Increase Efficiency: Motivate Staff

Low Morale Costs Money ..... Motivated Employees Make Money

Too often, when a business wants to increase its sales or production, or wants to improve the quality of service being delivered, managers tend to look towards expensive methods. This might include sending employees on extensive training programs, increase expenditure on advertising or expensive machinery, and so on.

Whilst these are all essential items in a successful operation, sometimes we tend to overlook the most basic of all schemes.....having a motivated staff. Before going any further we need to make one thing very clear. Managing by intimidation does not qualify as positive motivation, or even good management for that matter - this includes such actions as causing an employee to loose face in front of co-workers.

Creating guilt only undermines motivation and eliminates staff loyalty and morale. Fear can definitely get some people to do what they are supposed to do, but for most employees a fear strategy is unproductive over the long term, and usually will lead to lower morale, which can adversely effect productivity.

Punishment may correct situations and improve performance for the short term - but again, this effect will disintegrate over the long term.

Instead, try devising schemes, which will make your staff feel they own the company, and where they will share in its success. This way, instead of conditioning them to place blame of a problem on others, they will be more willing to jump in and get a situation corrected, or come up with some new and fresh ideas to increase efficiency.

Should you motivate your staff with money?

Many managers believe that employees only work for money or other tangible rewards. But studies have shown that when asked, employees rarely list money at the top. Items like recognition and involvement in decision making are more sought after and appreciated.

You doubt this? Then try creating a short anonymous survey and ask all your employees, and let us know the results.

Whatever you do, remember.....low morale costs money.....motivated employees make money.

Peer-Initiated Recognition.

All employees like to be recognised for a job well done, but recognition from one's peers always has a special significance. Perhaps this is because these awards are seldom expected, and managerial favouritism plays no part.

Whatever the reason, when employees select someone from their rank to single out for recognition and praise, it is well earned and sincere. Not to mention the camaraderie that this creates within a team.

Probably, the best example of a peer initiated reward we came across, was the "Wingspread Award", adopted by the Office of Personnel Management in the Personnel and Management Training Division of the United States Government.

The "Wingspread Award" is a beautiful plaque engraved and given to the division's "special performer" by the division head. After a while the recipient wanted to recognise in turn someone who was felt to be a deserving colleague. The recipient then passed the award on to that employee, who later wanted to recognise yet another peer.

Over time, the award took on great value and prestige because it came from one's peers. Each employee who received it could keep it as long as he or she liked, until another special performer has been discovered. When a recipient was ready to pass it on, a ceremony and lunch was scheduled.

Other examples of peer recognition we came across in our research, involve the employees recognising - the best team player, the employees that go above and beyond their call of duty, the employee that has the best idea to be implemented.

Customers Used To Recognise Employees.

Who is in a better position to decide whether your employees are providing a good service to your customers, than the customers themselves.

A simple but effective customer-recognition program was adopted by Continental Airlines. The American airline mailed "Pride in Performance" certificates to its top 50,000 frequent fliers and asked them to pass the certificates out to particularly helpful employees. Continental workers could redeem the certificates for dinners, luggage, hotel stays, flight passes, and other merchandise. American Airlines has a similar program.

Seven Simple Insights for Motivating Your Employees.

• You get what you reward. Be sure you have clearly defined what you want to get, then use rewards and recognition to move toward those goals.
• What motivates people, motivates people. What is motivating to individuals varies from person to person. To be on target, ask employees what they want.
• The most motivating rewards take little or no money. Try a sincere thank you, providing information, involvement in decision making - especially as it affects your employees.
• Everyone wants to be appreciated. Competent people, quite people, even managers want to know that what they are doing is important and meaningful.
• All behaviour is controlled by its consequences. Positive consequences will most quickly lead to desired behaviour and enhanced performance.
• Management is what you do WITH people, not TO people. Tell employees what you want to do and why. By involving them, you'll more easily gain their commitment and support.
• Common sense is often not common practice. It's not what you believe or say - it's what you do. Practice recognising people and their achievements on a daily basis.

Incentive Pay Plan Checklist

In the first article of this series, we saw an overview of why incentive plans should be used and the benefits they bring along. Unfortunately, many incentive-based programs fail miserably, despite the best intentions of the companies and professionals who design them. Below is a 14-point checklist of rules which should be followed when designing an Incentive Plan Checklist. Whilst this is not a success guarantee, it will definitely improve your chances of achieving the objectives established.

1. Never place base pay at risk.

Never ask your employees to risk their family's livelihoods on something beyond their control. Instead, use the base pay together with an incentive to motivate them to enhance their performance.

