In the seven years they have been in business, the owners of Crimson Design & Construction, in Naperville, Ill., had been distributing discretionary bonuses, but Neil Kristianson and his brother Joel wanted to offer a more formal bonus program to the company's employees. “We wanted something more quantifiable,” Neil says, “but did not want to institute it until we knew we could hit the numbers.”
Neil gathered ideas from Jack Stack, author of The Great Game of Business and other management books. “I used the basic bones of his concept,” he says, “and tweaked it to fit our company.” He focused on using gross profit dollars to create companywide participation. “I wanted everyone to be on the same team,” he says
Before instituting the program in January of this year, Neil created a PowerPoint presentation to explain to employees how it would work. He also showed how much an employee with a $20,000 yearly salary would receive in bonuses if the company made its numbers for each quarter. “It can be confusing for someone who is not financially savvy; this was a good way for me to communicate the idea.”
In the plan, if the company meets its gross profit goals for each quarter, each employee receives a certain percentage of their salary as a bonus:
1st quarter = 0.5%
2nd quarter = 2.0%
3rd quarter = 3.8%
4th quarter = 7.0%
If the company exceeds its goals, the percentages increase based on the amount of additional profit to maximum percentages shown below:
1st quarter = 2.5%
2nd quarter = 5.0%
3rd quarter = 7.5%
4th quarter = 10.0%
Neil and Joel are included in the bonus plan. “That has been the biggest benefit — it helps with the trust factor. It shows we are not taking money out of the company unless the employees are taking money out of the company.”
This year, Crimson Design & Construction has not met its goals for the first two quarters, but business has picked up and Neil expects to meet the profit goals for the last two quarters. One change he plans to make next year is to set quarterly goals to mirror the company's pattern of sales. “I should have weighted it heavier for the 3rd and 4th quarters.”
