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Plan Now to Improve 2014 Performance & Results With a Management Incentive Program

publication date: Jan 22, 2014
 | 
author/source: HospitalityEducators.com Resources
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RestaurantOwner.com Profit Tip of the Week
Plan Now to Improve 2014 Performance & Results With a Management Incentive Program

With the start of a new year right around the corner, now is the perfect time to think about adding or refining your management incentive program.

Many highly successful independent and chain restaurants attribute much of their success to management incentive programs that produce higher compensation potential, stronger company loyalty and better financial results that benefit both the company and the employees.

There is no magic formula for creating an incentive program to fit every restaurant organization; however, most operators agree that for an incentive program to be effective, the participants need to believe in the program. They must have faith that the goals are achievable and the rewards are worthwhile.

In our Special Report, entitled "Management Incentive Programs", we surveyed hundreds of our members who were using incentive programs and found the following key characteristics as being the most common in those producing successful results.

  1. The program must be simple and easily understood by participants. Some members' plans as described were quite involved and detailed. The results of these plans tended to be average.

    The most effective plans were simple in that they were based on the results of just 3 to 4 areas which several operators referred to as "key performance objectives". These key performance objectives were activities or processes the managers had a high degree of control over.
  2. There must be mutually agreed upon and achievable goals. Many operators with successful plans stated that performance goals in the areas of sales and profit are discussed with management and mutually agreed upon. The objective is to make the goals challenging, but at the same time, also achievable and realistic.

    Make the goals too easy to achieve and managers can get complacent, make them impossible to achieve and managers can get discouraged and quit trying.
  3. Tie incentives to sale building as well as cost control. Nearly all operators with highly successful plans indicated that some portion of the incentive formula is based on improving or maintaining high levels of sales activity as well as controlling costs.
  4. Results should be reported and rewards distributed on a timely basis. Programs based on monthly or quarterly reporting periods tended to be more successful than those based on annual or semi-annual schedules.

    If you're been contemplating an incentive plan for your managers, be sure to consider these important factors to increase the odds your plan becomes a win-win for you and your people.


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