Isn't it nice to review all of your profits as you prepare for your year-end income tax reports? Unfortunately, you must also manipulate all of your costs, overhead, expenses, deductibles and depreciation to determine how much of that profit you can keep. Fortunately, Uncle Sam requires keeping all of those records to justify what you made or lost, as well as where and how it happened. It's too bad no one ever made us keep track of why!
Everything you made or lost in 2004 happened because of what you or someone on your payroll did or did not do:
- How many of you diligently “kept score in '04”?
- How many of you are now wishing you did?
Surely you are aware that each of your employees kept his or her own score. But employees usually remember only their positive “scores” and simply overlook or conveniently forget any negatives. As you already know, this complicates your wage, salary and benefits negotiations:
- 1. You feel they are overpaid and should be doing better for what they already are receiving.
2. They are unhappy and complaining to their peers, friends and relatives (your potential recruits).
Of course, your memories are just the opposite of theirs. You can clearly recall every incident that cost your company money, time, employee turnover or a dissatisfied customer. You may or may not remember any extra effort on their part.
You can easily relate this scorekeeping with your employees to your other business relationships with clients, architects and engineers, suppliers, etc. What they remember vs. what you remember results in arbitration, litigation and severed relationships.
You definitely cannot afford to have disgruntled employees who are unhappy with their wage and benefit packages. You also cannot afford to overpay your employees and stay competitive in your market area. The basic difference between these two extremes is simply establishing written guidelines, monitoring performance, and keeping a written scorecard. Don't depend on memories!
Making The GradeThis wage administration can easily be related to professional sports, where every player fully realizes that his or her performance is monitored and recorded to establish future retention as well as wage or salary. You cannot disagree or argue with the facts. Another way is to relate construction wages to grades earned in school. Students know that their God-given ability is useless without the necessary time, attention and effort their teachers demand before issuing grades and promotions.
Those teachers do not wait until the end of the quarter or semester and then try to remember how individual students performed. They monitor classroom participation, homework assignments and test results, which are recorded daily during each semester or grading period.
If a student is unsatisfied or unhappy with his or her grade, the teacher simply reviews those records as a reminder of how his or her effort controlled those grades. Just imagine a teacher trying to justify that student's grades to his or her parents without having the daily written scorecards. You should be able to relate that to satisfying your employees since their grades are reflected in dollars and benefits. Aren't you glad that your competitors are not keeping score?
These guidelines are for your foremen, superintendents, project managers, expeditors, estimators, purchasing agents, etc., and your entire office staff.
Naturally, you must begin with the basic fact that every employee in a profit-oriented business is worth and should be paid whatever it would cost to replace him or her in your market area. If an employee leaves your company, you will soon find out what it costs to replace him or her. You can also find out by shopping around and asking applicants how much your competitors are paying.
Your next step is to negotiate a written “scope of work” or job description with each employee to clearly establish all of his or her duties and responsibilities. This lets employees know exactly what you are buying from them and gives you a measuring device to monitor their performance.
If they do everything that they agreed to do, then you must pay what you committed to:
- 1. If they do more, you should commend them and document that effort or action in their performance file.
2. If they do less, you need to discuss, remedy, or discipline and document that in their file.
Above all else, this eliminates having unhappy employees complaining to their peers, your other employees, their friends or your customers.
If you ever hear about one of your managers or office staff being dissatisfied, you need to confront that person immediately. Your first question should always be, “Why did you not come directly to me?” Typically, employees deny that they said anything and you do not want to involve whomever told you about their comments. If they want to know where you heard the comment, you simply tell them that it's not important and you believe that individual probably misunderstood or misinterpreted whatever was said.
Pull up that worker's job description and performance file and emphasize that this is what is important. Explain that you made a business deal which you intend to honor fairly and adjust or change as needed. Ask him or her if that is fair and if something needs to be altered.
In addition to comparing your wage and salary administration to a teacher's report card, you can easily see this is identical to every business deal you make with your customers and also with your supply houses.
Everything is negotiated and written to clearly establish a scope of work and a fair price. When a question or misunderstanding occurs, you simply pull out the written contract or purchase order and change or adjust to be fair.
You want to be fair, and definitely cannot afford dissatisfied employees - especially relatives. Establishing basic job descriptions and keeping score requires very little of your time, compared with resolving the problems of one-sided, convenient memories.
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