High-Performing Superstars - Building and Retaining Your Team - Part 5
High-Performing Superstars - Building and Retaining Your Team - Part 5
The variety of incentives and bonus structures is limited only by your imagination. The one commonality should be the incentives should be quantifiable and measurable. When designing your incentives program don't think in terms of one-size-fits-all. An incentive that creates enthusiastic and effective performance within one individual may have no meaning to another. People respond best to rewards that are of specific interest and value to them. It has been shown; people value a reward that matches their interests. Dinner for two at good restaurant or a paid weekend at a local resort will be remembered far longer than had they received a cash bonus; of even greater value.
There is one program I've seen that offers significant potential benefit to both the company and employees. This program essentially combines the usual "merit" increase program and the incentives program into one. It's not my intent to go into the details of the program, but simply provide you enough information to determine whether this approach might warrant further investigation. In most companies the dollars in the merit increase program become embedded as a large fixed cost. By combining that program with the incentive program with all payouts only from the pool of funds created from the growth in the bottom line, all those expenses are now variable.
At first, it could appear this might be restrictive to the amount of money an individual can make and therefore be counter to our interest in creating an environment for strong company loyalty. Reality has shown, the amount of money the individual is capable of realizing can be many times over what they might expect to gain via any other pay structure.
In general, an analysis is made on a departmental basis as to the normal percent of contribution by each department to the bottom line. Within each department, a similar analysis is done for the potential of each position to impact the department's contribution to the bottom line. Once each week a short meeting is held by each department or by teams within the department to work on ways to increase their contribution to the bottom line. At the end of each measurement period, usually quarterly, these same groups meet to enumerate the actions they took within the period that had positive impact on the bottom line. An example would be, in the situation defined in segment two with a growing business, our example department might normally need to hire additional people. If they figured out how to handle the increased level of business without hiring, they have a quantifiable improvement to the bottom line. Another example might be where an individual is negatively impacting the throughput of that department. The other individuals in the department, seeing that person as taking money out of their pocket, will self-police the situation causing that individual to increase his/her throughput. This will result in a measurable improvement of the department's contribution to the bottom line. In the same fashion that results are measured for the department, similarly, individual performance can be tracked and rewarded.
As you can see, the subject of incentives has the potential for providing significant benefit towards creating and maintaining high levels of company loyalty and retention.
HighPerforming Superstars Building and Retaining Your Team Part 5 - To learn more about this author, visit Sam Langfitt's Website.
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Part Five: Incentives
Okay, you've hired right and trained right. Now... to get absolutely the best possible performance and the highest ROI from your people and certainly to assist in creating an employment environment conducive for maximum retention, provide them meaningful incentives. I know you've heard this before; to have meaning and provide the lasting benefits you are trying to achieve, your incentives/rewards need to come very close to the achievement being rewarded.
Incentive and bonus programs are certainly good ways to reward the organization and individuals for performance. From the company standpoint, you want to make certain, that in the majority case, your incentives are related to improvements to your bottom line. When incentives are applied to individual line item costs its common for actions taken to decrease those costs to have the effect of increasing costs in other areas. I'm not inferring that happens with intent. However, it can be difficult to control how changes in one area will affect others. One of the standards you want to consider is defining what percentage of the improvement to the bottom line, after return on equity to the owners and accrual for business-reinvestment, do you want to set aside as a pool for incentive payouts.The variety of incentives and bonus structures is limited only by your imagination. The one commonality should be the incentives should be quantifiable and measurable. When designing your incentives program don't think in terms of one-size-fits-all. An incentive that creates enthusiastic and effective performance within one individual may have no meaning to another. People respond best to rewards that are of specific interest and value to them. It has been shown; people value a reward that matches their interests. Dinner for two at good restaurant or a paid weekend at a local resort will be remembered far longer than had they received a cash bonus; of even greater value.
There is one program I've seen that offers significant potential benefit to both the company and employees. This program essentially combines the usual "merit" increase program and the incentives program into one. It's not my intent to go into the details of the program, but simply provide you enough information to determine whether this approach might warrant further investigation. In most companies the dollars in the merit increase program become embedded as a large fixed cost. By combining that program with the incentive program with all payouts only from the pool of funds created from the growth in the bottom line, all those expenses are now variable.
At first, it could appear this might be restrictive to the amount of money an individual can make and therefore be counter to our interest in creating an environment for strong company loyalty. Reality has shown, the amount of money the individual is capable of realizing can be many times over what they might expect to gain via any other pay structure.
In general, an analysis is made on a departmental basis as to the normal percent of contribution by each department to the bottom line. Within each department, a similar analysis is done for the potential of each position to impact the department's contribution to the bottom line. Once each week a short meeting is held by each department or by teams within the department to work on ways to increase their contribution to the bottom line. At the end of each measurement period, usually quarterly, these same groups meet to enumerate the actions they took within the period that had positive impact on the bottom line. An example would be, in the situation defined in segment two with a growing business, our example department might normally need to hire additional people. If they figured out how to handle the increased level of business without hiring, they have a quantifiable improvement to the bottom line. Another example might be where an individual is negatively impacting the throughput of that department. The other individuals in the department, seeing that person as taking money out of their pocket, will self-police the situation causing that individual to increase his/her throughput. This will result in a measurable improvement of the department's contribution to the bottom line. In the same fashion that results are measured for the department, similarly, individual performance can be tracked and rewarded.
As you can see, the subject of incentives has the potential for providing significant benefit towards creating and maintaining high levels of company loyalty and retention.
Look for Part Six: Recognition & Appreciation
HighPerforming Superstars Building and Retaining Your Team Part 5 - To learn more about this author, visit Sam Langfitt's Website.
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Dianne CramptonDianne Crampton is an executive leadership coach, team culture consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here. Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009. Her new book TIGERS Among Us: 5 Winning Business Team Cultures And Why, Three Creeks Publishing will release in March 2010. To receive publishing discounts, subscribe to the free TigerTracks Newsletter here. - Visit Dianne Crampton's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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