At a recent seminar that I was conducting on motivating employees, I was asked, “What was your secret in growing the former business that you owned from 35 employees in the Philadelphia area to over 450 employees in 10 states in 7 years?”

HR CONTRARIAN POINTER: Get the basics of the employment relationship right and everything else will fall into place.

I used a simple philosophy and that is:

• Create a compensation and benefits package for employees that is competitive with the external labor market. (i.e., as close to the 90th percentile of the market for your most experienced workers as you can afford)
• Establish clear expectations of performance and monitor, monitor, monitor.
• Don’t apologize for people working hard because that’s what the competitive salary and benefit programs are for.
• Create a reward system that allows ALL employees to participate in the successes of the organization, and not just financial successes.
• Create an organizational culture (written and unwritten practices and policies) that supports the philosophy of “A Great Place To Work.”
• Practice what you preach.
• Communicate, Communicate, Communicate.

Dedicated To Improving Your Financial & Human Resources!

While recently conducting a program on my Employee Process Evaluation Program, the group was discussing merit pay.  One of the members of the group posed the following question, “Why evaluate performance if you are not going to give an employee a salary increase?”

HR CONTRARIAN POINTER: If the only purpose for evaluating performance is to provide a monetary reward, then we are in trouble as organizations.

In my mind, the purpose for an evaluation is to ensure that the employee is meeting the expectations of performance as outlined by management and to provide the employee with an opportunity to present his/her comments and ideas relative to the performance expectations.  By tying compensation to the evaluation of performance, we detract from the central purpose of an evaluation.

One of the main problems with merit pay programs is that they are subjective rather than objective and are tied to personality rather than performance. The result is that the merit pay plan becomes a de-motivator.

There are numerous ways to compensate exceptional performers while recognizing the performance of the “average” employee.  But first managers MUST identify the expectations of performance for each employee.  Without this level of specificity, any type of reward program will be looked at with suspicion if the “teacher’s pets” appear to receive all the benefits.

Dedicated To Improving Your Financial & Human Resources!