Advancement

Audio Video Interiors established a $2,500 Educational Advancement Fund for every employee. The money can be used for college courses, certifications, trainings, books, seminars and industry conferences. The results have proven to be a huge differentiator in the business as well as to increased staff pride.

Get Creative with Bonus Programs

Chris Hatzis at Custom Home Sound in Charleston, S.C. bases half of a technician's compensation on performance and the other half on the company's overall performance. The individual performance criterion is primarily based on billing hours. A technician can also earn a commission on equipment if he upsells on the job.

Sales bonuses are totally different. Custom Home Sound pays sales staff a very small bonus (as little as 0.01 percent) if the company achieves its overall goals. However, individually, a salesperson can earn a $10,000 bonus if he doubles his quota.

Propose Phantom Stock Programs

One way to create longevity with employees is to give them equity in the company. Unfortunately, most integration companies are too small to start giving away ownership percentages. One solution is to issue phantom stock.

Randy Zahora of Enhanced Solutions Corp. in Oak Brook, Ill. offers specific key employees the opportunity for a no-cost buy-in. The phantom stock has a certain value placed upon it that is only redeemable when the company is sold. Hatzis of Custom Home Sound recommends offering programs like this only to key salespeople "vested" with the company.

Set Your Sales Compensation

Paying salespeople is tricky. You want to keep them motivated to keep pushing. So, the carrot has to be good, but you don't want them to get too comfortable.

Firszt says the two basic payment methods for a salesperson are:

1. 100 percent commission with a draw
2. Base salary + commission

He says the salesperson's quota should always be more than the amount of the draw. Let's say the company pays 7 percent commission on sales. If the company's goal is for an individual salesperson to sell $1 million, then that person should earn $70,000 if he hits the target. So, the company should pay him a $55,000 draw, for example, to entice him to reach the goal and earn regular commission checks.