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 moreāincluding McHaleās 50 foremen. But Kevin McHale, president, says he was getting concerned when he realized employees were āmaxing outā their hourly wages. After all, there are only so many trees to be cut in a day or sidewalks to be shoveled. Thatās why McHale says that they needed to reincentivize employees, particularly long-term employees, with something new.
The solution came with implementing a gross margin bonusāsomething 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.
āThe last two years we increased our gross margin by a half a percent, which is $100,000,ā McHale says. āWe split the $50,000 among our 50 foremen, giving them each a $1,000 bonus at the end of the year.ā
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.
āWhat this bonus did was create a sense of teamwork where everyone wants to help everyone elseāregardless of their divisionāso they all succeed,ā McHale says. āBecause in the end, either they all get the bonus or none of them do.ā
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.
āThe idea behind this incentive model is shifting the employee mindset toward the idea that if the company makes money, we make money,ā McHale says. āBut 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.ā
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.
āAsset generates reports quickly and easily every quarter for us,ā McHale says. āI would definitely advise you have a good system in place if youāre going to do this kind of program. You have to be able to show your employees the companyās profitability in real time, or else it might be suspicious to the crews. You just donāt want them to think youāre making up your numbers. Transparency is key with this.ā
Reincentivize Employees Tip #3: Keep Employees Engaged
Whether itās a gross margin program or something else, McHale says he believes a key to employee retention is keeping employees engaged.
āWhen youāve had long-time employees, youāre going to reach that level where you canāt keep raising their hourly wageāand you must find new ways to reincentivize employees to continue working hard,ā McHale says. āI think incentives are always an important part of any business.ā
McHale says the company has a long-held motto, āIf you do more, you get more,ā and this gross margin bonus really reinforces that concept.
āIf you do more and make more profit for the company, youāll get more, too,ā McHale says. āItās a pretty simple ideaāand one that everyone seems to understand. Since itās worked well for us, weāll continue to do it going forward.ā