How Construction Owners Should Handle A No Bonus Year

Q:

What should I do about year-end field employee bonuses this year? We actually lost money this year. For the last eight years, I have been able to give out year-end bonuses. Last year, I gave each of my foremen $2,500, superintendents $5,000 and project managers $10,000. I’m afraid if I don’t give them at least something, they will get upset and look for another job. What should I do?

Bill Williams, Owner

Williams Concrete Structures

A:

I would hold a company meeting to show them the numbers. Tell them your actual sales, overhead and profit for the year. Explain what it takes to make a profit and have enough remaining for bonuses. This will help them understand how hard it is to make money in construction, especially this year. Then ask them for ideas to improve field productivity, increase crew efficiency and improve job profits.

Offer to let them earn a percentage of any additional profits earned from their ideas or when they beat the estimated bid goal. For example, using the same bid rates you have used in the past, if they improve their field production over past performances, give them 30 to 40 percent of the savings. Split the savings evenly over the crew, foremen and superintendents so everyone will share in the success. To make this happen, you will have to give the crews a target to hit before each job. A job goal might be to form and pour 500 yards of footings with five men over ten days. If they do it in less days, they save money and share in the savings accordingly.

This plan will get them all involved in building teamwork and create a more efficient company. Plus, it will take away that burden of arbitrarily trying to decide how much money to give out at year-end. Your crew will know what’s expected and how they earn their bonuses in the future.

For this year, give them all something small and let them know it is a gift of appreciation for a job well done. It is not the amount that matters as much as how you present it. Personally give the gifts and thank each employee by telling them why you appreciate them.

Construction Business Owner, December 2009