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

1. How to Incent Your
Employees for Higher
Performance
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Burlington Chamber of Commerce
Lunch ‘n Learn
September 2013

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
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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”
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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
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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
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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
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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
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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
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9. Bonus Program - Key
Components
Who is Eligible?
Criteria for Achievement
Calculation of Reward
When is Bonus Paid?
Termination of Bonus Plan
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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
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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
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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
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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
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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
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15. Questions & Answer
Thank you for your time.
Questions? Comments?
Faye Wales, Boomer Match to Business www.bm2b.ca
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