When it comes to compensation, many team leaders believe that making a profit and keeping their team happy at the same time, is a big challenge. That’s not always true. They may not have the right programs and systems in place to have great profit margins and a highly-motivated team.
Many teams are making the mistake of giving away too much. They end up not making enough profit to grow their business. Some even dissolve their teams due to poor team partner compensation plans.
There are also real estate entrepreneurs that keep losing their best team members as they are not willing to compensate fairly. They think they can keep their business safe by not giving too much away. However, short-term profits can only get them so far. They will not be successful in the long run if they don’t keep their successful team members happy and onboard.
Here are four steps to creating a compensation strategy that will make both you, the business owner, and your team partners happy.
1. Do the Math and Develop a Fair Program
If you don’t have a documented compensation program in place, start with creating one. Don’t make assumptions. Do the math and understand how you can make money while sharing your company’s profit with your team members fairly. While doing this calculation, you should factor in all the direct and indirect costs associated with every single dollar your team members are bringing to your business. They are making deals and generating GCI but how much money are you spending on marketing, technology, and office space to enable them to make these deals?
If you are providing your team with marketing-qualified or sales-ready leads, that means you are spending a lot of time and money to generate them. Yes, they are doing an important job converting these leads into transactions, but your effort can’t be ignored when it comes to sharing the profit.
2. Maintain Justice by Sticking to your Program
Once you have figured out a fair compensation and incentive program that will make everyone happy, you should make sure that nobody in the team is an exception. When you bring in a new team member, be sure to clarify all the aspects of your company’s compensation program and clearly express that everyone on the team is on the same plan. Don’t forget that you are dealing with human beings and they value justice more than anything. Favouring a single agent on your team will get you only one single happy partner and will leave the rest of the team frustrated. So, no matter what the situation or who the person is, think twice before you make exceptions.
3. Reward High Performers
Maintaining justice in terms of compensation doesn’t mean that everyone on your team makes the same amount of money. This is far from being just. Your compensation program should be tailored to reward those who perform best. This will not only strengthen the sense of fairness on your team but will also motivate and push your team to work harder to generate better results.
Remember, all the terms and conditions of your program should be documented and be applicable to everyone. This way you will be rewarding based on high performance.
4. Don’t Get Too Complicated
Going back to creating a fair compensation program, there is one crucial thing you should remember: keep your program simple and easy-to-understand.
You are trying to create a sense of justice and harmony on your team by providing them with a fair, transparent program that is applicable to everyone. But if your program is not simple enough, chances are there could be confusion and this confusion will lead to frustration. The whole point of creating this program is to treat your partners fairly while making a profit. If your program is complicated, all your efforts will be in vain and you may be left with unhappy team members.
We will cover how to create a fair compensation program that will make you millions at the Mastery Summit 2017.