Who's eating the better meal, you or your employees?
By Darren A. Gaitan
I was having a conversation last week with a business
mentor of mine and I heard one of the best quotes I have
ever heard. We were talking about my future and the
topic of a school manager had come up. We were
discussing what a school manager should be receiving as
compensation and how it would relate to mine. That’s
when I heard it, “You should be eating hotdogs while
your staff should be eating steak”. Unfortunately, I
feel that most school owners practice the exact opposite
which is hurting the future of their business. Once at a
convention I was talking to a school owner who was
telling me all about his financial success. I then asked
him about his employees, do they own houses? Are they
financially comfortable? Can they afford the cost of
living in your area? Would they stay with you over ten
years? He got quite real quick and I could see that he
was not as successful as he thought he was. As martial
artist we must remember that our success is measured on
the success of our students and not our individual
achievements. Not only do employees need to be taken
care of financially they need to feel like they are.
After all, they are a big reason why the money keeps
coming in every month.
I have seen some school owners drive a Mercedes to the
school while their employees can barely afford the gas
it takes to drive to the school. How do you think this
employee’s attitude is? Probably very resentful and
non-productive, and even more importantly it is
affecting the overall energy of the school. Put yourself
in the employee’s shoes, would you keep earning your
boss money when they barely throw you a crumb? No!
Here’s a perfect example of what I’m talking about. I
know of a school that was producing over $50,000.00 a
month in the mid 90’s and the manager was getting paid
so little that he could not afford his car anymore. He
had to ride a bike to the school and worked seven days a
week. Eventually this manager left and found employment
elsewhere, and the school now makes about $25,000.00 a
month and charges over $100.00 a month for tuition. This
shows you the caliber of this employee and his affect on
the school’s revenue. Would it have been worth it to
increase his pay and introduce bonus structures? Well
I’ll let the numbers speak for themselves.
Your instructors need to be getting their piece of the
pie or the will leave you sooner than you think. Have
you ever wondered why your school never grows after
making all the changes that were suggested to you by the
industry leaders? Well, one area you probably overlooked
was employee bonuses. Bonuses will make or break your
school. Think of how much the stock market would change
if brokers never made a commission on their sales. It
really makes you re-evaluate your views on staff
bonuses, does it? You don’t have to start big with the
bonuses, you can implement one every couple of months or
so. It really doesn’t matter how you introduce your
bonus plan as long as you do it.
Here is a good example of how to use an employee to get
quick results at your school. I opened a school about a
year and half ago with very little money to work with.
My goal was to get the school to 100 students in the
next three months. I sat down the three staff members
and asked them if they could have anything under
$1,000.00 what it would be. Each of them answered, and I
wrote it down. Then I told each one of them that I would
buy them what they wanted if the school reached 100
students by the end of the third month. I also told them
that they needed to hit an individual goal of new
enrollments as well as their fellow employees. This
ensured that the staff would take ownership of the
school and that they would come together as a team. It
worked, and all three staff members received the item of
their choice. I spent $3,000.00 and the school was over
100 students by the end of the third month. I don’t know
where else you could spend $3,000.00 and get the same
results. Here is the best part; they all wanted to know
what the prize was for getting the school past 200
students. Now that’s staff motivation.
The next bonus you need to implement into your school is
a school revenue bonus. This can be done on a monthly or
yearly basis. Your main employee can receive anywhere
from 3-10% of the schools overall monthly revenue after
a certain level. I suggest that you have certain
requirements that the school must meet in order for an
employee to be eligible for their bonus. You can also
put this bonus into a pool that all of the employees
split, but you main person should receive something
different than the other employees. You can also have a
yearly financial goal for the whole staff to meet and a
separate incentive for reaching this goal. A staff fun
day that includes limo service, meals, etc. is always a
great package. I’m in California so a staff trip to Las
Vegas or the ski slopes is definitely within reason. The
amount it will cost to pay for these trips is worth the
return on the investment and I guarantee you will keep
your employees a lot longer.
Another bonus that is very effective is an enrollment
and renewal bonus. Your program director will receive
$10.00 for every student that enrolls in the school.
After they reach certain levels, the amount can increase
up to as much as $20.00 per student. This bonus will be
paid out at the end of the month. The renewal bonus is
based strictly on student upgrades. With upgrades there
are great opportunities for students to cash out their
agreements for the next couple of years. Employees need
to be enticed to go for the paid in full and there needs
to be a reward for doing so. An employee will get 1% for
a one year cash out, 3% for a two year agreement, and
10% for a three year. The three year paid is the one
that you want and that is why the bonus is the highest
among the three. Three of these contracts are worth over
$16,000.00, so financially it’s worth paying the bonuses
to the employees. This is a one time bonus, meaning that
it is only paid to a single employee or it goes into the
bonus pool once.
The pro-shop revenue should also have a bonus that goes
along with it. The standard bonus for employees on the
pro-shop is 10%. Sometimes this bonus is only available
to the head instructor since they are the ones pushing
the equipment on the floor. The percentage can also
change when certain revenue levels are reached. You can
also implement a commission scale for different items in
the pro-shop. The bottom line is that employees need to
know that they are making money when the school is
making it and losing money when the school does. Their
attitude and motivation will change very quickly when
the school numbers start to slide.
Other bonus can include quarterly financial goals, event
goals, testing, active student body count, a letter from
a parent, etc. The more creative you get the better the
school will do. The days of an employee working for
peanuts and having their family on welfare while you sip
champagne and bathe in the sun are over. Always take
care of the people who are taking care of you. Can you
run a successful school without good employees? Will
good employees stay with for peanuts? Will they earn for
you when they get nothing? I rest my case. Employees
should always be eating steak while you eat the hotdogs,
but I don’t mean that they should be making more than
you. They should realize that they are being taken care
of and they should have the impression of this concept.
How they feel directly affects the atmosphere of the
entire school. Your team needs to win in order for you
to win. Play with these ideas and make them work for
your school. A bonus program is necessary for the
financial success of your school. Don’t think, make it
happen! Feel free to email me darren@championsway.com for assistance or
suggestions on a topic I have not yet covered.
Darren A. Gaiten
Associate Consultant
ChampionsWay Inc.
877.774.5425
darren@championsway.com |
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