In this advisory video, Brian Kaskavalciyan explains how home‑improvement business owners can design compensation plans for sales and production managers that drive both revenue volume and profitability. He contrasts two common approaches—purely volume‑based plans and efficiency‑focused plans—arguing that the most effective plans blend the two. He stresses the importance of setting a baseline quota at or above the company’s breakeven point (or a higher growth target) and paying bonuses only on revenue generated above that threshold. Using a concrete example (a $400,000 baseline with $600,000 sales), he shows how the bonus is calculated on the excess $200,000 and tied to efficiency metrics such as low cost per lead, high NSLI, and strong gross margins. Throughout, he warns against “win‑lose” plans that reward employees while the business loses money, advocating instead for win‑win structures that align employee earnings with the company’s profitability and growth goals.
Chapters
What's a good comp plan for my sales manager, my production manager, anybody? How do I build that comp plan out? There's usually two schools of practice when I see comp plans being built. The first is going to be volume-based comp plans. I think that's really easy to wrap your head around. It's really easy for your personnel to wrap their head around. Let's drive volume, let's kill it, let's sell more, let's, let's set more appointments, let's issue more appointments, let's sell more, let's install more, more, more, more, more. Right. And it drives that side of all those sides of the business. The other component though, that's equally, if not more important, is your efficiencies, which drive your profit. Okay? Low cost per issued lead, high NSLIs, high gross margins. In my very personal opinion, the best comp plans for the best business leaders are a combination of these two things. They drive your volume as well as your efficiencies. Okay? Common mistake, if you do have volume bonuses in your business, do not pay your people from ground zero. It's nice of you, but why would you pay them when they're not— when you may not even hit your breakeven or your growth? So really good comp plans are going to at least have a baseline quota, whether that's installed revenue, whether that's net sales, whether that's issued appointments, whatever it is, define that baseline quota at least at your breakeven point. But what I would challenge you to do is define it at a higher point of where you want to grow and then The bonusing should be on every dollar after that. So for example, we'll stick with that $400,000 of net business. Let's say that that's our base threshold. And let's say our sales manager killed it this month and he netted out $600,000 with his sales team. My bonus is going to be figured on the $200,000 difference above my baseline. Okay. It's also going to be coupled with an NSLI. You can drive sales, you can drive volume, you can spend a lot of money to do that. I don't want— this sounds a little harsh. I can be a little bit brash if you know me personally. I don't really care for my staff making money when I'm not. So, yeah, a little relatable, right? So it's got to be a win-win bonus plan. And by the way, I'm gonna give you like a little dose of reality. The people that work for you are good people. They love you, they care about you, they're loyal to you. They don't really care if you're losing money. Not all the time, at least. Okay, you got good people that don't want to be a part of a company that's losing money, right? But they still got paid. And if they get paid but you don't get paid, they don't really care. So it's incumbent upon us as business leaders to make sure we create win-win situations, not win-lose. And when I say win-lose, oftentimes the comp plans I see are a win for the employee and a lose for the business owner.