In our opinion, this is one of the major reasons why estate agents have to suffer such a high rate of staff turnover, and why the property negotiating business is many times not regarded as a viable long term employment.

One way of working with this, is to keep the base pay competitive within the market (not too low, but at the same time not so much that your sales personnel will lounge around all day doing nothing), and let incentives take overall pay to the high end of the market or even beyond.

2. Make sure everyone participates.

Do not limit your incentive program to a restricted group of people, such as managers only, or sales teams only. A good incentive program is an option available to all levels of personnel. Getting everyone involved will unleash the potential of certain people, who otherwise would be too reserved to stand out. Also, the involvement of an individual within a company-wide program will make that individual feel part of a team and increase the camaraderie within the organisation.

3. Match the incentives with your strategic objectives.

Do not spend time and money designing and implementing an incentive program for the sake of it. The incentive plan should be aligned with the overall objectives of the company.

4. Utilise a "balanced scorecard" of measures.

One of the traditional shortcomings of incentive plans is that they are one-dimensional. Employees are smart, they will soon figure out a way of maximising the incentives at the expense of some other part of the organisation, or even at the expense of their own colleagues.

When designing an incentive plan make sure that the reward is based upon the results of more than a single factor. This way, employees will be able to balance out their duties better without sacrificing anything.

Taking a retail store that sells shoes. Basing an incentive plan on the sales of one brand will put you in a position where the sales personnel will only try to sell that brand, and they might even be over-persistent with the clientele with the result of actually scaring them off.

5. Reward results, not activities.

Rewarding activity will only bring more activity (together with higher operational expenses). A great example is over-time. Instead, if you reward the results that are achieved from that activity, employees will always be looking for ways of maximising the results whilst minimising the activity (and expenses).

6. Establish an equitable starting point for new personnel.

Expecting that newly hired personnel achieve the same standards as the established employees is unrealistic and can lead to frustration.

However, this does not mean you should have two different incentive plans. This might lead to internal conflicts.

Instead, establish a reasonable threshold or baseline of performance that justifies base pay, and reward for performance beyond that mark.

7. Utilize stretch targets.

Once you have established a threshold (and a base pay), start creating "stretch targets". Stretch targets involve a non-linear increment in rewards - creating progressively larger rewards for achieving each increment.

Stretch targets encourage "out of the box" thinking and behaviour.

8. Compare measures based on ROI.

When designing an incentive plan with multiple measuring factors, establishing the importance relative to another can be highly subjective especially for different managers from different departments.

It is usually best to decide the importance of a measure depending on the economic value of that measure, basically the amount of money it brings into the company.

9. Self-fund the program.

Fund your incentive program by using a portion of the profits from improvement. This way employees will start thinking like owners sharing the profits.

10. Offer incentives at multiple levels.

Reward employees for organisation-wide, department and individuals results simultaneously. This will encourage them to get involved in a team environment, and also make them realise and appreciate the impact their actions can have on the company's bottom-line.

11. Do not place a ceiling on rewards.

Employees will stop working to improve their performance once they reach the rewards ceiling. If your incentive plan is based on performance, rewards should continue to increase according to performance, with no limits.

12. Include a consequence for under-acheivement.

The same way that improved performance is rewarded, the opposite should also be catered for when designing an incentive plan. In this case, you should penalise the reward pool, but never base pay, by the amount of deterioration in performance.

13. Create an additional, deferred incentive for key managers and executives.

This has three benefits. First, a deferred reward that is at risk will force your key decision makers to take actions that are in the long-term interests of your organisation. Second, it will create a golden handcuff to retain and motivate your best talent. Third, it will cost next to nothing since it involves only a small number of employees.

Another factor to keep in mind, is that these top executives, are the people that will keep the rest of the staff motivated.

14. Provide frequent feedback and coaching.

An important aspect of a good incentive plan is that the level of success depends on how well the employees understand the plan. Allowing them to express their opinions also makes them feel part of the organisation's decision-making process.

How To Manage a Successful Incentive Program If you have followed the previous two articles, by now you are familiar with the pros and cons of incentive programs and also the factors to be taken into consideration when planning on implementing such a program.

Now that we have got the basics down, it's time to see how to actually implement and manage this incentive program. A note of caution first..if you plan on introducing some sort of incentive scheme within your organisation, this how-to article should only be used as an outline. Every organisation is different, and warrants a program that is specifically customised to its own particular needs and targets.

What are your objectives?

Before anything, have a brainstorming session, during which you write down all your ideas, and make sure you know exactly why you want to implement such a program, and what you hope to achieve.

Failing to do so, means killing the program before even taking off the ground.

