Design Compensation That Turns Growth Into Cash, Not Chaos
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Key Takeaways
Compensate salespeople with a base commission and gross profit-based bonuses to incentivize high-margin jobs and discourage discounting.
For production managers, implement a 2/3 base salary, 1/3 performance bonus structure tied to production volume, gross profit, and customer satisfaction (Google reviews).
Pay sales managers a base salary supplemented by a percentage of the sales team's gross profit, not revenue, to foster margin protection.
Maintain total admin compensation between 2-4% of revenue to prevent overhead bloat.
Ensure combined admin and project management compensation does not exceed 7% of revenue.
When transitioning existing staff to new compensation plans, provide clear communication and sufficient notice (e.g., three months) to manage expectations and secure buy-in.
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