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What are Performance Pay Spiffs and Commissions? (In Construction Industry)

Aug. 9, 2022

 

In the construction industry, pay-for-performance spiffs and commissions are common. They are used as an incentive for employees to increase their productivity or achieve certain goals. The amount of the spiff or commission is typically based on a percentage of the project’s value or revenue. For example, a worker who completes a construction project worth $100,000 may receive a $5,000 spiff.

Spiffs and commissions can be a great way to motivate employees and improve performance. However, there are some drawbacks to using them. For example, if the goals are not realistic or achievable, workers may become discouraged. Additionally, if the amount of the spiff or commission is too small, it may not be worth the effort for employees to try to achieve it. Finally, if spiffs and commissions are not used correctly, they can create a competitive and tense work environment.

When used properly, spiffs and commissions can be a great way to improve performance and motivation in the construction industry. However, it is important to consider the potential drawbacks before implementing them.

 

What are some of the pros and cons of using performance pay spiffs and commissions in the construction industry?

 

PROS:

1. Can be a great way to motivate employees and improve performance

2. May help to increase productivity

3. May help employees to achieve specific goals

 

CONS:

1. May discourage employees if goals are not realistic or achievable

2. If the amount of the spiff or commission is too small, it may not be worth the effort for employees to try to achieve it

3. Can create a competitive and tense work environment if not used correctly

 

Important web resources that talk about performance pay spiffs and commissions in the construction industry

 

1. http://www.constructionbusinessowner.com/managing-your-business/article/13078897/what-are-spiffs-and-how-can-they-improve-employee-performance

2. https://huddle.eurostarsoftwaretesting.com/performance-based-pay-in-construction/

3. http://www.forbes.com/sites/groupthink/2013/05/29/to-spiff-or-not-to-spiff-the-pros-and-cons-of-using-sales-incentives/#2afbf54e4b0f

4. http://www.business2community.com/human-resources/pros-cons-performance-based-pay-0619591

 

Books that talk about performance pay spiffs and commissions in the construction industry

 

1. The Performance Pay Paradox: How to Make Performance-Based Pay Work in Your Organization by David G. Lewis

2. Incentives Matter: Paying Employees for Results by Edward P. Lazear

3. Sales Compensation 101: The Definitive Guide to Plan Design, quota setting, role definitions, and everything else you need to know about sales compensation by David Cichelli

4. The 5 Forces of Pay by Patrick Sweeney and Daniel Pinkwater

5. The New Pay: Linking Employee and Organizational Performance by Edward E. Lawler III and Christopher G. Worley

 

1. The Performance Pay Paradox: How to Make Performance-Based Pay Work in Your Organization by David G. Lewis

In his book, The Performance Pay Paradox, David G. Lewis explores the pros and cons of using performance-based pay in organizations. He discusses how to design a system that will work for your organization, and provides tips on setting quotas, role definitions, and more. Lewis also looks at the potential drawbacks of using performance-based pay, such as creating a competitive environment or discouraging employees if goals are not achievable. Overall, The Performance Pay Paradox is a helpful guide for those considering implementing performance-based pay in their organization.

2. Incentives Matter: Paying Employees for Results by Edward P. Lazear

In Incentives Matter, Edward P. Lazear provides an overview of the different types of incentive pay programs that are available, and discusses the pros and cons of each. He also gives guidance on how to design an effective program that will motivate employees and improve performance. While Lazear does acknowledge that there are some potential drawbacks to using incentive pay, he argues that, when done correctly, it can be a powerful tool for organizations.

3. Sales Compensation 101: The Definitive Guide to Plan Design, quota setting, role definitions, and everything else you need to know about sales compensation by David Cichelli

In Sales Compensation 101, David Cichelli provides a comprehensive guide to designing and implementing a sales compensation plan. He covers topics such as quota setting, role definitions, and how to structure payouts. Cichelli also includes information on the different types of incentive programs that are available, and discusses the pros and cons of each. Sales Compensation 101 is an essential resource for anyone responsible for designing a sales compensation plan.

4. The 5 Forces of Pay by Patrick Sweeney and Daniel Pinkwater

In The 5 Forces of Pay, Patrick Sweeney and Daniel Pinkwater provide an overview of the different factors that can affect how much employees are paid. They discuss the role of supply and demand in the labor market, the importance of company culture, and how to negotiate salaries. Sweeney and Pinkwater also look at the role of government in setting minimum wage levels, and the impact of technology on the labor market. The 5 Forces of Pay is a helpful resource for anyone interested in understanding the factors that influence employee compensation.

5. The New Pay: Linking Employee and Organizational Performance by Edward E. Lawler III and Christopher G. Worley

In The New Pay, Edward E. Lawler III and Christopher G. Worley explore the concept of linking employee compensation to organizational performance. They discuss how to design a system that aligns employee incentives with company objectives, and provide guidance on setting goals and measuring success. Lawler and Worley also look at the potential drawbacks of using performance-based pay, such as creating a competitive environment or discouraging employees if goals are not achievable. Overall, The New Pay is a helpful guide for those considering linking employee compensation to organizational performance.