I used to work in a company where there was no performance bonus, nor an annual salary increase. In one town hall, the CEO said the management was looking at the company’s financial books and studying if there was a possibility of giving out either a performance bonus or a salary increase. He said it all depended on the company’s profits. One of my team members asked me, “So, for all the years I have been here, they have never made a profit?” She resigned after a month.
Richard Branson once said, “Take care of your employees and they will take care of your business.” At the core of every organization is the people. A leader has to consider different personalities and goals so they can be united under the umbrella of the organization’s vision and mission. But let us face it, people do not go to work solely for altruistic reasons or because they enjoy the work. Much as an organization’s bottom line is profits, an employee also looks at what is in it for them.
While a good salary can answer much of what an employee expects from an organization, employees also need to understand how their work impacts the organization’s bottom line. There are several ways organizations can do that, but I think one of the effective ways is to give back to employees through performance-based incentives. These can take the form of direct monetary payout, changes in the work environment, or anything your employees will appreciate.
But before you implement any incentive program, make sure you understand why you are doing it. This will focus your activities on a specific goal and help you reward the work attitudes and performance that you want to encourage. When you have settled on the program objective and desired results, then set a budget for the program. To limit your incentive offerings, listen to what your employees want in terms of incentives. This can be done through surveys, focus group discussions, or one-on-one discussions with their managers. When you know your organization’s budget and what your employees want, you can be as creative as you want with the incentives.
The most common incentives are monetary incentives, or bonuses. A performance bonus for all employees provides a means of acknowledging everybody’s accomplishment. But you run the risk of rewarding even those who have done poorly. They might think that regardless of their work, they would still receive the same bonus as everybody else. You still need to make a distinction for those who have extraordinarily exerted effort for the organization to succeed.
In addition to performance bonuses, annual salary increases can also be offered based on agreed-upon performance measures and standards, and based on the earnings of the organization. Industry standards and market studies can help a compensation expert in deciding how much should be given as an annual increase for employees. Organizations who use this incentive need to ensure they have an effective performance management system where people managers know how to evaluate performance fairly, and employees understand and agree with the work expectations and deliverables. Otherwise, it could lead to employee disengagement and attrition.
These bonuses should be performance-based and not a result of arbitrary deliberations. Your employees need to understand their effort is rewarded when they reach a certain level of performance. Expectations should be clear as to what constitutes a performance deserving of a bonus. These should be discussed prior to the evaluation period and could include completion of certain projects and initiatives. In order to make a fair consideration, you also need to look at employee’s job classification, tenure, contribution to the organization’s profit, and effect on company culture.
Other organizations do profit-sharing as a way of showing their appreciation to their employees. They set aside a certain percentage of their earnings and give it to deserving employees, or the entire work force if possible. For me, this is the best case of giving back to your employees because one way or another, everybody has contributed to the success of the organization and should be given their share. If they are worth their salt, they will try to perform better the following year, or their peers will make sure they do. And if possible, give your employees the option to own shares in your company.
Not all incentives need to be monetary. Understanding what your employees want as incentives gives you the option to look for other ways in giving back to your employees. One option is to provide a flexible work schedule especially if the work is output-based and the tools needed can be accessed remotely. This helps in their work-life balance and frees up time for them to attend to personal necessities without sacrificing work deliverables.
You can also provide additional time-off from work which they can use for whatever reason. I know of one organization that offers a heartbreak leave, a dating allowance six times a year, and even a stipend for an employee’s wedding reception. This organization understands what their employees want, and is willing to give back to their employees through means their employees appreciate.
Organizations can also arrange activities that employees enjoy doing. Engagement activities like company outings, family day, and sportsfest can also be a means of giving back to employees and letting them enjoy the fruits of their hard work. With the pandemic and the limitations in gathering, organizations have become creative by bringing food packs and care packages to employees’ homes. Others have provided options for employees to enroll in classes for their hobby or provide membership to interest groups of their choice.
Of course, you can always recognize the accomplishments of the different teams in your organization through the company newsletter or web site. But I guess the best way you can give back to your employees is when you ensure that whatever happens, you will have their best interest at heart.
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