Create accountability
Throw out a number for the salary you’d like to earn this year.
Whatever that number is, consider it done at PartsSource. When
employees start, they determine their salary, and managers break
it down into monthly, weekly and daily goals to help them get
there. Setting their own goals helps employees succeed and avoids
the disappointment of not meeting someone else’s expectations.
“The relationship between employee and employer is pretty intimate,” Dalton says. “Everyone wants to be held accountable, but
they want to be held accountable in a fair way. … If your boss is
doing nothing but pounding on you for results and setting unrealistic results, and all you do is fail at them, pretty soon, you’re just
going to shut down and say, ‘Whatever.’ People who set unrealistic
goals are just setting them up for failure.”
You also have to hold them accountable. Create no more than
five metrics for each position.
“If we can’t get down to five, then we don’t understand their job,” Dalton says.
As an example, the metrics for someone answering phones
would be accountable for how many times the phone rang before
it was answered and how long the caller was on hold.
Dalton then ties everyone’s salary to these types of metrics
through a variable compensation program. Depending on the position, 20 to 100 percent of someone’s salary is variable comp.
“People who have the ability to make the decision have higher
variable comp,” he says.
For example, salespeople are on 100 percent variable comp
because they can pick up the phone to get a sale. On the other side,
receptionists can only do their job if the phone rings, so they’re at
20 to 25 percent.
People often scoff at putting low-rung employees like receptionists on variable comp, but their efforts matter, too.
“When they answer the phone, that customer, in that very
moment, is deciding what kind of relationship they’re going to
have with the company,” Dalton says.
It’s important that the call is quickly answered and transferred to the appropriate person, and a base or hourly salary
doesn’t give them any incentive to do those things.
“So what if it rings five times?” he says. “Who knows and who
cares? We said because we care, we’re going to measure.
Everything we care about, we measure.”
While salary is important, you also need to reward people for
a day’s work that very day. PartsSource has a program where
each day employees earn 25,000 bonus points for meeting an
individual metric and the same amount for contributing to corporate objectives. That 25,000 points equals $100, and employees can redeem their points anytime for anything. Last year,
PartsSource paid out more than $350,000 in rewards.
“We’ve paid for weddings, divorces, day care, transmissions,
down payments on houses — anything you want,” Dalton says.
“It’s our way of recognizing the individual contributions if
someone says, ‘I’m going to work a little harder.”
When you tie rewards to performance, everyone pays more
attention to metrics, so make them available. Individual and
team progress are posted online and in each team’s cubicle
area every day.
“If you’re going to set expectations, then people have to be
able to get to them,” he says. “One of the biggest distractions
people do in business is they set goals, and people don’t know
if they’re there or not. People say, ‘Here’s your goal,’ and they
go, ‘Well how close am I?’ and they say. ‘I’ll let you know next
month — I have to wait to get the numbers.’ People, where
there are high expectations set, need to have instantaneous
reward. They need to know right now how I’m doing.”
Posting progress also creates peer accountability. If someone
takes a long lunch and misses their numbers that day, the team
gets on them. If they miss three days in a row, then the manager talks to them about getting back on track.
“It’s the team having the conversation — it’s not HR,” Dalton
says. “Your team will manage you and groom you.”