Small business owners are faced with a myriad of challenges every single day. If it isn’t sales, then it’s receivables and if it isn’t receivables, it’s operations. Add to this the hundreds of thoughts they are juggling trying to sustain their enterprises. Always at the top of their worry list is how to keep their staff focused and motivated.
Unlike much larger corporations, small business owners usually don’t have the financial resources to implement sophisticated incentive programs. A big part of the problem in smaller organizations is that the employees usually wear more than one hat or have overlapping responsibilities. Of course, we can argue that this isn’t efficient or effective, but it’s the way it is in so many owner operated companies. Compounding the situation is that most owners are not skilled in human resources, as their expertise tends to lie in other areas of the company, such as manufacturing or sales.
So, in order to offer up any type of solution we must first look into the mind of the entrepreneur to understand why creating meaningful performance initiatives or incentives can be so challenging.
Time is a precious resource for everyone but even more so for an owner. With a finite number of hours in a day, week or month, the typical owner must prioritize where they are going to spend their time. Inevitably, any and all activities that contribute to generating or maintaining short term revenues are usually contenders for the top spot.
Even though we could argue that a well executed incentive program could provide significant operational gains, the reality is that scoping out a plan requires time that so many owners just don’t have. If the truth be known, most owners would rather focus their attention on other priorities under the guise that they’ll get to it soon.
With any incentive program, there is an expectation on behalf of the employee that there will be a payoff for doing more or doing it better. This has been ingrained into our psyche since we could first walk in the form of allowances, rewards for good behaviour or achievements. Right or wrong, there is an expectation.
What few people realize is that owners are conflicted in taking care of their personal needs versus paying some form of bonus to their staff. You see, a great number of owners are not paying themselves an acceptable wage putting the company and staff ahead of their needs. This sacrifice usually transcends the workplace as it puts tremendous pressure on the owners family life. If you don’t think so, try telling your spouse that there isn’t enough money to take a paycheque again this month all the while paying out a performance bonus to the staff.
Type of Incentive
Again, the business owner is challenged in how to reward individuals because revenue and profitability is far more volatile in smaller organizations. So, even if they can afford it in the short term, there’s a potential that it can’t be sustained over the long haul and therefore, it’s just easier to do nothing.
But instead of doing nothing, the simplest way I found is to structure any incentive program as a project with clear start and end dates. That way they don’t become expected and gives you tremendous flexibility to create incentives based on the needs of the organization at any given time.
So, what are the solutions for a small business owner? How can they affordably launch an incentive program that satisfies all the stakeholders?
Keep It Simple
Ideally any program should start small. The owner needs to know what they can handle. Many get overly sophisticated in designing their programs and don’t consider how they are going to capture the information, let alone monitor it.
Make the objectives clear and straight forward. An example would be – to reduce the after sales service calls by 20% or increase billable hours by 4%. These examples are simple and measurable. Because implementing a program and then not being able to properly measure it is a recipe for disaster and a waste of time. Plus, there is a huge risk that it will likely cause ill-feelings when nothing ever comes of it.
The default idea for most people is that an incentive needs to be a monetary reward. In keeping with my previous comments this becomes a challenge for the business owner. Fortunately, people covet other things that may have far more value than money. Such as, offering time off in lieu of a cash related compensation will be far more valuable to many employees.
For instance, someone with children who would prefer a day off with pay that they can use when the school board has a PD day. What about the individual who has elderly parents that they need to assist with appointments? Even the single person would enjoy an extended weekend without having to dip into their vacation pool.
How is this any different from cash to the entrepreneur? Since salaries are usually a fixed expense, giving someone a day off, isn’t costing the entrepreneur anymore money.
Getting a little imaginative when trying to create an incentive is not that difficult. It just requires a little thought. But whatever plan you put into place, you must follow through or you risk turning an incentive into a disincentive.
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