How Pay-for-Performance Creates Better Construction Managers

In past blogs, I’ve talked about how pay-for-performance models help create engaged, more efficient workers, who are committed to quality. But there’s another important cultural shift that comes into play when these models are implemented: How do managers step up their game to keep up with engaged workers?

Disengaged workers will not usually point out management or project inefficiencies, because they don’t have the same vested interest in the success of the company. But this changes when you align incentives, getting the best workers to pay attention to more of the elements that drive success.  In fact, you might get some very interesting feedback, with the potential to benefit your entire business.

Managers Are Key to Building a Culture of Efficiency

Mid-managers are of course integral to driving company culture forward. They are, after all, the connective tissue between leadership and workers. Developing servant-leader managers will strengthen your culture and increase your bottom line by building a team that functions together more efficiently.

As Peter Drucker says, “Culture eats strategy for breakfast.” This is true for all businesses, in all industries, including ours. Culture is also the most important indicator in predicting how your company will perform over time. An analysis by John Kotter and James Heskett, on Corporate Culture and Performance, found companies with strong cultural alignment performed significantly better versus those without:

Revenue in companies that invest in culture increased by 682%, as opposed to 166% created in companies with no culture investment; company valuation was 901% versus 74%; and net income was 756% in contrast to 1%.

Companies with aligned cultures have everyone working towards the same goals because everyone is invested in the success of the company.

Workers vs. Managers: The Underlying Problem

Still, we’ve got this fundamental breakdown that's occurring between workers and their managers: if hourly workers work harder, it doesn't change what they earn. The only people who generally benefit, if a job is finished ahead of schedule, is the management team.The workers feel this. Their incentive is actually to take longer, get overtime or at least not work as hard. After all, why would a worker care about a company’s performance, if that performance does not impact them at all?  4 out of 5 people in the industry are paid by the hour, without incentives directly tied to performance.

Investing in company culture can begin to turn things around. By being authentic with your workers, you let them know what to expect from Day 1. By adopting a people-first mentality, your workers will begin to feel like management actually cares about them, which supports their willingness to invest in you and your objectives. By communicating better, you see problems sooner, reduce breakdowns in operations, and bring jobs in more consistently on schedule. And by finding ways to grow your workers and company together, you give them more than just a job: your success becomes their success and vice versa.

How Managers Should Think About Company Culture

Your managers are the face of your company, which is why they are most instrumental in building your culture. As a refresher, “company culture” is the personality of your business.  At Protiv, we have broken down the core aspects of company culture into four pillars:

• Authenticity: how accurately you present your company and is your culture genuine to who you are Does your company actually do and act the way you say it does?
• People-First: how much you care about your employees as people. This goes beyond safety or annual picnics; it’s how much investment your whole leadership team make into really knowing your workers.
• Communication: how well your managers and teammates talk to each other and work in sync.  This means information is flowing up and down the org chart.
• Growth: how much you invest into the development and financial well-being of your workers. Do you incentivize them to grow your company by growing them first?

You might think that because workers can come and go as they please, investing in them might not make sense. But people are the center of a great workplace culture and culture is at the center of performance. Getting them to stay at your company and do their best work has a massive positive financial impact. As business guru Tom Peters says, “You take care of the people. The people take care of the service. The service takes care of the customer. The customer takes care of the profit.”

How Pay-for-Performance Creates Better Managers

Using Protiv’s integrated platform that bonuses hourly workers for safety, quality, and productivity is a great start - but it won’t instantly give you a good culture. You and your managers need to invest into that. Protiv helps incentivize workers to get the job done faster and to higher quality, but past customers have also found that much of the benefit comes when workers help identify inefficiencies in management and/or operations. Here’s what I mean.

Protiv takes the labor budget for the job and tracks how many hours it will take to beat the budget. Workers set this as a goal. Whatever money is saved on the labor budget is divided up and distributed as bonuses. This, of course, incentivizes them to finish the job faster and do it right the first time.

When workers care about beating their deadlines, they begin to take ownership of the processes. Say, for example, they arrive at a job site and the materials aren’t there. They might wait hours for the right ones. They won’t necessarily say anything if they don’t care about finishing the job on schedule. After all, it’s not their money. But we’ve found that when they use Protiv, they urge their managers to stay on top of material deliveries, since their bonuses are at stake. This puts upward pressure on the managers to make sure workers have everything they need to get the job done efficiently. Crews will start to see more opportunities; process improvements, team organization, materials, scheduling and more. All because it begins to matter to them.

In the end, pay-for-performance doesn’t just improve the output of your workforce; it also elevates your management team and overall operations. When workers are empowered to care about the outcome of a project, it naturally pushes managers to be more efficient, organized, and attentive to their needs. This symbiotic relationship builds a culture where everyone is accountable, leading to better communication, faster project completion, and ultimately, a more profitable business. By investing in both your workers and managers, you’re creating a win-win environment where success is shared—and sustained.