The grand compensation experiment at our first store.

[NicksPizza]

@dewar

@NicksPizza

I will look forward to hearing how many people you find willing to take the plunge on this somewhat risky proposition . . . I got to trust those other folks a WHOLE lot to play in that world, and there aren’t so many strangers I would trust to put all the tips in the jar and not cheat me . . . then the taxes.

I am not sure I understand about the taxes.

I trust but verify. I do not watch like a hawk or assume you will cheat me. But I do audit. If I catch you stealing even a dollar, though, you are gone. You can’t be “mostly honest”. You either are or you are not.

If the person who delivers the order pockets the tip, that means they are willing to steal from their friends to get $2-3. That person is gone.

1. I unfortunately daresay that nearly anyone is willing to steal from their friends for $1 a delivery for 15+ deliveries a night every night . . . .when the choice is between their family or their friends. Genuinely curious what sort of concrete assurance you are giving employees that they will not be cheated by other drivers/employees . … would be useful to many of us in our own shops.

2. Taxes: Pizzerias drivers are, by nature of their existence, high scrutiny creature in the eyes of the IRS. Your putting tips into my compensation package impacts my tax exposure and liability. As a driver, my tips possibly will be lower than the “industry average”, making me more open to IRS attention. As a cook, my taxes exposure will change as I am required legally to report this additional income . . . not DEMANDING compliance with federal tax code will erode credibility of management and control of the micro-culture. This is not an insurmountable item by any means, but one that I would be asking about if I were being hired for this $$$ system. (At least until a system similar to the Fair Tax gets implemented)

[paul7979]

What I don’t understand is where is there any incentive to do any more that to learn the jobs to the satisfaction of you and the co workers. Why should someone push themselves to be the best pizza maker in the store? why become the best driver, who takes the most deliveries and gets the highest tip average? They will still make the same as they would if they were just decent at each position.

[billy_romano]

@dewar

@Registered Guest

So if I clock out early and reduce labor, I will get paid more? (bonus)

You would get paid more per hour, but not overall. In other words, you would not make more had you stayed the full shift, but your hourly average would be higher.

This is a rough example only:
So instead of $10.00 an hour for 5 hours = $50
You would get $11.00 for 4 hours = $44
You got a dollar raise for the hours you worked, you worked one less hour, and the business saves $6.

I have never had a problem finding part-time people who wanted to get off early. The problem is getting people to keep up the pace after the rush in order to clean up and clock out. I want there to be some incentive for them to do so. And the incentive is team-based, so that as a group they encourage each other to get the work done and clock out. All those extra 15 minutes of slacking add up quickly. Either a manager must ride herd or the employees must be motivated.

I always prefer self-managed employees and have been successful in the past in developing the needed culture for it.

so if me and 3 others decide to leave early and get $15 an hour,and the other 3 stay and get $9 hr stuck cleaning up the mess,while we go to the group party…hmm
mind you the tip factor of the people that did the work and now stay will be paid less for work performed.while the others
"did not do anything"as far as all else will see it.

[Charles]

@NicksPizza

[Psych MS background]

This is a very interesting concept. I am also interested to hear how you are accounting for and balancing “outside” influences on the system. A self-managed culture generally requires a self-actualized culture of some level. Any group dynamic has various stages of development that are always shifting, and require different interventions of leadership and management.

“norming-forming-storming-transforming”

I learned group development as “forming, storming, norming, and performing” with “adjourning” added later for those groups with finite terms.

@NicksPizza

Storming is the phase in which I am most interested in your game-plan. A very normal and natural stage of functioning includes a period where there is resistance to open rebellion against the structure of the group. There will be manipulation, power struggles, and even borderline criminal behaviors (see adolescents). The first time your group gets to this stage will be a profound paradigm crisis . . . meaning the leadership will have to adjust the system to manage the stage, or collapse. Unsophisticated and/or untrained leaders (regardless of business acumen) have the increased potential of imploding instead of moving them to “transforming”.

I think perhaps the Psych department tends to view group dynamics through a pathological lens rather than as a natural and manageable process. During the storming phase, there are the the inevitable conflicts as groups work towards norming. However, carefully choosing the group members during the forming stage mitigates much of the conflict and is the reason that the forming stage is just as important as the others. We are forming our initial group from participants who already share common values rather than a crap shoot of hiring off the street.

@NicksPizza

Then there is the application of Maslow’s Hierarchy of Needs as applies here . . . . the guy whose family utility bill is overdue is more likely to pocket tips. BTW, what controls are built into your plan to identify tip skimmers? That part gnaws at me as I cannot come up with them for my own world, let alone this new one you are building your innovation could help us here.

