Staff incentives

Business
1

I currently work for a web design company. We do lots of low-end web design and some development work. The problem is, there are lots of projects and the customer service and tech staff seem to be dragging their feet in finishing them up. It’s not that they do it maliciously, but often times clients would have scope changes and they just accommodate. Another big reason is sales not communicating everything very clearly upfront. This causes the customer to demand lots of different things after the work starts.

Sales is very accommodating to the client’s requests also because they have no sense of overhead. It’s really not of their concern, as long as they get their cut after the project finishes.

With customer service and techs, they seem to not have incentives on finishing up, because they’re just earning monthly salaries.

I’m thinking, another way of doing this is to incentivize the techs and customer service by decreasing their base pay, and giving them a set fee for each project (depending on amount of work). They will then be in the same boat as sales, who only get paid after customer pays.

Any thoughts on this?

2

You’re talking about putting everyone on at least a partial commission salary. Commission does work great for motivation but only if the employee can do anything about it. What would happen if the sales person underbid a project and then your developer has no motivation to finish the project because the commission is too low? You’ve already said that the sales people don’t completely understand the overhead that goes into the projects.

3

I’ve been all those positions in the past and I would say that putting non-sales people on commission is probably not a great idea. The point of having commission is to profit by getting more revenue, not finishing something. The sales person’s incentive is to get more revenue. The support and tech people just want a steady paycheck and preferrably some stock in the success of the company meeting it’s targets. Getting them to finish should be relied on having dates of completion and letting them know that missing those dates will reflect badly come review time which could mean a smaller or non-existent raise. Hope that helps. GL

4

It sounds to me like your problem is the sales people entirely, not the work of the designers and developers. Sorry to say it but I would get rid of the sales people (or perhaps keep one or two for promotion but not actively taking on clients) and have the designers trained to handle the scope of the project and the needs of such a contract (just having those few sales people to deal with the payment). Communication is the most vital part of any business and as your sales team seem to be making more work for your designers and developers the obvious thing to do would be to eliminate the component which is increasing the workload un-necessarily and have the staff deal directly with the clients rather than some sales agent with no clue about the ongoing development process. It’s pretty harsh but you do have a major problem which could escalate into disgruntled employees and the last thing you want is to loose your skilled workers because they tire of having to enter a post-completion dance to consistently fix the mistakes the sales team make. If you had fewer sales agents you could increase the base pay for your developers and designers, solve the communication redundancy and have a much happier team. Altering their pay won’t make them more productive if it’s other staff members causing the issues, you want to fix the reason why this is occurring, not patch it up with payment shifts. :slight_smile:

5

Well, I think the sales problem is partial, as part of it is also due to customer service staff not getting the customer requirements down often times, and also techs not doing their work satisfactorily. But I would say the majority of the problem lies in customer expectations and pricing.

The way things work is like this:

Sales go out and try to get the sale. If there’s customization, we have a specs person who goes over the scope of the work request and gives an estimate. Then, we hand it off to customer service who then communicates with the client after that. The customer service staff have no commissions, hence some of the communication errors. They aren’t incentivized.

One other alternative is to have customer service and sales on commission, and techs on salary + performance rewards. It appears you guys are mostly against putting the techs on mostly commission.

Do any of you have experience working for this an outsource company? Perhaps there’s a some optimized method to get it working.

6

You mean you’ve worked in a company that implemented such a policy? How did it end up?

7

Now, our projects involve lots of design and also coding work. Are you saying we should let the programmers and designers interface clients and quote the work?

The problem here is, often times the clients want us to go out to them, and projects often take weeks or months to close. Plus, tech staff salary is too high for them to go outside of the company.

My proposed method of working is to minimize management overhead, which leads to lower prices and a more competitive service. However I’ve not tried it and I don’t know how they will react. From the feedback given, it appears you’re all against it. :frowning:

8

What is your role in the company? It takes huge amounts of time and effort to manage this kind of situation and improve the organizational effectiveness and profitability.

You said you work at the company. What is your role? Are you a stockholder? Partner? What decision-making ability to you have?

