Bonus Programs

I was recently involved in a discussion about changing a manager/maintenance supervisor monthly bonus to a quarterly or annual pay out. The discussion also included changing the metrics for which the bonus would be paid against.

The discussion generated a number of thoughts that I am reserving for a blog post. The question I have for this discussion is; do you think changing it from monthly to quarterly or annual will give cause for employee backlash in the form of poor morale?

That may be an element if it is effectively part of their short term cash flows.

Also, it makes your metrics even more important. I've been in a situation where the bonuses were much too subjective and on a yearly basis, so we had people who normally were average workers suddenly become extraordinary a month before bonuses come out. And since the bonuses were so subjective, there was a real fear from the other workers that management wouldn't realize how fake the extra work ethic really was.

Before I can answer I'd have to know what the purpose or objective of the change is? When messing with anyone's compensation it can be a touchy subject.

To provide a real life example as one perspective to consider: I worked with an organization who tried to make this change. The result I heard from the employee pool (more than a year after the change had been made and despite the cumulative bonus actually increasing) was that it was a bummer to the employees. They really saw the immediate gratification of a monthly bonus as a perk of their job, and when it changed it felt as though a perk had been taken away.

Another example of how perceived value always trumps actual value!

At the seminar I attended today the speaker shared a story in which a company increased their sales commissions from 10% to 11%. They made the announcement at a conference, and for the rest of the conference all the sales people talked about was how they were going to get screwed by the change.

When you mess with people's pay be prepared for the backlash. Any change will be perceived as a negative.

Maybe the feeling held by leasing professionals that they're going to "get screwed" by compensation changes comes from experience instead of bad math skills or some kind of need for instant gratification? In my experience, many apartment communities treat their leasing staff as fairly expendable and unimportant.

...which raises another issue. Why are so many leasing professionals treated as expendable? The high turnover rate in the industry suggests that the skill set required to lease an apartment is fairly low, meaning almost anyone can do it. If almost anyone can do it, maybe that means even the customer can do it? With today's internet, I bet people could lease their own apartments; fill out the online credit check form, click a virtual tour to select their apartment, read about the amenities, etc. I bet one "advanced" leasing professional (who does much more than just leasing) could do the work of 3-4 "normal" leasing professionals if customers did the bulk of their own leasing online. For those customers with no internet access, just provide a computer with instructions in the leasing office. (maybe you don't even need a leasing office if enough people go online, just have the leasing agent work from home in an apartment)

scott

I think you're right that an employee's reluctance to be happy about a changing compensation strategy comes from that past experience. If an employee feels expendable, every company action feels suspect.

We currently have a bonus program for our Community Managers and Assistant Managers and it doesn't appear to be motivating them. Curious to hear from others how they have their bonus program structured....(% of NOI, occupancy, delinquency, etc.)???

our company does a few mgr. bonus programs
-delinquency reduction
-occupancy improvement - these are paid out monthly on the month that the lease starts - they still get their regular monthly bonus but there is a built-in lag time.
season competitions (usually in spring for lease-up and fall for retention)