Managers of small businesses go through many undocumented sleepless nights trying to develop a reward scheme that will help the organization motivate its employees. Reward schemes are those monetary and non-monetary perks that managements give to employees in the bid of calling for the best in them.
Reward schemes usually comprise of extrinsic and intrinsic rewards. While the extrinsic reward scheme deal with hard and tangible benefits an employee gets, intrinsic relates to those feelings that are hard to quantify – not even by the employee that is purportedly enjoying the benefits.
As small business environment become more volatile, fragile, complex and ever competitive, it is vital that entrepreneurs develop and deploy small business employee programs that would be motivating enough to make their employees give in their best in an enthusiastic way and that is where the tips given in this article comes in to fill the gap.
Important elements of a successful reward scheme of small business
- Carry all employees along: Fitzgerald and Moon subtly captured this in their building block model when they argued that a good performance model should have three core elements of equity, ownership and achievability. Carrying all employees (or at least employee representatives) along in designing a small business reward scheme will make employees have a sense of fairness which is what Fitzgerald and Moon call equity in their building block model. It will also make the employees feel that they own the system and this will make them believe that it is achievable.
- Have a mix of incentives: having a reward scheme that lacks depth and breadth will encourage suboptimal behaviour in an organization. Measuring an employee on purely financial matrix for example will give managers the motivation to cut corners in the bid to achieve the targets. Performance measurement system should have nice blend of both financial and non-financial flavour. This is the main reason why managements are drawing closer to full adoption of balanced scorecard as a performance measurement tool.
- Make the objective known: the employees will be happy to comply with management if they understand the reason and objectives behind the schemes. Everyone still has the tendency of acting like children, tell a child the reason behind an action or activity and watch them devote their undivided attention towards whatever course of action you pursue as a group.
- Keep the matrix simple and transparent: for a business to strive, it must build trust amongst its workforce and also share from a common pool of aspiration. Your employees will trust you more if they understand the components of the matrix that they are being measured on. In fact, the aim of having a reward scheme will be completely defeated if it lacks transparency. By all means, employ the SMART technique of setting standards.
- Make it social: as a consultant, I have helped two of my clients increase productivity of 16 staff members by 27% simply implementing this technique of making performance measurement social. The idea is simple; we give the employees the avenue of sharing their stats with their friends on any major social media of their choice. Imagine what good you will do the morale of an employee if you provide an avenue of showing off that STAR award he or she received as the most productive employee of the week, month or year.
Objectives of reward system in a small business
To help make a company more attractive to potential employees: business owners know just how hard it is to attract and retain good staff. Having a good reward system or at least what employees perceive as being good will help your business attract and keep bright minds. Best and sharpest minds will be naturally attracted to your business- note that this must not necessarily be monetary in nature.
To help build a company’s brand and image: good words always have a way of spreading. People tend to see companies that adequately reward their staff members from a positive perspective. Corporate brand building is not an easy task and takes the collections of multiple positives to achieve and fair and transparent remuneration scheme certainly adds to the number.
To achieve organizational goals by reaching a compromise with employees: ideally, the goal of any incentive scheme is to reach a win-win situation where all parties involved feel happy at the end of the day. Reward schemes should be signed in such a way that it motivates the employees enough to put in their best so as to help the business achieve its ultimate goal.
To be ethical and seen as being ethical: companies develop reward schemes to off to the community that they are ethical in their dealings. This is especially true when the employees buy into the ideology upon which the scheme is built on. The workers will be the ones presenting the entity in the most ethical way as possible.
To motivate employees: the ultimate goal of having reward plan in place is to motivate workers and a properly designed program should achieve just that. Applying the tips in this article will help a small business achieve just that.
In as much as many researchers and academia has concluded that there is no right reward scheme, following the tips given in this article will produce the kind of result that any small business owner will be pleased with. All you need is to concentrate on making sure that you don’t lose sight of the reason why you are in business- to be successful.
On a final note, always remember to follow the recommendations of Fitzgerald and Moon; keep the rewards scheme clear, simple, motivating and within the control of the employees. Keep in mind that your most valuable investments are your people, treat them right!!!