9

Anne, if you really want to ensure people quote the work for the proper amount of money, why not talk with your staff and agree upon a price for each solution you offer (so for example installing a CMS = X amount of dollars) and then publish those costs on the website. You could move things along by having baseline costs for generic functionality (or quoting a baseline hourly rate on the site) rather than having sales people negotiate with the clients. That way the orders and quotes can go directly to the designers (as the price is known before asking for the work to be done) and the spec’s can go straight to the designer. The fact is, the only thing you need from the clients is the up-front payment (if there is one) and them to know what you charge (you need visible figures - not a sales agent). I would dump the sales team (except in the case of marketing your business), have the costs up-front for the clients to see, have them decide a budget (along with the specs they need) and the designer can get back to them and say whether the amount their willing to spend will cover the amount of time the project will need to take. :slight_smile:

10

I am a partner in the firm, so I can make the decisions.

11

Great suggestions. However here’s the situation…

99% of our clients are local clients, and as such, they require a bit of sales pitch and presentation before buying. This means someone often has to go out to these clients and pitch our services, and often follow up.

I wish we were a purely-online provider. In that case, communications and sales would be much easier (no physical travel).

Also, with many of the features/functions, while we have a baseline of functional pieces, often times what the client wants isn’t a simple plug-n-play. Sales are good a selling, but since it’s not them who will develop the sites, they may only have a surface-level understanding of the underlying work. I’m thinking, before the client signs, perhaps a tech should review the specs, and/or meet with the client to get the full picture?

12

Perhaps build a promotional DVD or something which has everything the clients will need to make their mind up, you could mail them the DVD with the sales pitch and the forms they need if they want to work with you and you could have the designer follow things up with a phone call to them. It would eliminate the need for physical travel (unless that’s expressly something they want) and you would have them communicating with the people making the site directly. If they do want people to travel to them, send the sales team out with a set of questions agreed upon by the designers and developers (stuff they need to know - keep that list evolving) and then once the pitch is made and client is brought onboard, have the sales team take care of the payment and pass on the job to the designers and developers (putting them in control of keeping in touch of the hours they work with the sales team) :slight_smile:

13

Who is managing the designers? developers? sales staff? the individual projects?

14

I am, but it’s difficult because there’s too many projects, and many of these projects are very low-end, meaning there’s little profit margin. The reason I’m thinking of putting everyone on the commission basis is, one to incentivize them. And two, to decrease management overhead so we can be competitive on pricing. If everyone involved has a stake in the collections, then they will strive to finish the project asap.

What do you think of this setup?

15

I think that adding in a more complex setup isn’t going to fill in the gap in your business, which is project management. I have never personally known a development firm that had to tie sales incentives to developer productivity in order to keep projects moving effectively.

Also, you are almost 100% certain to create a devastating conflict of interest if you put sales and tech in the ‘same boat’. Those two need different boats! Imagine if sales brings in a 100k project. Tech approves of the cost/schedule. Everything is great, until sales brings in a 12k change order which they liked but refused to bump the schedule to accommodate the changes. The project slips, and the client is unhappy which makes sales unhappy. Sales leans on tech, and you get this:

sales: “We need this to be done by Jan 15!!”

tech: “Well, we could have if you didn’t increase scope on us”

sales: “Well, we have to find a way to make it work!”

tech: “The only way to make it work is for us to work 24/7 to accommodate your lack of concern for the scope creep. This always happens!”

etc. etc. :slight_smile:
However, I have heard time and time again that sales as allowing too much scope creep and tech is not able to keep up. That classic problem is best solved by adding the needed management into the middle.

A good project manager builds a bridge between sales and tech - encouraging sales to help contain scope creep and encouraging tech to support sales with good pricing and scheduling estimation.

If there is a ‘gap’ there, it will be hard to systematize a solution through some sort of financial incentive. Having managed many hundreds of technical resources (literally) my observation is that they are very different when it comes to management than sales, and don’t respond to simple financial incentives in the way that you’d expect.

Why not go the traditional model and see if you can find ways to improve the team, company, and project management so that you can help out these problems?

One easy policy is to simply stop allowing sales to ‘approve’ change requests. They will always screw the developers. As a result, the developers become defeated and lose any motivation to bring projects on time as they are generally thwarted. Sales should only close a deal using pricing that was approved by a project manager who coordinated with the tech lead. Change orders should be the same way. This empowers developers as they have a bit of say on what is reasonable and what isn’t.

Another policy is to use a simple review/bonus approach to optimize you developer output. There is a BIG difference between getting a ‘cut’ and getting appreciation and a bonus. Developers ultimately love development more than money, time and time again. They thrive on having a voice, innovation, doing things ‘right’, etc. Having a real review session with developers and using that session to determine their raises, positions, bonuses, etc. is a proven model.

