By John A. Haas
Management Strategies Group
Successful companies realize the value and importance of sharing their success with those whose efforts directly contributed. It's both motivational and cost-effective.
Rewards usually go to senior (and perhaps middle) managers and sales staff. While part of their pay is at risk, these key employees usually can count on a meaningful performance-based pay "kicker."
Hey! Remember US?
Clearly, the majority of employees are not labeled "key." These are the people who make the company run on a daily basis, service customers and carry out directions from above. This majority largely determines how customers perceive the organization, yet they're usually in the background and lower on the salary scale.
These employees understand that others carry the burden and risk of making decisions leading to profit and growth, and deserve commensurate rewards. Yet, their outstanding job performance goes largely unnoticed--they're simply doing what they're supposed to do. (Of course "screw ups" sure get noticed!) They too want to do a good job, and feel part of a team effort.
Rewarding the Critical Majority
It's often not practical to "measure" their impact and contributions directly. Spot awards are an effective way to recognize good ideas. And some companies set aside a portion of profits for distribution to "the troops" as year-end bonuses. That's fine, but it's after-the-fact, not predictable, and not directly related to performance.
More exciting and effective are "team" incentives that align the interests (goals and rewards) of one or more unit heads and their staff. E.g. the head of Customer Service can earn incentives for such measures as: reducing the number of customer complaints, customer survey results, average time to resolve customer inquiries, etc. Why shouldn't his/her staff share in pursuing those goals and be eligible for rewards directly tied to the manager's?
It's important to design incentives to encourage desired behavior. If rewards and their performance bases are clearly defined, team members will figure out how to organize to maximize their performance, and thus their rewards.
Incentives work. You'll be amazed how ingenious and focused a team of motivated people can be--and what they can achieve!
Volume 8, Number 3