Unequal Pay for Unequal Work Pay-for-Performance, Part 1

Health |

Simply stated, capitalism creates wealth by encouraging people to be productive. Why don’t you try the same concept in your fitness facility? Pay-for-performance works like this: You set standards for performance, then reward those who exceed the standards. Pay-for-performance does not take into account years of service, seniority, education, potential or other measures of future achievements. All that matters is performance. Consider the steps involved in setting up an effective pay-for-performance program in your facility.

Define what you mean by performance
In the health and fitness industry, no one club can be all things to all people. Some facilities are of the high-volume, affordable variety. Others feature state-of-the-art equipment, cutting-edge programming and luxurious spa services. The key to defining “performance”in your facility is understanding your target market, and your mission within the marketplace.

To define “performance,” ask yourself, “What are we trying to accomplish?” The emphasis must be on the specific. Like most businesses, your ultimate objective is to make a profit, but there are many roads to that destination. Precisely how will you do that? Through volume, or through high price points? Who are you trying to serve? If your mission is to provide affordable, accessible fitness services, you need to increase public awareness about your club and its services. In this scenario, your business plan is based on volume, not revenue per customer.

Determine how you will measure performance

Once defined, performance must be measured, not just described by some vague generality. This is because, in the pay-for-performance equation, above-standard performance gets higher pay. If your facility is of the lower-priced type, you need to come up with quantitative ways to measure your employees’ability to reach the greatest number of people.

If you discover that most new members join your facility after a tour, you will want to reward not only those employees who enroll new members, but also those who give the most tours.

Why not just reward those who sign up new members in a straight-up sales commission arrangement? There are at least two reasons: 1) If you are engaging in community outreach and awareness, you want to encourage and reward actions that bring people to your facility; 2) If you reward only straight sales, your employees will engage in high-pressure, boiler-room tactics that will drive many people away.