There’s an old proverb that says, “You shouldn’t muzzle the ox while he’s treading the grain.” What this means is by give your workers lots of room to move so they can get the job done well their way. But there’s a fine line between giving a worker unrestricted freedom to achieve a good result and getting efficient continuous great outcomes from happy employees.
Offer too many incentives and an incentive is no longer something special – it becomes something expected. Pay modest wages and as your employees become better skilled they’ll insist on promotions to get higher wages or leave. Pay high wages to encourage peak performance and an attitude of entitlement can develop, causing problems with team dynamics.
Getting the balance between remuneration, rewards and performance right is incredibly tricky because there is no magic formula that can tell you what it should be. What works in one business may be a disaster in another. So the thing to do is to start with industry averages and that means what are other people in your industry being paid to perform an equivalent job to one you need a team member to do.
Job ads can give you some idea of what the going rate is; there are also government guidelines for some industries that prescribe a minimum wage. Make sure you keep track of the job descriptions as you’re researching being mindful to compare jobs with similar workload requirements and levels of responsibilities. A little bit of research like this will give you a good starting point for remuneration.
Next you’ll want to consider KPIs.
Key Performance Indicators (KPIs) are measurable events that can be easily tracked to provide you with insights into the performance of different aspects of your business. For employees they can be things such as regional sales figures by sales person, the average duration of a support call per helpdesk personnel, the number of hours allocated to a particular cost center each week, etc.
Each member of your team will likely need to have their own set of KPIs against which their performance can be measured. You will need to negotiate with them targets for them to meet within each KPI as well as agree standards of performance if the KPI is unable to account for specific quality standards. It’s wise to steer clear of KPIs that have a subjective aspect, like having a positive attitude, being appropriately dressed or having good attendance.
KPIs are one of the easiest ways you can use to determine whether an individual has performed adequately or exceeded expectations and are deserving of a reward or bonus.
Rewarding team members who are excelling can be as challenging if not more challenging than determining remuneration and KPIs.
There’s a long-standing debate in human resources circles about whether people prefer a financial reward or recognition and praise. The best way to find out what will work for your team members is to ask them. Getting them involved in the deciding what rewards they will get for achieving KPIs can motivate, get buy-in and create a lot of positive energy within your organization.
Being able to find a good balance between regular remuneration and special rewards can be difficult, especially since you, want to set the bar high. But finding the right balance is the key to making sure that your team performs with consistent excellence. A good business coach can help you to achieve a well-designed recognition and rewards program for team so that your company can enjoy the benefits of a productive team working at peak performance.