Employee retention has never been much of an issue at McHale Landscape Design, a $20-million full-service landscape and maintenance company based in Upper Marlboro, Maryland. In fact, the company has many long-term employees who have been with the business for two decades or more—including McHale’s 50 foremen. But Kevin McHale, president, says he was getting concerned when he realized employees were “maxing out” their hourly wages. After all, there are only so many trees to be cut in a day or sidewalks to be shoveled. That’s why McHale says that they needed to reincentivize employees, particularly long-term employees, with something new.
The solution came with implementing a gross margin bonus—something McHale tried for the first time two years ago. As part of the bonus incentive, McHale shares half of its gross margin profits with the foremen. The program has proven successful so far.
“The last two years we increased our gross margin by a half a percent, which is $100,000,” McHale says. “We split the $50,000 among our 50 foremen, giving them each a $1,000 bonus at the end of the year.”
Besides reincentivizing employees, which was the primary goal, this program is also fostering a culture of teamwork. The company has four main divisions: landscape, masonry, carpentry and maintenance. More often than not, all four departments are working on a job at the same time.
“What this bonus did was create a sense of teamwork where everyone wants to help everyone else—regardless of their division—so they all succeed,” McHale says. “Because in the end, either they all get the bonus or none of them do.”
Building a successul program involves focusing on the following key components.
Reincentivize Employees Tip #1: Keep Employees in the Loop
This program would not be as successful motivating employees if McHale didn’t update them with real-time information on the gross margin. Every quarter, McHale gives employees a report that shows exactly where things stand.
“The idea behind this incentive model is shifting the employee mindset toward the idea that if the company makes money, we make money,” McHale says. “But the employees have to know if the company is making money or not. Keeping them updated is key, otherwise they might lose the momentum and motivation the bonus creates.”
Reincentivize Employees Tip #2: Have a Good Reporting System
Of course, in order to be able to provide real-time data with employees and keep them in the loop of where the gross margin stands, McHale says having strong reporting capabilities is vital. McHale utilizes Asset from Include Software and says the program has been instrumental in supporting this gross margin bonus plan.
“Asset generates reports quickly and easily every quarter for us,” McHale says. “I would definitely advise you have a good system in place if you’re going to do this kind of program. You have to be able to show your employees the company’s profitability in real time, or else it might be suspicious to the crews. You just don’t want them to think you’re making up your numbers. Transparency is key with this.”
Reincentivize Employees Tip #3: Keep Employees Engaged
Whether it’s a gross margin program or something else, McHale says he believes a key to employee retention is keeping employees engaged.
“When you’ve had long-time employees, you’re going to reach that level where you can’t keep raising their hourly wage—and you must find new ways to reincentivize employees to continue working hard,” McHale says. “I think incentives are always an important part of any business.”
McHale says the company has a long-held motto, “If you do more, you get more,” and this gross margin bonus really reinforces that concept.
“If you do more and make more profit for the company, you’ll get more, too,” McHale says. “It’s a pretty simple idea—and one that everyone seems to understand. Since it’s worked well for us, we’ll continue to do it going forward.”