369. How to Do Coworking Bonuses Right - Data-Driven Recommendations

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369. How to Do Coworking Bonuses Right - Data-Driven Recommendations

00:00:00,"Welcome to the Everything Co Working podcast where every week I keep you updated on the latest trends and how to's in co working. I owned and operated co working spaces for eight years and then served as the Executive Director of the Global Workspace association for five years. And today I work with hundreds of operators and community managers every month, allowing me to bring you thought provoking operator case studies and inspirational interviews with industry thought leaders to help you confidently stay on top of what's important and what you can apply to your own role in the co working industry."

00:00:44,"Welcome to the Everything Co Working podcast. This is your host, Jamie Russo. Thank you for joining me today. How are you doing? It is Q4 so I'm checking in because there's probably a lot going on right now. I know in my business there's a lot going on and we just wrapped up our mailbox Moneymaker challenge this week. So exciting. Our goal was to be done before Thanksgiving in the US so that our moneymaker challenges could feel like they took some great action and are ready to start 2025 with a strong mail program."

00:01:22,"Speaking of 2025 and Q4, it is planning time. So one thing I said to my moneymaker challengers in our wrap up se our closing ceremonies was that I was super impressed with this cohort. They were really focused on making a plan, setting goals and taking action. And we had some action takers in the group. So a huge high five to those folks who were able to carve out the time and put the focus against getting done what they wanted to get done with accountability and support."

00:01:59,"It was awesome. But one thing I said is that, you know, it is not rocket science to operate a co working space. What it takes is discipline, focus and execution. So the folks that show up and take action and act on their plans win a hundred percent. So I think it's incredible to be able to create a plan and then act against it. And sometimes the planning piece is hard and sometimes we do need accountability to do that."

00:02:30,"I know that's the case for me and that's one of the reasons I love doing challenges. And it was a 10 week challenge so it wasn't a quick and dirty one. But it created a space for that focus and intention and I know that's what I need. So we are hosting, this is actually for our community manager program, but we're going to open it up to the public."

00:02:55,"We're hosting a Q1 2025 planning session on December 11th. So if you are a community manager or an owner of a space and you have our community. You have a community manager or community managers, plural. In our program. You have an invite in your inbox. You might just need to find it to attend this workshop and we'll keep sending you reminders. Don't worry. If you were in our Moneymaker Challenge."

00:03:23,"Moneymaker Mailbox Challenge, you also have an invite to attend our workshop. And if you're anyone else and you would like to get some accountability and support for Q1 planning, we're going to open it up shortly. We're working on our signup page and we will let you know on the next episode. We'll share the link we'll share the link in the Facebook group and on the newsletter. If you're not on our newsletter, you can go to our homepage everythingcorking.com"

00:03:52,"and subscribe. So our goal for that session is to get you a clear Q1 roadmap. The first thing you have to have to make progress on anything is clarity. So if you're doing this on your own, which you might totally prefer to do with your team, just keep these principles in mind. Clarity. That's one of the reasons why we plan right. If we're just ready, wait, fire, aim."

00:04:17,"Ready I think is a saying, you know, we're just responsive and we're kind of reacting as we go. We're not going to accomplish the things that we want to accomplish. And the value of clarity is incredible. And that just sometimes takes some work. And sometimes you may not even get the clarity on the first go round. You might have to go through the process and the clarity will come and then you'll feel really good."

00:04:42,"So we're going to create a roadmap and again, if you don't have the clarity in that session, that's okay. We're going to facilitate and create a framework so that you have some time to do that or fill in the gaps later. So you'll the goal is that you're gonna workshop through this 90 minutes and get specific goals tailored to your space and market in a prioritized action plan for whatever it is you wanna accomplish."

