Within the past 24 months I have been told of and observed builders of all sizes creating net profits of 9-18%.
Within the past 24 months I have been told of and observed builders of all sizes creating net profits of 9-18%. This is a major upswing from the mid-1990s, when an 8% pretax was above average. With the incredible increase in earnings and ROI for most builders, I’m still amazed by the disproportionate amount of dollars being paid to senior executives compared with what’s paid to the average builder, superintendent, estimator and staff position. Identify business milestones that let all employees share in the spoils. Sending the message that everyone is an important part of the future creates a competitive edge in recruiting, decreases turnover and allows for extraordinary retention of your "A" team.
Develop a process that pays out to all non-bonus-eligible employees. Set the milestone of success on a sliding scale. If you base your primary financial measurement on net earnings, identify a threshold number that would pay a minimum amount and an outstanding performance number that would pay a higher amount. Communication of the plan is critical. If all employees understand their roles in maximizing the payout, you'll get the biggest ROI.