Employee Motivation Tips

Gary Brose, author of "Bonus Your Way to Profits!", has some unique first-hand insights into motivating employees and energizing the workforce. The following is an excerpt from Chapter 3 of his book.

THE PREMISE

The premise of the Bonus Your Way to Profits model is that any one of the previously mentioned five status levels of business can be improved through use of a targeted and well-structured bonus program. In this book, we will discuss the Eight Essential Elements that must be present and properly applied in order to achieve the desired results.

Each of the next eight chapters will provide you with a brief, to-the-point examination of the individual elements. They will be explained in as much detail as is necessary so that they can be fully understood. As you complete each chapter, there will be examples of the wrong way and the right way to apply that element and a chance for you to test yourself on your understanding of that principle. When you have finished this book, you will be armed with everything you need to know to begin immediately to solve some of your company’s problems through compensation restructuring.

These Eight Elements have been identified and, using the first letter in each description, together form the acronym GETS MORE. And that is because, if you build your bonus program correctly, EVERYONE GETS MORE! On the next pages is a short summary of the Eight Essential Elements:

THE 8 ESSENTIAL ELEMENTS OF

A SUCCESSFUL BONUS PROGRAM

GRADIATED – Structure the bonuses so that there are 3 to 5 levels. Make the first easy to reach for someone who is doing the job reasonably well. The second (or 2nd and 3rd) tier bonus is a reward for doing "quite well" while the last levels are for record-breaking performance.

EQUITABLE – The bonus amount must be fair and equitable. If you have many people in the company on various bonus programs, one program cannot be so good that everyone else wants to change jobs to get to it.

TIMELY – The frequency of the bonus should vary inversely with the level of the employee. Lower level or entry employees should get paid their bonus frequently as in once every payday or once every month. Middle level Managers should be paid monthly for the previous month’s performance or at the least, Quarterly. Senior Management can be rewarded once per year. This is extremely important. If you do everything else correctly but fail to pay in a timely manner, the entire bonus program will fail.

SIMPLE- Just keep it simple: simple to understand, simple to explain and simple to calculate. Clearly explain how your bonus program works. Put it in writing and make the computation of it so simple that anyone can understand it or do the math themselves. If they don’t understand it, they won’t care.

MEANINGFUL – The bonus must be meaningful on two levels. First, it must be based on an action that is relevant to the employee’s job function. In other words, they have to be able to affect results. Second, it must be a large enough amount of money to be meaningful to the employee. A good rule of thumb is to structure the bonus to pay, on average, about 6 to 8% of the employee’s base pay.

OBJECTIVE – The bonus must be based on objective rather than subjective points. Base the bonus on something that can be counted without ambiguity. For example, base the bonus on the number of widgets sold each pay period or month; or the number of consecutive days when Quality Control shows a 95% service level. Do not base it on how management perceives the employee is performing or on how well employees dress for work. Nothing should be subjective. Make it things you can count.

REINFORCED- Feedback, feedback, feedback. Give the employees a daily or frequent periodic recap of their performance as it relates to the bonus. Post the results for all to see if it is appropriate. Team goal bonuses should always be posted on the wall and updated daily. Make sure everyone knows how they are doing and how likely it is that they will hit bonus level 1, 2, or 3 (or 4 or 5).

EASY- Yes, we already discussed making it easy to understand, but also make it somewhat easy to succeed. Bonuses work best in an environment where base pay is artificially lower than the norm but the bonuses are consistent and attainable. Set the first tier bonus at a level that an average performance can achieve so that nearly everyone gets "something". Set the next higher levels to be more challenging and skew them up so that the greater the achievement the greater the reward….in a big way.

Create your bonus program correctly and the employee, the company

and everyone GETS MORE!

Visit www.SmallBizSherpa.com for more details. Copyright 2006 Gary Brose. All rights reserved.