Wayne Automatic Fire Sprinklers deploys two financial concepts to drive better performance: incentive payments and open book management.
Actor and performer Will Rogers once said, “A man only learns in two ways: one by reading and the other by association with smarter people.”
The founder of Wayne Automatic Fire Sprinklers, Wayne Gey, is one of “the smarter people” I get to learn from.
He champions two powerful concepts within our company that contain real magic to drive performance. We embrace the concepts of open book management and incentive payments for everyone.
Incentive payments for everyone is a relatively simple concept. For everyone in the company, part of their total compensation is based on a performance output. As an example, our branch managers receive 10% of the pretax profits of their branch. Additionally, everyone in the company—from the receptionist and field foremen to designers and the management team—receives a portion of their total compensation based on an outcome. Depending on their role, that outcome could be beating a job budget, outshining a design budget, exceeding a department profit budget, or surpassing the company’s profit budget.
As for the second element of the performance-driving magic, we’re open book management company. We share profit information widely across the organization. Branch managers know that they all start out receiving 10% of their branch’s profits. Because everyone receives information that details the profits of each branch, they also know what each branch manager receives as incentive payments.
But that’s not where the magic stops. Some branch managers feel obliged to share part of their 10% incentive payment with other team members. That’s where the magic really happens. Managers choose to reward individuals who help pull the wagon and drive results by sharing some of their incentive payments with them.
Our founder also has another saying: “What gets measured gets done.” Because of this, our company tracks each manager’s “sharing amounts.” Our managers can see how their sharing amount compares to other managers’ sharing. Not surprisingly, sharing has become more prevalent as we track and share this information.
The sharing also has a trickledown effect. Our managers share some of their incentives with their direct reports, and some of their direct reports then choose to share their incentives with subordinates. Is this required? No! Is the sharing amount consistent from branch to branch? Absolutely not. Each position has a set incentive payment factor, but the sharing of incentives is entirely discretionary and left up to individuals to determine.
These two concepts coalesce to propel exceptional implementation. We’re convinced that this combination is the “secret sauce” that continues to drive industry-leading performance.
These two concepts are simple to understand, but they require faith in your team if you want to deploy them successfully. You can’t speak about shared rewards unless you’re completely committed to making those rewards happen—and making them visible. Our team shares more than 30% of pretax profits in incentive payments. That’s a commitment.
Good luck on your journey toward performance improvement, NSCA members. I guarantee that it will be well worth the effort.
Eric Morris is CFO at Wayne Automatic Fire Sprinklers, Inc.