As agency owners, we make a couple critical mistakes when it comes to giving bonuses.
The first one is that we just give out money in the fourth quarter because we have money left over. And so we “reward” people. But we haven’t done anything to change their behavior throughout the year, to get them to earn that money and to understand how they can help the agency have even more money at the end of the year.
And number two, we structure bonus programs based on longevity rather than tying it to KPIs that are something that everyone in your organization can achieve.
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Hey, everybody. Drew McLellan here from Agency Management Institute this week coming to you from Cabo San Lucas. Been having a lot of conversations following the Money Matters workshop. And it's just that time of year when people are thinking about changing or establishing a bonus program for the year. And I will tell you, one of the biggest mistakes we make, a couple of mistakes we make around bonus plans.
Number one, we just give out money in the fourth quarter because we have money left over. And so we “reward” people. But we haven't done anything to change their behavior throughout the year, to get them to earn that money and to understand how they can help the agency have even more money at the end of the year. And number two, we structure bonus programs based on longevity. Longevity – having a great employee who's been with you for a long time is a wonderful thing. Don't get me wrong. But people should not get paid more just for sticking around. It's all about adding value.
And so your bonus program should be tied to KPIs that are something that anyone in your organization can achieve. So number one, one of your bonus goal criteria should be did they complete their quarterly growth goals? If you don't know what those are, go back and listen to my solocast where I talk about the one-on-one meetings and the importance of those and the importance of your employees having one-on — or quarterly growth goals. Number two, are they living the core values of your agency? And number three, are they hitting the KPIs inside their job description? If you don't have KPIs inside your job description, go back a couple videos where I talk about adding those into your current job description. So are they hitting their quarterly growth goals? In other words, are they getting better? Are they adding more value? Number two are they showing up the way you want them to show up? Core values are vital to how the agency exists, how we work together, how we appear to our coworkers and our clients. And number three, are they hitting the KPIs that are that they are responsible for in their job? Somebody who does those things is an employee who deserves a bonus, and having a program that rewards that will make you very happy and keep your top performers feeling really appreciated and valued.
Okay? Talk to you soon.
