Labor Solutions: April 2001, Compensation Packages

Supply and demand economics dictate that the price of landscape employees will continue to climb as long as they are in such short supply. The lack of qualified supervisors and managers, in particular, has forced contractors to reevaluate how they compensate their employees in order to attract them.

One trend gaining momentum is providing employees who go above and beyond the call of duty with paid time off work, observed Larry Fish, president, GreenSearch, Atlanta, Ga. "For example, a lot of contractors hustle to get work done in May before the heat really gets bad," he explained. "Maybe a company that asks for a lot of hours in May will reward the employees by giving them a day off in June when the workload is a little lighter."

Contractors’ compensation creativity is most evident, however, when they start offering variable compensation, Fish noted, adding that more companies are going this route in a dual attempt to attract key employees and drive growth. "The most controllable cost on a profit-and-loss statement is labor," he noted. "If there’s a way to reduce the fixed element of that line item and tie that expense to the company’s performance, then everyone should win."

Essentially, companies using this approach tie a portion of their managers’ salaries and bonuses to the performance of their area of responsibility in the company. Paying employees this way could actually result in paying more dollars, but only if the company hits the desired goals.

"This way, the irrigation manager is motivated to grow his division or maximize profitability, depending on the goal set at the beginning of the year," Fish explained.

For the most part, this variable compensation model has been limited to the upper management of landscape companies, but Fish noted that some companies have offered foremen or crew leaders similar earnings opportunities.

Meanwhile, Fish cautioned employers to steer clear of discretionary bonus programs. "More people pay their foremen, technicians and so forth with discretionary bonuses based on how much the company has left over at the end of the year, but this creates inherent employee relations risks," he pointed out. "If you pay these bonuses on Dec. 31 one year, what happens the next year when there isn’t any bonus to give out because of factors out of your control, such as escalating fuel prices? Plus, discretionary bonuses may imply that one individual will get more than another, and employers will eventually have to face the music if that is the case."

An equally important part of total compensation is the benefits package that companies offer.

As employees climb the organizational ladder, company cars and even retirement programs become more common, according to Bob Zahra, general manager, Floraper-sonnel, Sanford, Fla, adding that this industry offers relatively small benefits packages compared to other industries.

Fish noted that most employers offer a benefits package that includes employer-sponsored health insurance or access to a similar program. "Most employers with 25 or more employees procure a program they can offer employees and eligible dependents," he added, "although most employers require a portion of the premium to be born by the employee."

While vacation days are commonly offered, Fish said generally only large companies offer paid sick days. "Smaller companies forgive the absence or charge the day against another accrual."