Farm Progress

Tie bonuses to farm profitability and individual performance to help generate an owner’s mindset in your employees.

Darren Frye, CEO

November 29, 2018

2 Min Read

 We have traditionally given all our employees an end-of-year bonus. What’s your take on employee bonuses and rewards, especially this year? — D.W., Nebraska

Many in ag find a main factor limiting growth is retaining good employees. Kudos to you for acknowledging your employees’ part in the success of your operation.

But how can farm leaders properly share an operation’s success with their employees?

Consider this: Do employees have any control over the size of their bonus? Do they understand when they would receive a bonus versus not?

Say, you gave each employee a $5,000 bonus at year-end for the last two years. You tell them it was a good year and you appreciate them, but they still don’t know what they did to contribute to the farm’s success. They’re appreciative, but it doesn’t impact how they focus their time. Generally, if a bonus has happened two years in a row, the employee will begin to expect it, regardless of performance.

If you want to bring your employees further into the successes and challenges of the operation, you need to explain how a bonus will be calculated. It might be based on the farm’s profitability or a proxy of that. This can help generate more of an owner’s mindset.

You could continue with year-end bonuses — but you run the risk of having an unprofitable year and still paying out.

Overall, employee retention is much more than an end-of-year bonus check. One of the best things you can do to help retain employees is to maintain a positive workplace environment where people are respected, encouraged to bring their creativity to work, and feel they are part of something bigger than themselves.

Frye is president and CEO of Water Street Solutions. [email protected]


About the Author(s)

Darren Frye

CEO, Water Street Solutions

Darren Frye grew up on an innovative, integrated Illinois farm. He began trading commodities in 1982 and started his first business in 1987, specializing in fertilizer distribution and crop consulting. In 1994 he started a consulting business, Water Street Solutions to help Midwest farmers become more successful through financial analysis, crop insurance, marketing consulting and legacy planning. The mission of Finance First is to get you to look at spreadsheets and see opportunity, to see your business for what it can be, and to help you build your agricultural legacy.

Visit Water Street Solutions

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