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Numbers game

Business Management

Lawn America rewards employees in dollars, long as their results show it makes sense.

Lee Chilcote | June 28, 2012

Brad Johnson, owner of Lawn America in Tulsa, Oklahoma, admits that he’s a bit of a fanatic about measuring results. Employing a color coded spreadsheet, Johnson, who runs a “good old-fashioned spray and fertilization company” with more than $5 million in annual sales, tracks everything from production goals to cancellation rates.

The results and rewards system is at the heart of Lawn America’s successful operation. The company, which serves 11,000 customers throughout northeast Oklahoma, has grown every year since it was founded in 1999, even during the last recession. This year, Lawn America is on track to grow 18 percent compared to sales in 2011.
“Our basic tenet is that what gets measured gets done,” he says. “Lawn America has developed a great track record, brand and reputation, and that’s part of our strength.”

When it comes to measuring results, there’s a method to his madness. Lawn America is not only growing, but it also has a 92 percent employee retention rate in the past three years. And that, says Johnson, is the key to providing good service to his customers.

“When you have a 2-5-year employee servicing a property versus a different guy every six months, that makes a huge difference in the level of service a customer receives.”

Whereas most companies measure outputs like production and profits, tracking such general data won’t tell the story of how to improve and grow as a company, he says. Instead, more companies should focus on measuring “the things that get us there.”

Here’s how Lawn America does it.

Reap the benefits
. By rewarding employees based on outcomes, the company ensures that they are producing the results needed to be successful. With bonuses accounting for as much as 40 percent of employees’ salaries and strong performance adding tens of thousands in extra pay, workers take it seriously.

“Even if they don’t do their job properly, route managers could get $13,000 in incentive pay – but I tell them they probably won’t be working here too long,” says Johnson. Route managers who perform exceptionally well earn up to $26,000 in bonuses.

Johnson’s system is very elaborate. There are 15 performance categories for the route managers alone, and each position has a customized performance spreadsheet. Although it might appear that such a finely tuned system would become cumbersome to manage, Johnson says that the opposite is actually true. Office staff members are trained to record data, and employees see it as part of the company’s culture.

With annual pay for team members topping out well above other lawn care companies in the Tulsa metropolitan area – about 30 percent higher – you can bet that Lawn America’s employees pay close attention to its carefully developed metric system.

Lawn America only recently hired its first full-time salesperson, yet typically closes about 75 percent of its estimates. “Most of our growth comes from referrals,” Johnson says.

The company’s incentive system delves much deeper into rewarding performance than simply examining an employee’s production rate. For route managers, Lawn America also measures such factors as customer net gain, evaluations, team production goals, cancellation rates, Net Promoter Score, optional service sales and average overtime.

“Every year we find new parameters, new things that we can track and reward for great performance,” says Johnson. “Most lawn care companies measure hours and how long someone works there. Some bigger companies have even taken away incentive pay.”

To Johnson, one of the most important factors is Net Promoter Score (NPS). Used by companies across the world, the simple metric measures how likely a customer is to recommend a company. Lawn America’s NPS score is in the 70s, which is high.

Once an employee gets a customer into the pipeline, they are rewarded not just for the initial sale, but for keeping that customer happy and retaining them throughout the year.

“The route managers are at the core of our company, and they are responsible for a certain geographic area and selling, servicing and retaining customers there,” Johnson says. “It’s like they have their own little business. They don’t own a single share of stock, but feel like they have ownership because they’re measured and rewarded.”

Other bonuses. Although peer pressure is a significant positive force within the company’s culture, Lawn America also emphasizes teamwork by setting team goals and rewarding performance. “Every biweekly pay period, there are team goals that are set,” says Johnson. “If a team hits their goals, then each person on that team gets $45 in addition to their paycheck.”

Lawn America also measures response times by using the software system Real Green. For instance, if an employee hits his goal of re-spraying a property within a certain time frame, he earns $80 on top of his base pay. It’s not so easy, however – as Johnson puts it, “You gotta get out there quick.”

Johnson has learned from experience not to provide every incentive up front, but to hold some of them in a “pot” until the end of the season. For instance, client cancellation rates aren’t measured until the season is over, since attrition occurs in summer.

Lawn America has a profit sharing system, too. At the end of a given year, 25 percent of total profits are placed into a pool and shared with employees based on their yearly pay. Employees that earn bonus pay are also more heavily rewarded with profit sharing.

In other words, the effect is cumulative – the better your performance, the more you stand to gain. Johnson’s carefully designed system is designed to incentivize strong performance at every level, and that’s why Lawn America is growing in a tight market, he says. “The good news is that the system does help drive attitudes, culture and performance in a positive way,” he says “Our guys know their job and what needs to be done. They just go out and do it as if they’re the owner, and they’re rewarded for it.”

Imperfections.
So what’s the bad news? “We’ve had this system in place forever, so people have come to expect it,” Johnson says. “They don’t budget right, so it comes to a point where if we had to scale back or take it away, that would hurt them. We’ve been fortunate so far.”

The other challenge with Lawn America’s system is instilling its values in employees. Typically, they begin to “get it” when they see money being added to their paychecks, Johnson says. Yet even then, it’s often still difficult to get workers to grasp the upside.

“I sometimes have to explain to my route managers that if they lose a customer, $22 comes out of their pocket – whether they sold them initially or not,” he says. “Also, people don’t like to work on Saturdays, and we battle that sometimes. Yet if they come in on Saturdays, they make $30-40 per hour – it’s like selling candy those days.”

Although it’s not always easy to implement, Lawn America’s time-tested performance reward system has allowed it to not only retain employees, but also to attract top talent. “There are some jewels out there with industry experience, and they’re just not being taken care of,” says Johnson. “We don’t go after them – they just come to us.”

To him, success is all about investing in people. “There’s a direct relationship between employee retention and customer retention,” Johnson says. “That’s what we focus on.”

 

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