PhyllisGoldie and Associates
Phyllis Goldie and Associates
Never Underestimate the 
Power of the Pay Plan 

We all know that the right pay plan is imperative to the company's financial growth and employee satisfaction. Constantly changing pay plans will have a negative effect on productivity and the bottom line. Too often the employee does a great job and business and profits are increased and all of a sudden the employee is "making too much money".  If you have the right pay plan from the start and don't deviate from it, your percentages of compensation will always be in line.

Items to Consider  When Evaluating or Creating Pay Plans

  • What effect will an automatic increase in your warranty rate have on your team's income?  
  • A change in an accounting method can have a huge effect on pay plans.  Before making changes review pay plans and determine how these changes will affect someone's pay.
  • Are your expense accounts pointing to the right line on the financial statement?  If something is pointing wrong you could be over or under paying your employee.
  • Are your expense allocations set at the proper department percentages? Ex: if managers are paid a % of department net and the electric is only being charged to New and Used cars, then you could be overpaying your Parts and Service Managers and underpaying your Sales Managers.
  • There are several methods for expenses allocation: 1) factory dictated, 2) gross sales as a % from prior year - adjust every year, 3) departmental gross profit as a % of overall GP, and 4) actual - all expenses directly related to a specific dept. should be charged to that dept.  Decide which one is applicable to the expense. 
  • Sudden changes in business can often create large swings in an employee's pay.  In order to offset this you may want to consider paying a salary and a percentage.  This will keep your personnel expense percentages in line.
  • When paying on sales or gross profits verify that discounts or adjustments have been applied accordingly.
Download our Pay Plan template here.  PGA advises before using any Pay Plan document that you consult with your Labor Attorney.
Above is just a brief list of considerations for creating and evaluating your employee pay plans.  Contact us here for an in depth analysis and advice on how to keep your percentages in line and maintain employee job satisfaction.
Effective 12/01/2016: Fair Labor Standards Act (FLSA) Changes Go Into Effect

On May 18th the Department of Labor released the details of it's changes to the FLSA.  These changes go into effect 12/01/2016 and it is important that you understand these changes and how it applies to your employee compensation. Below are links that may help you navigate this change in your payroll.

"I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel ."  - Maya Angelou 

Phyllis Goldie and Associates, LLC | | 239.826.9544 |
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