Service Compensation Planning – Where do you start? Unfortunately there isn’t a cookie cutter approach to designing a service compensation plan that works for everyone. Job qualifications, market conditions and business needs vary amongst dealers, further complicating a plan’s design. Often upper management feels the organization is over paying their service personnel for the job performed, while the technicians and managers feel they are under paid for their efforts and work. As a service leader, start with the basics and determine if your organization has a formal compensation process for its service employees. You might be amazed at the rationale of your current compensation methods. For starters, compensation is the wages and other financial benefits earned from one’s labor. Consider compensation as what you give people, in this case service employees, for doing the job for which they were hired. Compensation comes in the form of direct and indirect benefits. Direct benefits are monies provided to the employee i.e. salary, over time, and bonuses. Indirect benefits are the non-cash benefits provided to the employee i.e. insurance, company vehicle, pension, etc. The remainder of this article will focus on direct compensation. If you find that your organization does not have a formal pay plan, or you are struggling to develop your current program to coincide with your business needs, you are not alone. It is not uncommon to find service organizations without job classifications, or pay ranges. On the other hand, if your service organization has job classifications, are they tied to business need? Ask yourself, “How do we determine if an employee earns a pay increase/decrease?” Many times, pay increases are based on perceived value or the individual’s pay is driven by tenure versus job value and performance. With all of this in mind, where do you start? First it is important to determine your organization’s pay philosophy. For example, the pay structure must be competitive in that it enables your organization to attract and retain quality employees. It should also provide opportunity for income growth and job advancement based on individual qualification (demonstrated skills), individual contribution (performance) and business need. The structure and policies must enable the organization to manage the plan with consistency and equity while remaining flexible and adaptable in order for it to evolve with changes in the organization. For the pay plan to be competitive it must be equal to, or better than, your market for like jobs or comparable skilled trades. There are many sources available of salary and compensation data to help determine a competitive pay range for your market. The BTA, as an example, provides a yearly Compensation Report which can aid you in your research. The US Bureau of Labor Statistics and Copier Careers are other resources for such data. Fortunately there is a natural progression, or career path, within the office technology field service providing a guide for job advancement. Depending on the size of your organization, a new hire without prior industry knowledge may begin working on printers or segment 1 or 2 equipment. Once they become competent at servicing this equipment, they may progress to working on the higher segment equipment. However, service job classifications need to start with your business needs and the pay ranges within these classifications need to allow for income growth over time. Advancement through these job grades must be based on performance and demonstrated skills aligned with the job requirement and business need. For example, for a technician to move up in pay grade, or career level, they must accomplish certain performance standards i.e. FCE, images managed, remaining within parts spend target, in order to advance to the next level. In addition they must demonstrate specific skills that are needed for the job classification. Let’s assume you have a technician transitioning from an associate level position to a high volume color specialist. Up to this point this individual has exceeded the desired performance expectations; however, this person also needs to demonstrate the desired skills for the position (high volume color specialist). Such skills may include color calibration, adjusting color registration, and problem solving in order to determine if it is a machine or application issue. The pay structures and policies within your organization must enable consistent and equitable compensation management. It is important to convey to the team that merit pay increases are not an entitlement and must be planned for and managed closely. “Merit” adjustments to employees’ pay reflect the employer’s desire to recognize performance and to ensure that those employees who perform in a creditable manner will receive pay that will stay abreast of market changes consistent with the financial condition of the organization. It also implies that the organization does not guarantee the “real income” of its members – it is not providing cost-of-living adjustments. However, if all employees work together and if the organization is able to pay, it will reward through “merit” pay adjustments those whose contributions have helped the organization reach the level of success it has enjoyed. As your organization evolves over time so should your pay structure and job classifications. Job classification review should be part of your yearly planning process. Once you have established your pay ranges, revisit and benchmark them every two years to ensure your organization is remaining competitive and any changes should also coincide with the yearly planning process. Merit increase planning should also be part of the department’s annual financial plan to ensure the department remains within budget and minimizes the risk of any unexpected increases in labor expense for the upcoming year. Ken Staubitz is a service consultant with Strategy Development, with 14+ years’ experience in all levels of service operations and MPS service structure. Formerly with Modern Office Methods in various service and operational roles; was MOM’s Director of Client Services where he oversaw all service operations & managed a staff of 60+ field service personnel. He can be reached at (513) 200-2169.