I read an interesting blog post by Bob Meyer today.
Today in the workplace, the paycheck buys baseline performance…but with incentives you get exceptional effort, because they communicate that you care about and value your people.
To make rewards more effective—no matter how much you spend—you need to be as timely as possible, so the employee knows why he or she received the incentive.
That way you reinforce and encourage employees to keep doing the exceptional work that won them the incentive in the first instance.
You also must match the reward to the individual, making the incentives as personal as possible.
This means getting to know your employees, observing their interests and picking rewards that they will value and appreciate.
I must say, I have to agree. One of the things we implemented here at Shapeshift is a bonus incentive program. Every week we have an Employee of the Week award. This award gets you a small write up on our website and a small cash bonus for that week.
On top of that we tally up all the votes inside the company and the employee with the most votes receives quite a large bonus on top of his monthly salary.
The reasoning and advantage to the company behind this is:
Lets say our company turns R1 000 000 a month. This income is derived from the combined effort of all the employees. The simple math behind the bonus is, lets say we pay out R10 000 in bonuses a month and everyone works 5% harder to receive that bonus it means the company has made an extra R50 000.
This means that the bonus has paid itself off against a profit of R40 000.
Combine this with some of the ideas that Bob Meyer has wrote, it could easily mean that the 5% turns to 15%. Suddenly you are looking at quite a vast improvement in income and production turnover times.
The advantages of financial bonuses are numerous. Your employees will have more job satisfaction, as Bob Meyer rightly said, loyalty these days is strongly based on financial return. With more job satisfaction you will have a lower employee turn over rate which means more experienced employees. All these things will all effect your bottom line, for the better.