As we put the restaurant crisis portion of the pandemic behind us, many operators are resuming bonus plans that lay dormant last year – when there was painfully little (or no) profit to share.
But I see too many bonus plans out there that look like manuals for a product that doesn’t work. They’re convoluted, they direct the wrong behavior, or they don’t do enough to warrant attention.
If your bonus plan falls into any of those tragic categories, correct that now.
10 Rules to Follow
- Only bonus people on what they influence.
- Use four or five categories – keeping it simple, but not too simple. See if people can clearly explain it back to you.
- In your high-volume stores, give managers the potential to earn 25% of their base salary. In your mid-tier stores, make that 12.5%.
- Pay out quarterly. Measure performance over a period of time that gives people who don’t experience a great start time to catch up instead of give up.
- Bonus on a separate check, taxed accordingly, and make a ceremonial big deal out of it – rather than just adding it onto a paycheck.
- Make it modular. Focus your plan with on factors critical to immediate success.
- Confidently make changes from one quarter to the next – because restaurant life can be very different from brand to brand, from quarter to quarter, from year to year.
- Give people more tools and knowledge to earn more bonus dollars. If your weekly food cost by category cannot be timely or relied on, there’s no chance your management will bring food cost down by a half point or full point.
- Always include at least one subjective category – like service, employee morale, or culture. Critical aspects of our industry don’t always translate to a formula on a spreadsheet. If they did, no one would ever fail.
- Ensure the plan pays out – a lot. Nothing undermines efforts more than a bonus plan that looks good on paper but does not translate into money.
Remember: Bonus plans are where education, the activities of on-target multi-unit supervision and management action come together.
In a market where managers increasingly leave for what appears (to us) to be a small amount of money or benefits, the successful multi-unit independent operators I work with focus on boosting management loyalty.
Reinvent your bonus plan to direct behavior, reward people who deserve it, and increase retention, profits and net worth.
Over to you: How will you bring your bonus plan back in a new way that builds ultimate value at your restaurants?