The Payoff on Pay Plans

by WOHe

It pays to work in the kitchen and bath industry
these days. While kitchen and bath dealers are working long hours,
the rewards can be satisfying at least if you own the business.

The question is whether the pay that’s earned is
really worth all the work particularly for design/sales associates
who don’t own the business, yet who frequently put in long hours
without seeing the financial rewards for their labor.

Another important issue is whether the pay plans
kitchen and bath dealers are offering their sales/design associates
make sense for both the employees and the dealership.

Those are but two of the questions raised by
Kitchen & Bath Design News’ 2002 Designer/Salesperson
Compensation Survey a nationwide poll that also provides plenty of
answers about the salaries, commissions and benefits being offered
these days to those in the kitchen and bath industry.

The survey reveals, for example, that:

  • The great majority of kitchen and bath dealers work
    far in excess of 40 hours per week no surprise when you consider
    how many hats they typically wear, and how time-consuming it is to
    juggle the design, installation and management skills needed
    at retail.

  • Kitchen and bath design/sales associates are also
    working long hours but the financial rewards don’t seem to reflect
    this, particularly at lower-volume dealerships.
    And, longer hours don’t necessarily correlate to higher
    salaries.

  • Kitchen and bath dealers are doing a good job of
    offering a variety of compensation packages, benefits and perks.
    However, many fall short in the area of offering basic medical
    insurance a key issue for kitchen and bath designers/salespeople in
    the face of a recently released report that ties a lack of medical
    insurance to poorer overall health and a drastically enhanced
    mortality rate.

  • There are seemingly as many commission programs in
    play these days as there are sales/design associates at work. The
    K&BDN survey reveals, for example, that some pay sales/design
    associates a straight salary, while others offer deals consisting
    of straight commission, and still others structure plans that offer
    a combination of both.

    Moreover, for those who are paid some form of commission, there’s a
    variety of wrinkles to the plans. The poll finds, for instance,
    that commissions are sometimes paid on the basis of sales volume
    aloneor on the gross profit dollars generated by what’s soldor on
    net earnings from jobs. In addition, commissions are sometimes paid
    at a fixed rate, while in other cases they’re paid on a sliding
    scale.

  • While business owners place a high degree of value
    on customer service skills and industry experience, the vast
    majority
    of dealers do not pay premiums for sales/ design associates with
    CKD or CBD
    certification.

  • Despite tough economic times, more than half of
    dealers, designers and salespeople expect their earnings to
    increase in 2002 over their previous year’s earnings.

All of this should yield some interesting
benchmarks and insights for kitchen/bath dealers wrestling with
issues about compensating, motivating and retaining key people
while controlling their payroll costs.

What may be most important to take away from the
survey, however, is simply the notion that while there are
obviously many compensation options to consider, what matters most
is whether the pay plan dealers are offering is one that really
pays.

Does it offer achievable incentives to employees
without placing an undue burden on costs?

Does it enable the dealership to retain key people?
Does it enable the dealership to create an incentive to drive not
only sales, but profit margins, as well? Does it take into account
the myriad “perks” that often add thousands of dollars to the value
and cost of a compensation plan?

As the owner or manager of a kitchen and bath
dealership, you can make a compensation program do anything you
want it to. Similarly, you can decide how much you want to pay for
a given rate of productivity, and then build a custom program that
fits both sides.

Just be sure to establish compensation and business
objectives before putting your pay plans in place. And, be sure to
examine your pay plans regularly to see if they’re yielding the
results your business needs to thrive.

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