Maslow’s hierarchy, where lower deficit needs must be satisfied before the person deals with high deficit needs (and eventually is able to pursue self-actualization) has been the basis of new theories such as Alderfer’s ERG theory which addresses some of its limitations including the discovery that the deficit needs overlap. Alderfer simplified Maslow’s hierarchy to three levels of needs - Existence, Relatedness, and Growth. Though the needs are still hierarchical, Alderfer theorized that the needs could be pursued simultaneously and the order of the needs are different between individuals. The only time people will focus solely on lower needs is if higher needs are not being satisfied. In other words, you feel that someone will steal to pay overdue bills. Alderfer would say they would only do that if they were not having their Relatedness (relationships with others and fitting in) needs and Growth needs addressed. So if you appeal to their higher needs for growth they would not steal but find another way to satisfy their Existence needs that would not threaten the loss of their higher needs (friendships, personal pride, peer approval, etc.).

I enjoyed the mental floss. Thanks.

[Charles]

@billy romano

so if me and 3 others decide to leave early and get $15 an hour,and the other 3 stay and get $9 hr stuck cleaning up the mess,while we go to the group party…hmm

No, the entire shift would receive equal parts of the bonus.

[Charles]

@paul7979

What I don’t understand is where is there any incentive to do any more that to learn the jobs to the satisfaction of you and the co workers. Why should someone push themselves to be the best pizza maker in the store? why become the best driver, who takes the most deliveries and gets the highest tip average? They will still make the same as they would if they were just decent at each position.

The compensation as I listed is to both encourage individual knowledge/ability and team performance. Your base pay is determined by your ability, your shift bonus by your teamwork. If you only recognize individual performance, you will see competition between employees rather than cooperation. You need to reward both. The driver cannot deliver the maximum amount of pizzas without the the team performance of the cooks. The inside store folks determine how efficiently the orders are prepared and how many mistakes there are.

I will blog our plan and results at http://www.PizzaIsLove.com/blog as we go along.

[NicksPizza]

@dewar

@NicksPizza

[I think perhaps the Psych department tends to view group dynamics through a pathological lens rather than as a natural and manageable process. During the storming phase, there are the the inevitable conflicts as groups work towards norming.

I enjoyed the mental floss. Thanks.

Wow. I thought I was discussing the need for enlightened and prepared leadership in order to manage effectively and efficiently the inevitable and unavoidable conflicts that happen when humans interact for periods of time striving towards complex interactions of both personal and group goals. Who would have guessed that your people would never conflict.

Let the social engineering experiment commence with enthusiasm!

[bodegahwy]

I’ve been doing this for a long time and managing groups of people even longer. The simple fact is that not every employee will work as hard as another, only a few will even grasp the concept of looking after the interests of the business or the group effort as a whole. An even smaller number will look at the circustances around them and correctly perceive what needs to done to keep things moving smoothly over the rest of the shift, the balance of the week and next month.

I have a place in the business for employees who show up on time and do the tasks given and do them well. I need about 15 of them. There is another place for the employees that can lay out and organize those tasks on a daily or shift basis. I need 4-5 of these people. Employees that can look ahead to the next week or month and organize the things like scheduling, food buying, equipment maintainance, hiring etc are at yet another level. I would love to have more than one of these at a time, but I never have had more than one. This person is the general manager. Those varying levels of skill and responsibility have very different values and very different paychecks.

I would never consider splitting the bonuses I pay evenly. The contributions are not equal. Not even close. The skills sets are also not equal in how available they are in the marketplace. I can not turn just any pizza maker into an assistant manager or general manager. Whether a busy night goes smoothly has a lot more to do with whether the day shift manager correctly identified and assigned the prep work to be done and whether the general manager correctly hired, trained, sheduled and bought for the business than how fast some pizza maker did his job. Further, being that busy in the first place has still more to do with whether I succeeded in my responsibilities in the marketing, menu development, pricing and service policies which have been building the business for nearly a decade.

If an employee does a good job they get a raise. If they are part of the management group, they get a raise and a bonus. That bonus is based on the profit of the business and I share enough info with the managers for them to understand how controlling food and labor (the two main cost variables they have control of) will increase the bonuses.

To the guy that thought my policy on paying different wages for different jobs was somehow wrong, you are entitled to your opinion even if you are mistaken on a couple of things. 1st: there is no “contract” of employment. Employment here is “at will”. 2nd, it is entirely legal to pay different wages for different jobs. Driving is a tipped position. When they are driving, they average about $8-10 per hour in tips PLUS the wage I pay and sometimes quite a bit more. I get no complaints from the managers about the arrangement as they are making more per hour, not less, than they would as manager. The other poster is correct, this policy does not apply to a manager taking a run or two during the night to catch up, it only applies to shifts worked as a driver.

[Charles]

@NicksPizza

Wow. I thought I was discussing the need for enlightened and prepared leadership in order to manage effectively and efficiently the inevitable and unavoidable conflicts that happen when humans interact for periods of time striving towards complex interactions of both personal and group goals. Who would have guessed that your people would never conflict.

Oh, I certainly hope there is conflict. Constructive conflict brings innovation.

[thepassionofthecrust]

If nothing else it sounds like a paperwork night mare. We pool a tip jar and divide it by hours worked (insiders) and that is enough of a pain in the butt.