How to incent your employees for higher performance

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Incentive ideas and methods to increase employee performance. Bonus and reward programs for small to medium-sized businesses.

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How to incent your employees for higher performance

  1. 1. How to Incent Your Employees for Higher Performance BM2B-MatchingTalenttoNeed 1 Burlington Chamber of Commerce Lunch ‘n Learn September 2013
  2. 2. Today’s Agenda 1. What are key components of an effective compensation program for small/medium- sized businesses? 2. How to effectively use bonuses as a reward for performance 3. A review of non-cash rewards and programs to help you retain your best employees BM2B-MatchingTalenttoNeed 2
  3. 3. Your Compensation Program Why? • Shows your employees that you have done your due diligence • Ensures equity among your employees • Provides a forum for employees to understand structure “You are not just picking numbers out of the air” BM2B-MatchingTalenttoNeed 3
  4. 4. Internal & External Equity Fairness = Internal Equity + External Equity Internal Equity • Allows you to compare dissimilar jobs within your organization • Skill, effort, responsibility, working conditions BM2B-MatchingTalenttoNeed 4
  5. 5. Internal & External Equity Fairness = Internal Equity + External Equity External Equity • What is the market paying for a comparable job? • Participate in/purchase salary surveys, on-line research, information gleaned through hiring process BM2B-MatchingTalenttoNeed 5
  6. 6. Compensation Structure Includes: • Writing Job Descriptions • Conducting Job Evaluation • Collect External Market Data • Develop Salary Ranges (or Total Compensation) • Ensure integrity of Compensation Structure * Will need to enlist the services of a Human Resources professional BM2B-MatchingTalenttoNeed 6
  7. 7. As a minimum… • Establish a simple ranking scale • Assign a salary/wage range as opposed to a set rate of pay for each job • Consider dividing range into thirds L3 – new employees or employees in training M3 – fully qualified/match external market rate U3 – experienced/paid above market • Decide on what to communicate to employees BM2B-MatchingTalenttoNeed 7
  8. 8. Bonus Programs Why? • In these times of low annual salary increases, use bonus/incentive plans to retain top employees • Motivate employees toward specific company targets, performance objectives, team results • Reward for incorporating company values into completion of work responsibilities BM2B-MatchingTalenttoNeed 8
  9. 9. Bonus Program - Key Components Who is Eligible? Criteria for Achievement Calculation of Reward When is Bonus Paid? Termination of Bonus Plan BM2B-MatchingTalenttoNeed 9
  10. 10. Success of Bonus Program To ensure program success in motivating and retaining employees: Document the program Communicate plan to eligible employees Regular status updates of achievement against criteria (monthly, quarterly) Regular review of program (annually) Self-funding BM2B-MatchingTalenttoNeed 10
  11. 11. Reward, Recognition & Non-Cash Programs Employee Benefits Programs Recognition Programs Other non-cash programs If the employee does not value the reward provided, it will not serve as a motivator toward future performance BM2B-MatchingTalenttoNeed 11
  12. 12. Compensation or Reward? Cash compensation: • Low wage earners who live paycheque to paycheque • No specific actions you wish to reward • Temporary, contract or seasonal employees • Bonuses easy to meet and employees have come to depend on them to make ends meet Recognition & Reward (cash or non-cash): • Basic financial needs met; awards viewed as special gift • You want employees to focus on key targets or behaviours, or specific short-term situations (e.g. product launch) • To retain top talent • ‘Model’ top performance for other employees BM2B-MatchingTalenttoNeed 12
  13. 13. Fairness & Trust Trumps Cash Does money buy happiness? • Fairness drives satisfaction – what people really value is not money itself but the sense of fairness that surrounds it • Trust stimulates the most positive reactions – people want to trust those they interact with and want to be trusted • Fairness and trust lead to cooperation – these feel-good effects lead to voluntary cooperation BM2B-MatchingTalenttoNeed 13
  14. 14. Fairness & Trust Trumps Cash Manage to be fair and trusting • Get to know your employees as individuals and workers; this means spending time with them • Do what you say you will do • Trust your employees – trust your employees to do what is right instead of instituting a myriad of controls that show the opposite (95% rule) • Publicly recognize and reward what you value • Privately critique and discipline BM2B-MatchingTalenttoNeed 14
  15. 15. Questions & Answer Thank you for your time. Questions? Comments? Faye Wales, Boomer Match to Business www.bm2b.ca BM2B-MatchingTalenttoNeed 15

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