Time to Incentivise Your Employees
Leading up to the General Election on 4th July this year, much was made of Labour’s so-called “100 day plan” forming part of their manifesto to kickstart economic growth. They pledged to introduce legislation within 100 days to implement ‘Labour’s Plan to Make Work Pay: Delivering a New Deal for Working People’. There has been much speculation about the detail, but some parts of the Plan are relatively straightforward. Introducing day one basic rights to protection from unfair dismissal will bring Performance Management into sharp focus. Employers will need to be fair and transparent in dealing with employees who are not meeting their standards, so a robust Performance Management process - including recruitment, onboarding and probation - will be key.
Continuing his series of articles, Martin Nicholson discusses the benefits of a bonus or commission scheme to link employee performance to company success.
Performance > Success > Reward
In my last article Seventy-Year Old Practices to Support Labour’s 100-Day Plan I spoke of the need to align the efforts of employees with the success of the organisation. It’s not a new concept, yet it’s clear from our work within the SME community that many organisations don’t pay enough attention to ensuring their bonus and/or commission plans drive the right behaviours. In the majority of cases, a bonus is a discretionary option. Organisations strive to ensure staff know that there is no certainty of a bonus next year. Though that is a safer position to come from legally – and it’s arguably more ethical to not overpromise – there is another way. Incentivising staff via their company bonus scheme fosters buy-in to the objectives that will contribute to the company’s goals.
A good, well-planned scheme encourages every individual to seek to understand the performance of the organisation against its declared goals. By creating that focus and encouragement we also see individuals knowing how they are tracking with their own individual performance, and the role they play in helping their organisation hit its goals.
Of course, a bonus scheme is only viable if the organisation hits a threshold of performance and revenue that allows for it to pay out. The value of such a scheme is as follows:
Staff don’t hold it against the manager or the organisation if they know clearly that the goals/targets in that year were not hit;
It will encourage discretionary effort to help achieve the goals;
It focusses all staff on what is critical that month / year in their role which in turn should enable faster delivery;
It becomes affordable to the organisation.
A little tip to the growing business…
As a business, if you have plans to grow but are a little scared by the margins and returns, instead of an increase to salaries, perhaps the introduction of a bonus scheme may be a good route. Ensure there is upside to the bonus scheme if the business exceeds its targets (not simply the salary increase budget), so there is a risk and a reward at play.
We can help you put together an incentive scheme, and a performance management programme to support it. Find out more about our Performance Management solutions, and please get in touch for a FREE discovery call.
Martin Nicholson is the Managing Consultant at ProAction HR, providing Human Resources Services to SME businesses in Southampton, Winchester and throughout Hampshire and the adjoining counties.
Co-founder of the Winchester-based HR company, Martin and his team support clients across Hampshire and neighbouring counties, providing HR advice, HR consultancy, and HR services. They cover a broad range of HR solutions, from one-off responsive HR support to a full Human Resources service, along with Learning & Development, Training and Change Management.
“Helping organisations to thrive on the value & uniqueness of their people.”