00:05:04,"Growth, optimized operations, more member engagement, better retention, higher to or close rate. Whatever it is, it's on your roadmap and you have clarity. And then where we can, we're gonna provide some tools for success. And this is where being in our community manager program is a big advantage because our community managers and their teams will be able to set goals and then tell us what they're working on and we will feedback personalized resources to help them pursue those goals because we have an enormous wealth of templates, playbooks, swipe files, training, et cetera, that apply to many of the goals that you will have."

00:05:44,"So our community managers and their teams are going to be in great shape, but we will share some of those things with everybody who gets on the call. So we'll work through a framework that will help you get your roadmap, take away some tools and have confidence and focus and just really the time to do this. We're just going to take 90 minutes, so we hope that that's approachable and that it's enough time to do some workshopping and feel really productive before we get into holiday season, before 2025 actually starts."

00:06:15,"So mark your calendar December 11th. It's going to be at 10am Pacific Time and look for the registration link. And again, if you're already in our Community Manager program, community managers and space owners are invited to this call. And our Moneymaker mailbox challengers are also invited. And we'd love to see you join us as well. Okay, today I'm covering a hot topic, so I'm a little bit of a nerd."

00:06:41,"You might know that if you've been listening to the podcast for a while. I have an MBA from the University of Chicago and I subscribe to Harvard Business Review. I will confess I don't always get through it cover to cover, but I love to read. So a recent article caught my eye and I wanted to cover this because this is something I think about a lot. So we have a mentorship program for folks who are starting spaces and then in 2025 we will be expanding that to operators who are already in business."

00:07:17,"And we do a lot of coaching on community manager compensation, leadership, et cetera. So part of that is bonusing and I think a bias for operators is to want to over bonus community managers. Sometimes it's when they're starting or when something shifts in their business and they want their manager to have more autonomy. Their intuition says to create a bonus structure so that the community manager is really incented to get the outcome that the owner is looking for."

00:07:57,"And in some cases this makes sense. I love the phrase aligned incentives because we don't do things unless our incentives are aligned with the outcome of the thing, unless we have to. But incentives are really, really important. But it's it's tricky. Human beings are unpredictable and irrational sometimes, and so it's not the thing that we think makes sense is not always the thing that works. And so that's why I wanted to share this research."

00:08:31,"So the article that I'm referring to, I'll put a link you probably need a subscription to. Actually, I don't think I had to log in. I think you can grab this. So the article is research When Bonuses Backfire and it was written on September 4th of 2024. So it's a Harvard Business Review article titled When Bonuses Backfire. And it reveals that two large scale studies showed how monetary bonuses in certain scenarios not only failed to achieve their intended goals but also had unintended consequences."

00:09:04,"And this is what I mean by things that we think are intuitive and make sense are not always that way. For example, one study on attendance bonuses in a retail setting showed increased absenteeism. So they were bonusing attendance. And yet what it did was actually make people stay home more. Why? That is because the bonus actually signaled that perfect attendance was not just an expectation of the job."

00:09:32,"It's not just standard behavior, it's something special that we're going to bonus you for. Interesting, right? I have seen this very bonus in job descriptions in our industry and I think this is because in the post 2020 job market it's really can be really hard to find great people. In some markets it can be hard to find people that show up every day. And for community managers they need to show up every day, right?"

00:09:58,"It's not a work from home job. We need a manager who's really committed to the role, who really takes owners of the space. If the owner is not in town, for example, it's just a non negotiable. We need the community manager to be really committed to showing up. So we think it makes sense to bonus attendance if we're struggling with that. And the research says guess what, it doesn't work that way."

00:10:21,"So we're going to talk about why that is. The other experiment shows that combining monetary bonuses with performance reviews reduced candid conversations among managers. That's a little bit confusing, but basically there's another retail chain and this is. These are retail examples but I'm going to relate them to coworking. So what does this mean for co working spaces? Your community managers are the heart of your operation, responsible for member satisfaction, community building, operational efficiency."

