4. Payroll Standardization
A while back, I sat down to interview for the first management position in a small family-owned HVAC company. When it came time to discuss the details of pay and benefits, I asked about potentially owning a stake in the company. Profit sharing. In the many years of conducting interviews since I’ve discovered that this is a very common question. You need to have an answer. Likewise, you should have an answer when asked about the different paths available to a prospective employee.
Create a Ladder to Climb
If you plan on scaling your business, you can’t afford to play that game. Standardize your payroll.
While it may be early to think about stock options for your company, the question will come up and you better have an honest and straightforward answer. What I want you to focus on is your payroll structure. Is there a place and a path for each position at each level in your organization? This can and should change over time as market conditions warrant. Start by looking at your current payroll. Do you offer spiffs, commissions, or bonuses? What do you pay someone with little to no experience in a role? What would pay an absolute rock star in that position? What are the steps in between? It may help to come up with different designations for each rung on the ladder. Apprentice, Journeyman, Master. Or white belt, green belt, red belt, black belt perhaps.
The days of employees being asked to not discuss payroll are long gone and transparency reigns supreme. Not only do employees know what each other makes, they know what the shop on the other side of town is paying for their exact position. Do yourself and your staff a favor by giving them a standard incentive plan and a way to progress through it. Stop giving out inflation-based raises, or worse yet, getting strong-armed into giving raises. This is a mistake I’ve seen a lot in the trades and one I’ve made. The issue is that there is such a shortage of candidates, owners are desperate to bring in more people and even more desperate to keep the people they have. If you plan on scaling your business, you can’t afford to play that game. Standardize your payroll.