In this months contribution from Mr. Josh Hale of International Search Partners, Josh answers a burning question in the industry-how to reward employees;

Without a doubt, the most common question from employees and employers alike is about one thing: MONEY. Every couple of years or so ISP contributes the “Heat Treat Salary Guide (***LINK***)” to The Monty with an analysis of salary trends for the industry, but compensation isn’t just about base wages – it also includes benefits, PTO, career progression, work flexibility, commissions, and bonuses.

This month, Managing Recruiter, Josh Hale, answers a question from the president for a mid-sized commercial heat treater:  What’s the best way to structure a bonus plan for employees?

The Monty Heat Treat News has worked closely with International Search Partners, a US search firm which is known for being the only recruiting agency in the world working exclusively in the heat treatment industry, for many years now. In 2023, The Monty is pleased to announce that this relationship will continue with ISP offering a regular exclusive feature where they will answer questions about salaries, interviewing, negotiations, and a host of other topics related to recruiting and job searching for companies and/or individual professionals in the heat treat industry.

Without a doubt, the most common question from employees and employers alike is about one thing: MONEY. Every couple of years or so ISP contributes the “Heat Treat Salary Guide (***LINK***)” to The Monty with an analysis of salary trends for the industry, but compensation isn’t just about base wages – it also includes benefits, PTO, career progression, work flexibility, commissions, and bonuses.

This month, Managing Recruiter, Josh Hale, answers a question from the president for a mid-sized commercial heat treater: 

What’s the best way to structure a bonus plan for employees?

Josh: There are more than a few different types of bonus plans, so let’s focus on a few of the most common. Bonus structures might be commission based, a form of profit sharing, or incentive driven.

Commission Based Plans are typically reserved for sales professionals and can be an entire topic of its own. In the spirit of brevity, we’ll table that for now and give it the full attention it deserves by addressing the question in a future edition of ATHTR. 

Profit Sharing Plans are, as the name implies, a way for owners to “share the wealth” so to speak with employees. Don’t think this is entirely an altruistic endeavor, however, as the sprit behind this is to get everyone on the same page and incentivized towards a singular goal of bottom-line profitability. 

Finally, Incentive Based Plans are used to reward certain metrics. Most commonly, companies will put out a goal such as “decrease scrap by X% and received $Y reward,” but sometimes managers find it more effective to use activity as triggers instead of focusing on results. This is so that the employee can be rewarded and remain motivated despite of any variance that might hinder the desired outcome. For example, some junior salespeople are bonused for setting up meetings with potential clients or getting quotes, instead of when the deal is closed (this is especially true for lengthy sales cycles).

A lot of times the best bonus plans will be some combination of all of these and in the end, it really depends on the goals of the organization – is it to increase profits or topline sales? Improve quality or service? Engage new business or develop existing accounts? 

Once goals are in line, it’s a good idea to set aside a budget (5-20% of total payroll costs is consistent with industry averages) and then formalize the plan and put it in writing. At this stage, it is critical to remember that the best bonus structures set clear expectations for employee performance, are communicated concisely, and are tracked and rewarded with transparency, consistency, and fairness.

It takes some upfront work but once instituted, a good bonus plan will run smoothly without a lot of maintenance and serve ownership well as another resource to motivate employees, work as a retention and recruiting tool, and, in the end, help the company reach its intended initiatives. 

Josh Hale collaborates with companies to identify, engage, and hire top performers as a professional “headhunter” where he’s focused exclusively on the thermal processing industry as part of International Search Partners since acquiring the firm in 2015. He works closely with Jessica Maier to support the practice, and, together, they’ve helped dozens of companies make hundreds of hires in a variety of roles within the industry, including engineering, sales, quality, metallurgy, and management. For more information email info@internationalsearchpartners.net or call 619-465-9621.

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