When your employees perform half-heartedly on the job, there is usually a simple reason why.
A critical aspect of managing staff is incentivising them to do excellent work.
Here’s a simple truth: when people’s earnings are tied to their performance, it’s a powerful motivator.
On the one hand, it gives them a sense of empowerment. Because they can earn more by being better, the upside potential keeps them engaged in their work. On the other hand, even when they’re not feeling particularly motivated in themselves, the risk of loss keeps them going when they might otherwise slack off.
At the same time, your fixed costs fall as your profits rise, because now you’re paying for RESULTS — not just for someone to show up each day and fill space!
And keep in mind: there’s a false belief out there that only salespeople or assembly line workers can have their pay tied to their performance. Nothing could be further from the truth. Everyone, from secretaries to accountants to customer support agents, can be incentivized in this way.
Here’s how you do it…
- Determine the Key Performance Indicators (KPIs) for Each Job
There is almost nothing more important to your business than knowing what your key activities and metrics are. While this is obviously true for you as a business owner, it is also true for each individual job! Choose 3-5 KPIs that are most important for each position.
- Base Your Incentives on Actual, Past Experience
You want to set goals that are challenging but achievable. This is critical because erring on one side or the other can have disastrous results. I once heard of a business owner who arbitrarily assigned sales goals that were all but statistically impossible for his staff to achieve. As a result, when the new incentive system was implemented, even his star performers couldn’t keep up. Discouraged by their dwindling pay, they quit on masse. He lost some great employees because he set the bar too high.
On the other hand, I know plenty of business owners who have the opposite problem: they set the bar too low so that employees don’t have to work very hard at all to reach their targets and collect their bonuses. These businesses spend way more than they need to on labour and end up with a system that isn’t even motivational. Finding a happy medium can be challenging, but there’s almost nothing more important.
- Work with Your Employees to Improve Their Numbers
Now that your employees have definable, achievable objectives to keep them motivated, work with them to achieve their goals. Hold regular reviews. Ask them if there are resources, they lack in order to be optimally effective. Provide ongoing training to help them hone and sharpen their skills. The more invested they feel you are in their success, the more motivated they’ll be to achieve.
Try this. Look at the positions in your company and choose 3-5 Key Performance Indicators for each. Then, get in touch with me. This is an area that requires some delicacy and expertise, so let me walk you through the process of determining the right incentive levels for you and your team.
You can book an initial complimentary 15-minute call with me at TimeWithShane.com.