Compensation is a difficult subject, and field organizations are challenged with establishing and evolving their plans to attract talent and achieve performance goals. As a field service operations leader with a background in various industries, here are experiences and practices to consider to either define a new plan or update your current plan based on changes in the field service market.
The Field Service Profession
Field service is a specialized career requiring both applied technical skills as well as strong communication skills or soft skills. This is the dynamic basis of the field service role and reason to compensate above average for technical professions considering the depth of responsibility the field service position holds. This includes personal safety while working independently in hazardous environments, care and use of company assets, and the ultimate; building brand equity through customer relationships.
I have never regretted paying for talent and performance, and recognizing the breadth of responsibility and the combination of technical and soft skills of a field service position, justifies above average pay. Field service careers also provide many opportunities for advancement and have cross-over skills leading to other roles. With leading pay and career opportunities, field service is an attractive profession that can effectively compete with the shortage of skilled labor.
The first step is to establish a fair base pay relative to your service market and technical speciality. I am of the position to pay for field service quality and address operating margin in parallel through pricing and process improvements. Attracting a candidate based on economy pay ranges never works in the long term, either the new employee will be dissatisfied and leave in a relatively short period or worse yet, they stay and you have poor performance or pay inequity amongst your workforce.
Base pay is interrelated to the other qualities of a service business; the quality of training, equipment, IT systems, safety, vehicles and work environment. With the focus on quality, it is best to consider base pay with other quality factors of your organization to be congruent and offer the entire package to present a compelling offer to your candidate. This position on quality works equally well in retaining and developing your existing talent and operating performance achievement. Organization culture is largely formed by the standards and norms over time, and quality and accountability are strong attributes to ensure building a strong, performance based culture.
Other factors influencing fair pay include the amount of travel, range of responsibility and decision making. Varying field service responsibilities might include making job scheduling and inventory stocking decisions to selling services or products. Start with a thorough job description identifying key responsibilities and skills required. Often, there are wide ranges of service delivery methods for field service and a good business discussion and job description exercise with the Human Resources organization will provide a better assessment of skills and therefore pay.
One common mistake is not taking time to assess base pay across the entire service organization. If pay assessments are not done and adjusted periodically, new hires will be hired at higher rates, given the market, and create major issues in pay equity for your existing workforce. A common worry is paying too much and impacting the cost of services. Bottom line is that it’s easier to maintain and grow operating margins through pricing, value and process improvement then it is with reducing the cost of labor, or having inferior human resources. Strategic compensation issues across an entire workforce leads to demotivation and field performance problems. The best practice is to separate operating margin factors from workforce pay factors and address each individually under the umbrella of net operating profit.
Variable Pay; commissions and bonuses
Variable pay incentives are common in field service for selling services, generating product leads or other operational factors such as productivity, safety and such. I am a big supporter of variable pay to link individual or team performance with company mission, values and key operating objectives. In most cases, commissions are paid for service contract sales on a monthly basis and other type of incentives for productivity, safety, team goals vary greatly by organization. I really like the incentives for the technicians to obtain licenses, credentials or technical and soft skill ability as a way to keep professional development front and center. An organization constantly developing skills drives adaptability and performance achievement.
In total, the variable pay elements engages the team on the important goals and objectives for the business period and can be adjusted as the business needs change. One major area of concern for me is to avoid incentive creep or an incentive plan too structured into the technicians base work where it is hard to undo variable pay practices. Here is one example that challenged a field service organization: The service organization would pay large incentives for time and material work and products sold. Over time this could be 15-20% of a technician’s total compensation and designed to achieve “fair pay” for a high performing technician. The first concern is paying commision on time and material work and products and compromising service integrity and creating team conflict with their product sales partners. Another unintended result was that new technicians could never achieve fair pay levels as it took years and sometimes further team conflict for them to have the opportunity for these commissions. The result was poor recruitment and high turnover in the new hire levels, and protection of the senior tech and their territory, which together are obstacles for business growth. This was a win-lose situation. The lesson learned is that these compensation decisions and programs can be built to last and hard to change.
A best practice is to clearly align the company or service organization mission, vision and operating metrics to variable pay. This often includes proficiency in their technical and soft skill abilities as one grows within an organization, retaining and acquiring new customers, safety, productivity and revenue growth. Good field service organizations communicate frequently on continuous improvement and professional development, and incent their team on both accomplishments. Another core variable pay element is to demonstrate the values of the organization. After all we believe in the importance to define values to ensure that is how the organization conducts work and relates internally as well as with customers.
In summary, plan to compensate well for field service positions, their contributions to corporate objectives are significant as a field-based problem solver and brand ambassador. Second, base your variable pay programs in alignment with your corporate vision, values and operating plans. Usually you will have a mix of customer retention and acquisition, safety, teamwork and professional development elements that can be incentivized while remaining nimble as the business evolves. The compensation combination of base pay and variable pay will be a core element of your organization quality and commitment for professional and business growth.