Owner’s Desk
Raise or Bonus:
What Do You Give the Production Manager Who Carried Your Year?
For the $2 to $4M remodeler with one production manager or lead carpenter who ran the jobs this year, deciding comp in a month when 43% of builders are cutting prices. The decision rule, and when it flips.
Owner’s Desk
● Decision
My production manager ran every job this year and we had our best year yet. Do I give her a raise, a bonus, or both? And how much?
— The question we hear most at $3M · Every fourth quarter
Why the obvious answer is wrong at $3M
The obvious answer is the raise. She earned it, and the year can afford it. A raise says you mean it. At $3M that answer is usually wrong, and the reason is the word “year.” A raise is forever. The year is over.
Here’s the trap. A $15,000 raise at $3M in revenue is half a point of net margin. Every year. Good year or not. NAHB’s average single-family builder netted 8.7% in 2023, the best year the Cost of Doing Business Study has recorded in more than three decades. At $3M that’s $261,000 of profit, and the raise takes 5.7% of it before the first job starts. Then look at October. 43% of builders cut prices, the highest share NAHB has recorded in the 2020 to 2026 period. The average cut was 6%. A permanent decision is about to get made in a market that just moved.
The question underneath the question: what are you paying for? The job she does, or the year she had? Those are two different checks.
Permanent, simple, loyal. And it’s the right answer when the job changed. If she went from running two jobs at once to three. If she signs change orders now. If the sub schedule moved from your phone to hers.
That’s a bigger role, and a bigger role has a market price whether the year was good or not. Pay the role what a stranger would cost to do it tomorrow. That’s the number a competitor will offer her, and a counteroffer costs the same money plus three weeks of panic.
The year was good. Was it her, the market, or 20% more sold? A raise can’t tell those apart. It converts one good year into fixed cost and asks next year’s margin to carry it. In a market where the average builder’s 20.7% gross can lose six percentage points to one price cut, that’s the wrong direction.
If the year was good, pay for the year. A bonus with a formula, on gross profit per job, paid when the job closes. In a year that produces no margin, it costs nothing.
Raise the role, bonus the result, and if you can’t say which one you’re paying for, the role isn’t written down yet.
SBGP reviews who owns what in your company, how work moves through the field, and how your key people are wired, and builds a step-by-step 12-month plan across People and Operations, so you can write the role before you price it and pay for results you can measure.
The Bottom Line: when the rule flips
Three cases flip it.
She’s about to leave. A competitor’s offer is a market price for the job, and the price of the job just went up. Raise it this week, and stop telling yourself the bonus will hold her.
The company missed its number. If the year was bad at the company level, nobody gets a bonus, including you. A bonus formula that pays anyway is a raise with worse paperwork.
The formula can’t be filled in. If gross profit per job is a number nobody in the company can produce, that’s a tracking problem wearing a comp problem’s clothes. Fix the tracking first. Pay a flat year-end amount this once, and tell her the formula starts in January.
A raise pays for the job, and a bonus pays for the year. The mistake isn’t generosity. It’s paying for one with the other.
A BPA from SBGP starts with your leadership team, not just you. DISC and Motivational Assessments for you and up to five key people produce a team scatter chart that shows who’s wired for which seat, and the 30+ page plan that follows is built around the team you have. If your production manager is the person this question is about, her assessment is in it, and so is the role you’re about to write. Two executive coaches walk you through it in a 1.5-hour out-brief.
✓ Operations
✓ Finance & Tracking
✓ People & Role Clarity
Sources: NAHB Cost of Doing Business Study, 2025 edition · NAHB/Wells Fargo HMI, October 2026
Owner’s Desk
SBGP
