Many start-ups and young businesses today use inconsistent or arbitrary compensation practices. They do this because it’s hard to know when realistic financial incentives get the job done or attract the right team members. Even well-established companies have bosses that give out financial (and non-financial) incentives without understanding the impact these gestures have on the organization as a whole.
As the boss, your inconsistency in compensating people appropriately will develop mistrust in your management style, diminish loyalty and weaken the desire to work hard for you. It can become a no-win situation that needs to be addressed quickly. A Gallup study (2015) found 50% of employees leave due to bad bosses. The bottom line is, when employees don’t trust their bosses’ to do the right things the right way, they quit their jobs.
Money is not a prime motivator!
Many employees have the false perception that money will indeed motivate them! The truth is, money doesn’t motivate people to do more or improve their job performance. Great bosses, job fit and appreciation are key motivators when done right!
Develop good employees into great performers and keep them
Hire for job fit. Poor job fit is the number one reason employees don’t produce great results, even though they may appear to have the technical or interpersonal skills. These employees rationalize their mediocre performance on extrinsic factors, including the amount in their paychecks. Additionally, your top talent is more likely to leave when there has been a lot of turnover, or they continually have to work around those coworkers that aren’t doing their jobs well. It’s important to use qualified assessments and due diligence tools to ascertain a person’s ability to fit the work requirements and company expectations before you hire them.
Set clear expectations. Start on Day One by providing each new hire with an up-to-date job description, 180 Day Success Plan*, and an internal mentor. (For those companies with critical goals, hire an external business advisor for key employees.) Keep all employees focused on the right things by involving them in strategy creation, goal setting and focused action planning. Quarterly, use a qualified 360-degree feedback assessment to help identify areas for improvement, keep employees focused on the right things and provide spot-on training insights. Keep these processes separate from your annual compensation adjustments.
Keep your promises. When you offer financial incentives, be prepared to honor them. Performance will diminish individually and collectively when you are unable or unwilling to fulfill upon these promises. Consider offering non-financial incentives that are meaningful for the whole group (e.g., pizza Friday, company-wide recognition, movie passes, etc.).
Focus on performance results. When managing your employees and team for results, it’s wise to include individual stretch goals to help each person excel beyond their perceived performance capabilities and internal beliefs in themselves. Use non-monetary and monetary incentives for each person, and the team as a whole, based upon the completed metrics for each milestone.
Your key to developing good employees into great results-producers requires you to consistently and frequently share the goals, appreciate employees individually, acknowledge the team as a group, and objectively measure progress. Then, compensate them well with monetary and non-monetary rewards.
*180 Day Success Plan – How do you create them? Get your copy of “Hire Amazing Employees” available at BizSavvyHire.com
For information on using qualified assessments, contact http://SeibCo.com/contact
©Jeannette Seibly, 2015
Jeannette Seibly is laser sharp at identifying the leverage points that will take a business and its team to the next level of performance and success. Her unique combination of strategic and tactical people and business experiences includes being execution-oriented, customer-focused and business results-focused. She has guided the creation of three millionaires and countless million-dollar results for companies and not-for-profits. She is an innovator who loves producing amazing results with and through others, on time and within budget, as a team.