Make sure, that what you hope to achieve is realistic and fits within your organisation and current market conditions. Answer questions such as: What is the condition of the industry environment today? Who are my customers? What are the strengths and weaknesses of my products/employees/customers/competitors? Be honest with yourself!

Once you know what your objectives and goals are - prioritise them. Your most pressing needs come first. Then place the incentive program's focus on these issues.

List the major players. If you are focusing your program around a specific product, make a list of the people with the best track record in selling the product, but also make sure to find out who are the most promising salespeople. Remember what we said in the first article? An incentive program is supposed to enhance the performance of employees who, otherwise, tend to be somewhat overshadowed by the department's over-achievers.

Whatever your goals and objectives - be specific and keep them simple. Focus on one or two goals at a time, so your employees can direct and concentrate their efforts more effectively.

Consider some backup plans. What will happen if a large number of participants don't attain the objectives? Has such a goal been met before, either within the company or even the industry? Are there factors in the industry that could hinder the desired result?

The next set of questions relates to the analysis of the program. What factors are going to be used to measure employees' performance? What are the financial and hidden costs involved in measuring such factors? Quantifiable successes include tracking salespeople's progress according to how their sales have increased, or noting a factory's improved safety record by a lower number of accidents. Consider the cycles of your business, and incorporate the peaks and valleys into your goal structure. Attune your objective to these fluctuations. For instance, in a program aimed at boosting slow periods you can never expect to receive increased sales equal to those of a peak period. How do these goals mesh into the overall objectives of your company? Feedback from those involved in day-to-day operations may help steer you away from goals that may be unrealistic because of the situation in the workplace or marketplace.

How much are you going to spend?

Even though a well-planned and managed incentive program will fund itself from its own profits or cost savings, there are still some initial expenses to be made during the planning stage and early into the implementation process.

As a general rule, companies should spend from 5% to 10% of incremental sales (the profit the incentive program generates), or 1% of total sales. A sample breakdown would be similar to the following :

Awards. 70% to 75% of the incentive program budget should be spent on the awards themselves. When deciding this allocation take into consideration the following points: (1) For a short-term quick-boost program, the awards should be higher; (2) The higher the participants income and performance, the more expensive should be the award; (3) For a sales incentive, the value of the award should be between 3% and 5% of the participant's annual income; in a non-sales program, that number may be as low as 1%.

Promotion. The rule of thumb is to allocate 20% of the total budget for promotion.

Administration. The range of 5% to 15% of budget for this category is broad because it depends on several factors, such as the details of the analysis, man-hours required to perform the administrative tasks, etc...

Research & Training. If this is required, a percentage has to be allocated. Do not make the mistake of underestimating its importance.

When choosing the budget that best fits your company's plan, you can either choose an open budget or a closed budget. With an open budget you have the chance to sell more of your product, since there's no limit on the number of points or financial reward that can be earned by the participants. However, administration costs and other overheads tend to be higher. With a closed budget, there's a ceiling on the awards received, the cost is known up-front and so the overheads tend to be lower.

Rules & Regulations. Lay down the law! Make sure that there are specific rules and procedures to be followed, such as what is to be considered as part of the incentive program and what not. Avoid misunderstandings and prepare for surprises.

All participants should be aware of these rules and fully understand them. One of the most important factors involved, is that employees should know exactly how their performance is measured and awards distributed.

Measuring progress. The key elements in quantifying the progress of the incentive program participants, are fairness, simplicity and quantifiable progress. Ask for feedback from all levels of management, and especially from those that will be directly involved (such as the participants themselves).

The accuracy and methods of measurement will mainly depend on the budget allocated and also on the goals. The progress of a sales incentive program, can be measured through the number of accounts opened, number of referrals, repeated clients, totals sales, etc.. In the case of a program aimed at improving the quality control of a production line, factors such as reduced number of errors, returns and complaints registered could be used.

Pick your prize. Now the fun part! During this stage, you have to choose awards that are valuable enough that actually promote the program and that incite the participants. Cheap prizes will de-motivate the participants, and completely kill an incentive program. The awards will also depend on the level of income, performance, and social status of the participants.

Examples of awards could be merchandise, group travel, individual travel, cash, cash substitutes, and even good ol' simple recognition.

Staff Motivation: What Are The Local Companies Doing?

So far we have been through the various staff motivation programs and incentive schemes that could be implemented within an organisation to enhance employee performance, safety procedures and the like.

Nonetheless, however interesting and informational it was, what is theorised about is not always easy to implement in practice. If not approached with caution and administered with even greater care, the ramifications of a badly implemented motivation program could be disastrous.

