Issue link: https://www.e-digitaleditions.com/i/571132
12 FEDA News & Views world, revenue matters," says Harper, "so we needed to increase our revenue and we knew that those increases need- ed to come from within our buying group. And we also had to have some gross profit to eat every week." Every department, project management, outside sales and inside sales, is incentivized based on those three com- ponents, with varying goals, of course. Initially, when we announced the change, it was like who moved my cheese, says Harper. "But as a company, we've always mea- sured performance. So take project managers, for exam- ple. We know how many projects they're awarded, the percentage of bids, etc. We went back two years, put all of that information on paper and handed it out, face down, at the company meeting. Then we said based on these goals and these incentives, here's what you would have made. Everyone was really excited because they understood that it was an opportunity for them to make a lot of money." The best part: change has evolved into noteworthy gains Changing the Way You Cook since 1990 800.988.8103 360.650.1111 woodstone-corp.com STONE HEARTH & SPECIALTY Commercial Cooking Equipment Discover why OVER 13,000 OVENS, rotisseries, charbroilers, tandoors, and planchas have been SOLD IN 75+ COUNTRIES worldwide. Made in the USA. Sales Compensation continued in customer service and overall productivity. Two of the most significant being the uptick in effort to increase gross profit dollars and to move "rebateables," the term Oswalt uses to clas- sify product that supports its buying group. "That's been huge for us," says Harper. "Prior to the change, our project managers would drag their feet when it came to smaller change orders. The customer would say, 'hey I need three more shelves (on this million dollar project),' and the project manager would just run out and get three more shelves and give it to them. Now, they're tak- ing the extra effort to do the paperwork and they're making a percentage of that profit. They were always good at doing the large ones but now, when every nick- el matters, they're taking the steps to do the smaller change orders, which is usually where they can increase their gross profit." There's also a greater sense of urgency to field calls and support inside sales. "In the past, our project managers would take the call," says Harper, "but they'd jot down the information and then pass it back to sales. They were sending the customer in a big circle. Now, they're actively pursuing that two- or three-thousand-dollar refrigerator sale and they're doing more onesie-twosie sales than ever before." Something to Think About What's some of the most creative ways Kahle has seen to encourage a certain outcome? Incent on the increase opposed to on every dollar. Meaning, you don't incent on sales one through 20. You incent on sale 21. "For a lot of people that's a radically different concept because they came out of a world where a salesperson is entitled to a dollar for every dollar that they bring in." says Kahle. "Let's pay them on the increase and not for every dollar. That may not be all that creative but it's radical for a lot of people." Nudged for another, Kahle obliges with an interesting option for distributors looking to venture outside of the box. After putting in a new information system and discovering that he could calculate the total amount of gross profit per line of bill- ing, one of his distributors implemented a compensation plan that incentivized his salespeople to increase the average gross profit per line of billing. "The starting point for each salesper- son was their own average gross profit per line," says Kahle. "So we started with where they were and then incentivized them to increase that number. From a pure P&L perspective, that's almost pure profit. And when you think about it, that impacts what sort of product they're showing and the custom- ers they're calling on. That one little measurement could totally transform the behavior of a salesperson." Oswalt's Huff Harper on Crafting a Plan We looked at five years of historical sales data and used that information to determine each person's goals. So if a project manager was making x, y, z dollars prior to the change, we started at that point and built in incentives to encourage growth.