00:10:52,"Their motivation directly impacts your success. If you're using bonuses to drive specific outcomes like filling private offices or increasing member retention, does this sound familiar? It feels intuitive because we're trying to align incentives, right? And as owners we need high occupancy, we need the offices filled or we need membership sold and we want long lifetime value of our customers. So member retention is really critical. So it's worth considering the potential unintended consequences here because the research showed that that the these bonuses did not work to drive these specific outcomes."

00:11:32,"So for instance, offering a monetary bonus for hitting occupancy targets might send a signal that securing memberships is a special achievement rather than an unexpected part of the job. So it could also shift their focus from fostering authentic relationships to closing deals which might hurt the long term health of your community. I'm sure that's making sense to some of you. I can relate to this though. When I so I started my co working space in Chicago in 2012."

00:12:04,"In 2013 I moved to Palo Alto across the country and opened a second location. I was terrified of what was going to happen to my space. I was still stabilizing, I was still growing my membership and I was no longer going to be the one who played the sales role. So I could oversee the sales effort, but I could not do the tours. I could not manage all the follow up, I could not have all the conversations."

00:12:38,"I had to rely on someone who was a four hour plane ride away to maintain the health of my business and actually make it even better than how I left it. And I thought bonusing was 100% the way to do that. I was young and naive. I hadn't read the HBR article yet, but it made sense, right? It was very intuitive. But I 100% agree with this article, which is that I really learned that the win was to have someone in that role who was not really focused on being bonused for that behavior."

00:13:15,"Someone who intrinsically wanted to be really great at the job and just took ownership of that role and wanted as badly as I did to close those deals. Not easy to find. Not easy to find. Especially the part about wanting as badly as I did, but findable. I mean I had those community managers, I had not great community managers and I had amazing community managers. And we see amazing community managers in our community manager university program because I think programs like that attract people who want to invest in their career."

00:13:50,"So how do we avoid these pitfalls? So the HBR research highlights the importance of understanding intrinsic versus extrinsic motivation. So community managers often thrive on intrinsic motivators like the satisfaction of creating a vibrant, connected community or receiving recognition for their efforts. Extrinsic motivators like monetary bonuses need to complement, not replace those intrinsic drivers. So again, we want to hire somebody who just wants to do a great job."

00:14:26,"So if you're hiring someone who's not all that committed to doing a great job, who's just clocking it in. You're going to have trouble with all the things that you want them to do. So they might excel at a couple of things that they find particularly enjoyable and easy. But you really want to hire somebody who wants to grow in the role, who wants to work on things that they could develop in and do a really great job, and who understands the drivers of the business and who wants the same outcomes that you do."

00:14:56,"So one alternative is offering incentives tied to professional growth, an alternative to a bonus that is, for example, instead of a cash bonus for filling offices, offer access to a community management certification program, shameless plug, or attendance to a conference. We do see that. So I always attend the Juicy and GWA conferences and we absolutely see team members there and owners taking team members because they're really committed to the business and they want them to enjoy seeing the context of the broader industry."

00:15:32,"So these types of incentives can align with their intrinsic desire to grow in their role while still benefiting your space. Here are some practical tips to keep in mind when designing your compensation strategy. And you can evolve your compensation strategy, right? So if you have something in place, you can shift it. If you already have bonuses in place, it's probably hard to take them away. So you might have to wait out the current round."

00:15:59,"And when you hire someone new, start fresh. So here are some practical tips. Balance incentives. So again, combine those intrinsic rewards like recognition programs with extrinsic ones like team based bonuses, and use team based incentives, which the research shows does not have the free rider problem, but it does foster collaboration. So the free rider problem is the assumption that if you have a team based incentive, somebody's gonna be the slacker and say, well, I'll still get bonus because everybody else is working hard."

00:16:35,"That can happen, but the free riders usually aren't don't impact the total outcome. So yes, you may have one. Yes, that may be frustrating. That person gets a performance review and needs to have a performance improvement plan and they need to be managed out, probably. So the research shows that even though there can be free riders, there's still a big benefit to using team based incentives. And the team based incentive might be something like we all get a bonus if the company exceeds a profit goal at the end of a quarter so that you're all working together."

