6 Steps To Effective Incentive Compensation

Posted on November 28, 2011 by CEO Leadership Skills

The elements of a successful incentive plan – whether for a manufacturer, a credit union, a general contractor, or a restaurant franchise – are all the same. Here are 6 steps to making your incentive compensation a success and motivating employees to better performance.

Determine what the plan intends to accomplish
Identify, in detail, the improvable conditions desired, and the likely, attainable behaviours necessary to achieve them. Analyse for appropriateness in your environment.And really determine what you want when motivating employees. Be specific, because in compensation, it’s not what you wish for, hope for, or even plan for … it’s what you pay for that you get.For example: A client wanted to reduce worker’s compensation claims and their subsequent costs in two of their facilities. They simply created a “safety bonus” of 10% of the manager’s pay, reduced by 3% for the first accident, and 7% for the second.So what happened? You guessed it: fewer reported accidents, though they put no other safe-work or prevention efforts in place. Needless to say, this one got ugly before better, to be sure.
Determine participants
Realise that missing a key employee or position can put a wrench in the viability and success of the entire plan. Consider more inclusion than exclusion.The key to success in incentives – the basis of which behaviour is changed – is that the right people must be motivated to do the right things. If you exclude a group of people, specifically, from an applicable incentive, don’t be shocked when they don’t put that particular goal achievement at the very top of their daily “must-do” list.Human nature kicks in here, and employees will, first and foremost, do the things that most benefit their self-interest. This doesn’t mean they’re mercenaries, it simply means they’re human.
Develop clear performance goals
These should be simple, supported by historic, valid information, and clearly quantifiable. Think 2-3 total goals – the fewer the better. If you exceed 4 or 5, you’ve gone too far, and are trying to do too much with the plan. Model the potential payouts to ensure affordability.Be realistic. Be prepared to pay for incremental improvement, not just home runs. I was working with a metal smelter once; we were implementing a gain-sharing plan whereby line employees would share in all financial improvements from a predetermined threshold. Where we argued, of course, was where to initially put that threshold. I wanted it at or near the three-year historical performance levels; the client wanted it several percentage points below that. Bad juju. Employees can sniff out one-sided deals.
Determine logistics This includes dates of incentive consideration, payout dates, what is and isn’t considered, plan revision procedures, termination payouts, and effective dates of the plan.All plans should have a starting date and ending date.Two reasons: you’re giving yourself an automatic review cycle, and it lessens the likelihood that the incentive plan will morph into an entitlement with participants. We want incentives to always remain something extra, don’t we? Don’t even get me started on how many incentive plans I’ve encountered that evolved into a bonafide employee entitlement.
COMMUNICATE
Effective and thorough communications cannot be over-emphasised. Participants must realise the attention given to the incentive plan, clearly understand its parameters and intent, and have ample knowledge to successfully achieve those behaviours necessary to reach various incentive levels.Tell participants, in plain, easy-to-understand English, what the plan is designed to do, and what your expectations are for their performance within the plan. Sort of like the “whereas” parts of the recitals at the beginning of a contract. Further, the communication should be brief, and again, easy to understand.If you need four pages for an incentive plan, I’ll tell you what you have: One page, maybe a page and a half, for the actual “who does what, and who gets paid” part; the rest to tell participants how they can lose out under myriad conditions. Don’t do it. Be direct, and realise there will be judgement calls along the way.
Rinse and repeat
Evaluate the success and/or failures of the plan. Determine what worked, what didn’t, and what can easily be modified or improved for better results. Check payouts against modeling done earlier for accuracy and variations. Don’t rely solely on a consultant’s expertise. Make sure it passes your own sniff test, and that real dollars are appropriately in play, on both the incentive target side, and the payout side.Reward levels are determined by the triangulation of desired results, employee efforts, and financial impact (savings versus costs).

Dig deeper than most, and look to share something closer to 30-40% of savings/additional revenue; if employees believe you are simply enjoying a windfall for their efforts, while providing them just a few extra peanuts in their box, they’ll eventually rebel, and employee motivation will reverse. After all, if incentives are accurately implemented, you’re paying them from money you wouldn’t have had anyway… Think about that.

Guest Author:

Kevin Berchelmann, Triangle Performance. Described as a Human Capital Expert by The Harvard Business Press, Kevin Berchelmann helps new managers at private equity, Fortune 500 and small to medium sized businesses become top leaders that deliver results.

