Johnson Controls is a global diversified technology and multi-industrial leader serving a wide range of customers in more than 150 countries. Worldwide, the company employs 120,000 in more than 200 locations. In his role as VP, HVAC Service at Johnson Controls, Buddy Saucier is responsible for ensuring customers are being served well, the business is growing, and profitability is increasing.
In a recent discussion Buddy and I were having around the company’s quest to achieve those objectives, we touched on the impact that determining optimal field compensation has on service profitability. With years of experience and perspective, I think you’ll find Buddy’s input very valuable.
Nicastro: How do you align field compensation to both growth and profitability goals?
Saucier: As they say, you need to have a plan and then work the plan. My experience is when you can motivate employees with compensation or rewards to drive to growth and profit targets, it makes it much easier to achieve your goals. Whereas most measurements of business growth in past years looked at topline, secured volume, and executed revenue growth, more companies and analysts are looking closely these days at secured and executed margin growth as well. Both being achieved through robust pricing, growth, or productivity actions and planning alongside a well-aligned compensation plan. This plan needs to be based on components of sales and operational alignment as well as business P&L line of site and maybe an aspect of personal performance.
Nicastro: What are the best ways to use compensation as a motivator for your field workforce?
Saucier: Good question, and important to determine as the field workforce can be your best pricing and growth accelerator. As we all know, service is the money maker in any business and renewable business is the gift that keeps on giving. I think motivation starts with a good visible dashboard that ensures your field workforce is well aware of the organization’s goals. We’ve seen various reward programs for selling and lead generation work well with a combination of other line-of-site or team-combined leading and lagging metrics. I’ve seen programs pay out differently in monetary compensation or even rewards of tickets or tokens that a technician or managers can cash in for different prizes. This sort of approach also drives competition among technicians and teams.
Nicastro: What role does tracking job cost play in setting optimal compensation?
Saucier: Tracking cost is important in any business to drive business growth and profitability outcomes through productivity planning. What we typically see are plans built on secured volume and margin for sales and plans built around secured margin and executed margin for operations.
Nicastro: Besides wages, what are the most effective methods you’ve found to motivate your workforce?
Saucier: Certainly financial compensation is important but I find that a field workforce (technicians, managers, and administration) also respond well to recognition and rewards programs or a combination of recognition & rewards coupled with occasional SPIFF’s.
Nicastro: What are the biggest mistakes you see service organizations make with how field workers are compensated, and what steps can you suggest to rectify this?
Saucier: It’s important that everyone understands the target outcomes and that those outcomes have leading and lagging metrics and levers that can be pulled to achieve these metrics and financial outcomes. Many companies can’t make this tie, or they do and then fail at change management, either scenario creating breaks and failed outcomes. Another observation is across sales and operations and upper management, you could often have different plans. This is okay, but you have to ensure the gaps and grey areas are filled and that all teams are pulling in one direction. This is another way to be sure the compensation drives communication and collaboration.
Nicastro: What other advice do you have on this topic?
Saucier: Depending on the size of a service organization you can see very simplistic plans to, in large organizations, very complex plans associated with targeting specific product, services, and solution offerings with kickers, triggers, extra multipliers, etc. Complexity creates confusion for any field workforce. My best advice is to keep it simple and do your homework as a leader to ensure the rewards you put in place drive the right financial outcomes and reward the right behaviors and motivators. In some cases as an organization, you also have to be sure you don’t over compensate. It’s a delicate balance and takes a lot of work so that you can attract and retain employees as well as drive growth and profitability outcomes.