00:17:14,"And this can be important if you have multiple locations so that people aren't fighting over leads and that there's a bigger sense of teamwork and more incentive. Again, aligned incentives for collaboration over slack to show up to company Monday morning meetings, things like that. So the article talks a lot about signals and what you're signaling when you provide a specific incentive. So back to the attendance example. The incentive was supposed to encourage folks to show up to work and not stay home, especially if they're, I mean, stay home if they're sick, but not stay home for days when really they could be coming to work."

00:17:57,"But the signal was that coming to work was not a standard expectation, that that was, you know, going above and beyond the call of duty. So the signal actually conflicted with what the incentive was supposed to reward. So make sure you're enforcing reinforcing the right behaviors and values and make sure that you are collecting feedback and testing and seeing how things go. So I just want to wrap up by saying incentives are a powerful tool."

00:18:27,"And I think intentionally designed incentives can be really critical in our business because we are running a customer acquisition business and there are absolutely outcomes that we need to see and we do want incentives to be aligned. But how we do that is really important and it may not be just with cash bonuses. So the incentives can be a double edged sword. So for co working space operators, if you're thinking about designing an incentive system, just make sure that you're aligning the company's goals and your team's intrinsic motivations."

00:19:06,"You know, what's important to them, what do they care about, what would look like, you know, a reward for them based on what makes them feel good about being great at their job, which can help foster a more thriving, engaged team, which is really what you want. One more example that's really on my mind right now. It's a little bit in the weeds. But aligning incentives around using a CRM tool, this is a challenge that I hear from a number of folks that we work with because often we're helping folks with their sales funnel and helping implement CRMs."

00:19:43,"And there's a big change management effort around getting a team to use a system that they maybe they've never used before. You know, maybe you've been using post IT notes and spreadsheets and now all of a sudden you're using a pretty sophisticated CRM. And by CRM I mean could, you know, well, could. There's lots of them. Pipedrive, activecampaign. I'm working with one called CO level that we love, that I'm using in my business as well."

00:20:13,"And we see that it can be really challenging for a team to work it into their daily routine to follow all the processes and systems that come along with using a CRM. But back to, you know, aligning with outcomes, this is a great professional development opportunity for your team because most successful companies will have those systems in place. So you may have gotten to where you are today without using a CRM, but if you have transitioned into using one, it's because you're ready to take the next step and probably position yourself for growth or expansion."

00:20:56,"And you need those systems to be in place. And for, you know, for an owner, that's also a way for them to have transparency around what's happening in the business and a dashboard and a real line of sight on what the pipeline looks like and all of those things. So it's really important for you as an owner. It can be really challenging for the team. So thinking about how you align incentives around using that tool and not again, you don't want a bonus use of the tool because that sends the signal that it's optional and that they're going above and beyond if they use the tool versus whatever they were doing or just not using it."

00:21:36,"You want to show them how using that tool aligns with a larger goal like occupancy, like maybe profit goals, revenue goals, whatever it is that they might, you know, the longer term goals that they're incented around. So that's just something specific that's, that's on my mind that you want to be careful about. You want to align incentives so you really want to demonstrate like why using the tool lines up with a longer term goal for their personal development and for the company's growth."

00:22:11,"But be careful about not incenting use of that like in the short term with cash or other rewards because that sends a signal that it's not just required of the job, it's something special that they're doing. So. Okay, hopefully lots of good food for thought here. I'm going to wrap up here. We'll see you same time, same place next year. And don't forget, keep your eyes and ears out."

00:22:35,"If you are Interested in our Q1 planning session, we will have the signups for that available shortly. Thank you for listening to today's episode. If you like what you heard, tell a friend, hit that subscribe button and leave us a rating and review. If you'd like to learn more about our education and coaching programs, head over to everything coworking.com we'll see you next week."

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Jamie RussoComment