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