The Payoff on Pay Plans

It pays to work in the kitchen and bath industry these days. While kitchen and bath dealers are working long hours, the rewards can be satisfying at least if you own the business.

The question is whether the pay that's earned is really worth all the work particularly for design/sales associates who don't own the business, yet who frequently put in long hours without seeing the financial rewards for their labor.

Another important issue is whether the pay plans kitchen and bath dealers are offering their sales/design associates make sense for both the employees and the dealership.

Those are but two of the questions raised by Kitchen & Bath Design News' 2002 Designer/Salesperson Compensation Survey a nationwide poll that also provides plenty of answers about the salaries, commissions and benefits being offered these days to those in the kitchen and bath industry.

The survey reveals, for example, that:

  • The great majority of kitchen and bath dealers work far in excess of 40 hours per week no surprise when you consider how many hats they typically wear, and how time-consuming it is to juggle the design, installation and management skills needed
    at retail.

  • Kitchen and bath design/sales associates are also working long hours but the financial rewards don't seem to reflect this, particularly at lower-volume dealerships.
    And, longer hours don't necessarily correlate to higher salaries.

  • Kitchen and bath dealers are doing a good job of offering a variety of compensation packages, benefits and perks. However, many fall short in the area of offering basic medical insurance a key issue for kitchen and bath designers/salespeople in the face of a recently released report that ties a lack of medical insurance to poorer overall health and a drastically enhanced mortality rate.

  • There are seemingly as many commission programs in play these days as there are sales/design associates at work. The K&BDN survey reveals, for example, that some pay sales/design associates a straight salary, while others offer deals consisting of straight commission, and still others structure plans that offer a combination of both.
    Moreover, for those who are paid some form of commission, there's a variety of wrinkles to the plans. The poll finds, for instance, that commissions are sometimes paid on the basis of sales volume aloneor on the gross profit dollars generated by what's soldor on net earnings from jobs. In addition, commissions are sometimes paid at a fixed rate, while in other cases they're paid on a sliding scale.

  • While business owners place a high degree of value on customer service skills and industry experience, the vast majority
    of dealers do not pay premiums for sales/ design associates with CKD or CBD

  • Despite tough economic times, more than half of dealers, designers and salespeople expect their earnings to increase in 2002 over their previous year's earnings.

All of this should yield some interesting benchmarks and insights for kitchen/bath dealers wrestling with issues about compensating, motivating and retaining key people while controlling their payroll costs.

What may be most important to take away from the survey, however, is simply the notion that while there are obviously many compensation options to consider, what matters most is whether the pay plan dealers are offering is one that really pays.

Does it offer achievable incentives to employees without placing an undue burden on costs?

Does it enable the dealership to retain key people? Does it enable the dealership to create an incentive to drive not only sales, but profit margins, as well? Does it take into account the myriad "perks" that often add thousands of dollars to the value and cost of a compensation plan?

As the owner or manager of a kitchen and bath dealership, you can make a compensation program do anything you want it to. Similarly, you can decide how much you want to pay for a given rate of productivity, and then build a custom program that fits both sides.

Just be sure to establish compensation and business objectives before putting your pay plans in place. And, be sure to examine your pay plans regularly to see if they're yielding the results your business needs to thrive.