If you aren’t able to keep with the projects because they are too numerous/small, perhaps you could look at some ways to improve on this. Perhaps you could hire on a project manager - a good one can radically change your business success. Or maybe an assistant for you. Or, invest in an extranet or other system to help systematize management (although there are limits to this).

You could also look at the long-term outlook and discuss with your partners how you might evolve the business so that it sees longer, more lucrative clients with better margins - lowering management drag while increasing profits.

Back to basics, I say! :slight_smile:

16

When you say techs don’t respond to financial incentives the same way as sales, what do you mean? How will they likely react?

If there’s no accountability of the techs, then I fear that they will continue to make simple errors such as not re-using modified code. Rather, each time it happens they go and re-fix the broken modules. How can we track such things?

As for a project manager, would putting him on some sort of quota (say client payment within X period of time) work?

17

Techs generally are more in it for the challenge/fun of tech work than the money.

With that said…

As soon as you put incentives on anything you’re going to get unintended consequences…

You’re going to incentivize quantity over quality if the sole metric is time to completion.

You’re going to irritate your techs every time they don’t get paid their incentives because some goof in sales decided to add on new features that are going to take them more time to code.

Look what happens with your commission sales people, they are out getting you low margin business and promising clients the world because they are chasing commissions. They don’t care how much extra work it is for the dev team, their commissions are based purely on sales.

If there’s no accountability of the techs, then I fear that they will continue to make simple errors such as not re-using modified code. Rather, each time it happens they go and re-fix the broken modules. How can we track such things?

Hire some proper team leaders/project managers? If this is happening all the time then you have a poor management team.

Develop a re-usable code repository that everyone must take their code pieces from instead of everyone going off on their own for one.

Do peer reviews of the code.

Etc…

18

I was about to respond but I think tke did a good job in the above post. Tech folks just aren’t like sales folks, and management is an art not a science. It takes practice to really manage them well.

One thing I’ve noticed from your posts in this thread - you have asked for opinions on approaches to handling [what I perceive as] management problems. These approaches involve changing protocols so that financial incentives, etc. are used to wrangle the sales/tech teams into compliance with a model that will be more lucrative for you.

I wonder if you are looking for a system that you can ‘plug-in’ to achieve your management goals. In general, management doesn’t work like this - it’s a high-touch, human endeavor which involves intuition, experience, emotion, communication, and other human skills.

If you can come up with ways to increase employee output and quality through incentives, etc. you can make tons of money as a business consultant. The reason? Management is very tough, and most such systems don’t work well compared to good management. To be a good manager is a complex skill and is much harder to learn than tech, sales, etc.

For example, the questions I would ask myself are about WHY sales/tech are acting the way they are.

Sales is easy. Why don’t they manage scope creep? Why would they? Salespeople want to sell and there is nothing stopping them. They are just doing their job.

Tech is harder. Why aren’t they keeping up? Well, why would they? There is too much work coming in, and they are expected to just ‘go with it’ without much input on what is reasonable. You have to sacrifice quality or schedule if you overload your developers, and developers will almost always gravitate towards schedule vs. quality as they hate developing crap code.

If you don’t solve the tech issue, you’ll soon have morale and retention problems as this is the beginnings of a sweatshop!

19

Good points. Now, I understand management is a complex issue that requires deep participation.

The issue you’ve addressed regarding sales and their lack of concern for overhead, and techs’ lack of concern for high speed productivity. The main reason for the two are due to mis-aligned interests. If there’s some way to tie in the cash they bring in and their pay, it might get them to put forth that much more effort in trying to find more efficient ways to do things.

There are just too many little projects and whenever I peek, I often find problems. The problem there is, when I find out, time has already been wasted. Sure I can make them stay overtime and make up for the lost productivity, but I don’t know if that’s going to be good in the long-run.

The reason for the internal “outsourcing” model is really based on a comparison between output and final results of previous projects which were outsourced. I can control my cost upfront, and I only pay what the client is happy with. When there are deadlines, bugs, and/or changes, the outsource staff has to deal with it, or at least put some brains into it.

Now, if we could engage everyone in the company to use some brains, we will end up with better results, as opposed to management watching over every single project like a hawk.

The alternative here is, fire all the techs (except a couple), and outsource every project out.

20

Well, I guess I would agree if you don’t want to manage them you might as well fire the techs. It seems like it would be easier to hire a lead developer - someone who is experienced managing workflow and liaising with the sales team.

It may also be cheaper. When you outsource something, you are paying for a manager whether you like it or not.