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Managing Remote Employees

Posted on November 13, 2011 by CEO Leadership Skills

Remote working is undoubtedly the way of the future. But just because they’re out of sight doesn’t mean they should be out of mind. Don’t leave them stranded.

Remote employees are those who work from home, or on a different floor, a different site, or even from a car.

Managing employees who work remotely is just like having them stranded on a desert island. Instead of being separated from civilisation, they’re separated from head office. So what people do to survive on a desert island are the same things remote employees need to perform and be engaged.

Review resources
Top of the list for desert islanders is to take stock of what they’ve got, such as radios and maps. Resources are top of the list for your remote employees, too. Make sure they’ve got easy access to manuals, stationery, and people.
Start a fire
Desert islanders use fire to cook food and stay warm. The equivalent of fire for remote employees is technology. Having fast and reliable computer systems, email servers, and phone services are paramount for remote working to be successful.
Build shelter
Desert islanders need to build a safe place to sleep. Your remote employees need a similar safe place to work. Make sure that their workspaces are ergonomic, conducive to high productivity, and have safety protocols in place.
Find food and water
A primary goal for a desert islander is to find food and water – the basic necessities for survival. The basic necessity for remote employees is feedback. Hold coaching sessions which focus on results. You’re not there to monitor how and when they work, so your expectations need to be explicit, objective, and clearly understood.
Make contact
People stranded on a desert island use mirrors, radios, and flares to desperately make contact with rescuers. Communication really needs to be ramped up when you’ve got remote employees. Make the most of tools like the telephone, instant online messaging, and video conferencing to stay in touch.
Become acquainted
Eventually if no help arrives, desert islanders need to become friends with their fellow animals – as must your remote employees with their peers. Hold frequent team meetings, maximise interaction between your remote employees and their colleagues, and encourage them to visit the office occasionally. Nothing beats face-to-face.

Guest Author:

James Adonis is Australia’s leading expert on employee engagement. He shows companies how to reduce staff turnover, engage Gen Y, and win the war for talent. For more information and free e-books, visit http://www.jamesadonis.com, phone +61 2 9331 2465, or email james@jamesadonis.com.

10 Ways To Make Your Employees More Productive

Posted on November 4, 2011 by CEO Leadership Skills

It’s a simple equation. Improving staff productivity is likely to boost the profitability of your business. So, what straight-forward steps can you take to get more out of your people?

Improve the workplace A cleaner, more orderly or spacious work environment is likely to boost employee morale and increase their motivation. Ask yourself whether it’s time to redecorate – maybe it’s time to move to new premises altogether. Always maintain best-practice health and safety standards, too. This will help to limit the likelihood of staff absence because of sickness or injury.
Keep the workplace organised This will help you to maximise workflow efficiency by removing the likelihood of employees wasting time by not being able to find things they need when they need them.
Consider training Assess the skills of your staff and consider whether sending employees on training or development courses could enable them to do their job better.
Assess absence and punctuality If you suspect some of your employees are taking time off without genuine reason or if their timekeeping is poor, then putting effective policies in place can remedy the situation. These can include such things as return-to-work interviews for all absent employees – however short the absence.
Don’t let employees work long hours habitually It can lead to a decline in the quality of their work. Moreover, if a staff member becomes overly tired or stressed too often, their productivity can fall, while they could feel the need to look for employment elsewhere. Good management includes knowing when to tell an employee to take a break or go home.
Encourage teamwork Employees are usually more productive when they work as a team. Teams can also share skills and increase their problem-solving capacity through collaboration.
Incentivise staff Rewards can be financial or non-financial. They should be tailored to both the employee’s personal needs and your business goals. You might offer family-friendly benefits (such as child care vouchers or flexi-time) or pay a bonus when employees perform well.
Encourage openness By creating such a work culture, you can get to learn about areas within the business you can improve. Moreover, employees whose opinions are listened to are likely to feel valued, which can increase their motivation.
Give your staff clear and achievable goals

If everyone knows what you expect of them, then your employees have targets to aim at. Such goals should always encourage employees to push themselves, to learn new skills and gain added experience.
Provide adequate resources Make sure your employees have got the things they need to get the job done on time and to the necessary standard.