A Leadership Bonus Program That Will Actually Save You Money

In this video, I'm going to break down a bonus program that I put together that is the epitome of a win-win. The company saves money and your key leaders can get bonuses. What else could you want, right? Rewarding your key people while also saving the company money. That is the epitome of a win-win. And so, I'm going to break this down for you. And if you're on the Guru Leadership Team, I'm sharing this video with you as well, just to define this new bonus program that we're rolling out. So you may be asking yourself, where did this idea come from? Well, last week we had one of our key teammates, Jason Gullett, find a savings inside the organization that came out to, I don't know, it's $1,500, $2,000, I'm not sure, per year. And I wanted to reward him for that behavior. And at the same time, over the weekend, I read a tweet from someone who was talking about a negotiation service business that they started. And basically, they take 25% of any money they can save your company by negotiating your bills particularly with your software providers and service providers. So as I started to reach out to them, I took a step back and said, wait a minute, what if I can combine this and allow my leadership team the ability to reach out to these vendors to renegotiate any contracts where possible, to squeeze anything down from an expense standpoint that we can, to help to reduce costs, and then just reward them instead of some third-party service when we take action on these, uh, expense decreases. And so that's where this program was born from. And I'm really excited to launch it. And if you're watching this on our YouTube channel, I just thought it'd be interesting for me to share it so you could maybe roll it out at your organization. It's not the type of thing you can do all the time because, you know, again, you probably depending on the size and scope of your organization, I don't know how consistently you're going to be able to negotiate the larger vendors. For us, you know, if we can save a few grand as a result of this, then it'll be worth it. So let me dive right into what we've got going here. And I will share with you how this program works. All right. So, program works like this. Our objective is to incentivize anybody on the leadership team to renegotiate contracts or identify savings that will save us more than $1,000 each year. Annually. Uh, for your organization, you may want to move that number. Maybe that's not a meaningful number to you. We're a little bit smaller, so that's a perfectly fine number for us, and it's just enough to reward them $250 plus anytime they, uh, are able to renegotiate a contract, or you are able to renegotiate a contract. Uh, so the bonus will be a one-time bonus of 25% of the annual savings rewarded to you at the time of negotiation. Uh, once you prove that this is the decrease that we're going to see annually. So for example, if you reach out to Zoho, our CRM provider, have a conversation with them, last year we paid them $10,000, you're able to negotiate it down by 20%, and we're going to pay them $8,000 this year, then we'll have that $2,000 delta, you will get paid a percentage of that delta. And so really, the biggest thing here is just making sure that we also are only doing this with vendors that are sizable enough to make a dent in that amount of money that we're looking for and also to allow us the opportunity to negotiate in a way that makes sense. From our side, what we're going to do is if we're just going to need some verification of the savings. So just documentation, here's what we paid them last year. Here's some verification that they've reduced our rate or we've changed what we're doing with them to accommodate a lower tier. And now here's the new rate. So that falls into this, what types of contract negotiations are eligible? I would say that a decrease in service would only be eligible if it's something we have been blatantly overpaying for and don't use. So let's say again, using that Zoho example, that we've been paying for the super premium CRM and we only need the premium CRM. Um, and we really, we go through, we evaluate, hey, none of these features are being used by the team. Okay, great. Now you've identified without even negotiating that there's savings there to be had that will benefit the organization. You should reap the rewards of those benefits. Another example might be purely just reaching out. Google is known for being willing to negotiate if you contact them and tell them, hey, we're interested in going to Microsoft or some other provider. Just reaching out and purely negotiating the rate down with the threat of us leaving and going to a competitor as sort of the impetus there or I would suggest for those of you reading this or watching this, whether on Guru or not, check out Chris Voss's book on negotiation. Put together a little cheat sheet before you make these calls and put yourself in a good position to win, uh, the negotiation. Because again, some of these could be as simple as a phone call and others could be more complicated. We don't want this to be a total distraction from what you do, so let's make sure that we go, uh, it at this with some level of discretion as we start down this path. So things that don't really qualify, you know, a temporary discount or promotional offer that won't be a long-term thing. So if they give us a, you know, a $200 credit towards our account or something, things that don't reach $1,000, annual payments versus monthly. So that would be the example of, well, yeah, we can save you 20%, but now you have to pay $20,000 upfront versus, you know, paying $20,000 throughout the year. We'll evaluate those depending on the size of the savings versus the size of the cash commitment. And determine if it makes sense. Sometimes we like to, from a cash flow perspective, pay things off on a monthly and that premium is worth it to us. Other times, not so much. And then obviously, you can't remove something that we need. You know, some examples of this might be, maybe we've got a contractor that's helping out with a specific function in the organization, saying, hey, look, so-and-so is going to soak up all their work. And so now I'm going to let this person go. You know, We'll have to evaluate each of those on a case-by-case basis. So there's a lot to think about here, but make sure that what our next steps will be as an organization, and if you're watching this and you're considering roll this out at your organization, this would be a good path forward, is A, have your leaders watch the video or review what the program looks like. B, I'm having finance pull a list of all of our vendors that have spent more than a certain amount of money with us over the trailing 12 months. Then you'll be— have the opportunity to look at that list of vendors and say, hey, here are some that I'm going to be reaching out to. What we don't want is everybody on the leadership team all reaching out to the same vendors, trying to negotiate the same contracts. So let's make sure we're communicating who is speaking to who. Again, so we're efficient with our time. And please don't say, all right, I'm going to reach out to all the top vendors because I want to try to take all of the, uh, bonus opportunity here. Let's be pragmatic and make sure that we're serving one another and we're ultimately serving the cause, which is to help the organization and provide you with some additional compensation opportunities in return. So if this was helpful to your organization and you tuned in and stayed in through this, make sure you subscribe to our channel. We're not only providing valuable content as it relates to HR compliance and culture, but we're sharing some of what we do internally so that you can learn from us and vice versa, because we learn from so many of our clients, so many of our peers, so many of our friends that we love to share that intel with others as well. Thanks again for tuning in. My name is Matt Vady. Have a delightful day.