When I'm coaching, other new business owners that are, starting to really build their business and starting to get it off the ground from the single operator portion to then start hiring additional employees to help out and build the business. One of the most common questions I get is, how do you compensate and how do you incentivize your staff and your personnel? This is a super critical point, when it comes to hiring and keeping your people happy. Number one, not everyone is incentivized by money or compensation or motivation. So, one of the very first things that you need to realize is, you know, give your people a personality assessment. We use Predictive Index and see, what drives them? If compensation is a major driver, then you got to really focus on that and make sure that you craft a package that makes sense for that individual.
Now, once you get into larger corporations, they are unwilling to work with people on an individual basis. And what they usually do is they'll establish these pay bands with certain incentive packages, and that doesn't really change much, but when you're in a smaller company, it's really important to sit down with that individual and see, not only, you know, what motivates them? But also, what are their goals? Right? They have goals that you're not even aware of, that you can help them along with it. Won't actually cost the company any money or any capital contribution whatsoever. And maybe, you know, Hey, I'm saving up to go to school. So, maybe we can help them go to school, or maybe we can change their hours around so that they have time to do school on the side while they're working with us.
One of the hierarchies, or one of the things that we look at too is, how are people motivated as far as autonomy? Do they have the ability to make decisions once they understand the role without having to constantly ask for permission? Cause that really beats down on you. Do they have a sense of purpose in that role? Do they feel like the work they're doing is it adding to the greater good or the company or the greater good of the community or both? As well as their own well-being. And then the last one is, mastery. Do they have the ability to master that craft and really excel in that position? What we found is these three things are really what drive fulfillment in a position. So mastery, autonomy, and purpose, but after you have identified all these things, these kind of non-monetary things, and it's, that's important to structure the compensation in a way that incentivizes that individual to help the company grow or help the company stay profitable.
So, I'm not a big fan of paying just straight wages or straight hourly, or straight salary because that doesn't incentivize that person to go above and beyond and really help the company grow. That just, it just is a place from the clock-in and clock-out, and then go on with the rest of their lives. So one of the things that we like to do is structure incentives around profitability. So for example, if a manager can drive revenue, that's great! But what if that manager is driving revenue at the cost of increasing expenses? So, we want all of our employees to be bottom line focused and that top line, I don't care about growth, gross revenue. What I care about is net revenue or profit margin. So, we'll tie in set to those types of metrics. Another thing that we love to do is just see what drives that department and then incentives to that as well.
So say for example, if somebody is in the marketing department, we won't buy incentives to deliverability rate or if it's a social media type thing, maybe interactions or clicks if somebody is in the lead management department, it's how many of the leads did, were you able to contact and get all the information for and move it as a completed file to underwriting or to the due diligence department? If it's the underwriting department, it's how quickly are you turning these files around and how close are you on valuation, on resale value on, you know, how close did you get to the appraisal once we order that? How many times did we have to go back and renegotiate because something popped up that wasn't caught in the beginning? With sales, there'll be appointments, there'll be phone calls, there'll be offers made, there'll be contracts accepted, dispositions department, same thing.
We're going to tie the compensation to spread to profitability on the sale. You know, we don't really care what we're selling a property for. What we care about is the spread. So, if it's going to cost us a hundred thousand dollars to make a hundred thousand dollars, that's just a waste of and money. But if it costs us a hundred thousand dollars to make 500,000, then that was a slam dunk. And then finance department, you know, how quickly are they turnaround budgets? Are we having to follow, you know, are we having to file extensions on our tax returns? Are we comfortably sitting with plenty of cash in case opportunities come up, that we need to move on quickly? What's our debt load looking like? So, these are the types of incentives that will tie to each one of these departments to make sure that people are doing the right thing. I'm a huge proponent, a huge believer in you. Number one, what gets measured gets done. And then number two, are the measurables, measuring things that actually help the business move forward? So, those are typically the few things I tell people to watch out for and to look at ,when they ask me about, how to compensate their people? How to incentivize them?
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