In the past few weeks, we have talked to a number of HR Managers from some local companies to hear their opinions and experiences with staff motivation programs.

The first on the list, the Tumas Group of Companies. 'Staff Motivation is not about financial reward, it's about DEVELOPMENT..we offer people a career, not just any job', said Paul Piccinino, Group HRD Executive for the Group. Training sessions and twice-a-year performance appraisals seem to be the norm for the almost 800 employees of this group of companies, for everyone up to the General Manager.

In fact the Group organises various training programs, with approximately 50 sessions during 8 months of the year, with each session lasting about 3 hours. These courses are conducted by the Group HRD Executive himself, a local training company and other personalities that are invited for the occasion. At the end, each participant gets a certificate of attendance during a presentation followed by a reception.

Other departments within the Group take specific training. For example, food handlers are constantly attending hygiene courses, at the end of which they are given British certificates.

Training and development seems also to be an issue of great importance for Simonds Farsons Cisk plc. Talking with Arthur Muscat, Group Human Resources Manager, we found out that one of Malta's oldest and most successful companies goes a step beyond the in-house training. They, of course, provide technical courses and bring in tutors to the brewery, but they also established a Study Subsidy Program for it's employees. With this program, Farsons employees that want to further their studies (in their relevant fields) are able to receive some financial aid. To this effect, the company subsidises 60% of tuition and textbooks fees for any course, from an English 'A' Level to an MBA. The employee receiving this grant will have to sign a contract which will keep him with the company for at least 1 year after graduation.

These two companies have also something else in common. They value the importance of reducing the gap between management and employees and encourage communication between the two. This would also help employees in making them feel part of a team, and that's an incentive in itself.

In the case of Simonds Farsons Cisk plc, they have established quite an interesting Suggestion Scheme. In this scheme, employees are encouraged to make suggestions on how to improve things within the company. This is not done through some cheesy drop-box. Employees fill-in and sign official documents which are periodically reviewed by an appointed committee known as the assessors. The valuable suggestions are then forwarded to the relevant department. Arthur Muscat, Group Human Resources Manager, confessed that the initial hurdles in establishing this scheme were quite hard to overcome and also the cost for implementation and administration are relatively high. However, today, it has achieved a certain level of popularity with the brewery employees.

To promote this scheme, the company has established various prizes which are given out during official ceremonies. The prizes depend on various factors, such as whether the suggestion made was accepted and actuated, accepted but put on hold, accepted but not actuated, not accepted; also the total number of suggestions made and so on.

According to Mr. Muscat, the secret of success of a suggestion scheme lies in its administration. In their case, all suggestions are acknowledged within 2 weeks and considered within a further 3. the company also uses one of its full-time employees, who spends 50% of her time administering these suggestions.

Another drawback involved in the Farsons suggestion scheme, seems to be the resistance from some managers who don't like to see anyone intruding in their line of work.

However, all these drawbacks are worth the final results. Paul Piccinino, Group HRD Executive for the Tumas Group, prefers to establish communication channels with the employees by sitting at a table with coffee and sandwiches. However simplistic this might sound, Mr. Piccinino says that it does work, and on these occasions employees are invited to express their views on various issues that are bothering them or they feel could be improved upon. Obviously this is also done during other more formal meetings with both employees and the managers.

Newsletters seem to be one of the tools that are used by the Gasan Group of Companies. Mark Scicluna, Group Human Resource Executive, explained that 'these newsletters are distributed once every 2 months to all companies within the group whereby employees are kept informed of all the ongoing events.' It is worth mentioning that the Tumas Group also make use of a newsletter, aptly named 'The Tumas Times'.

Also employees at one of the Gasan companies - Mekanika - can boast about their own Klabb tad-Delizzji. In this club, people with common interests within the same company have the chance to meet once a month during working hours to talk about their hobbies and organise themselves. This is an excellent way of encouraging teamwork amongst the employees and also for them to meet in a non-working environment.

One interesting thing we have noticed was the usefulness derived from organising social events between the different companies. In the case of the Gasan Group, Christmas staff receptions, children programs, days of games and the like seem to work very well, and are warmly received by the employees and their families. On the other hand, Mr. Muscat (Simonds Farsons Cisk plc) confessed that this could never work in their case, due to the lack of homogeneity amongst the staff.

Another method of motivating staff, used by the above companies, are performance appraisals. However, we will look at performance appraisals into detail at another instance.

After, talking with these and other HR managers, we found ourselves agreeing about the fact that money IS NOT the biggest incentive you can offer an employee...recognition is, and this can come in various forms.

Another interesting issue that was covered, was the difficulty that these companies face when trying to implement some kind of incentive scheme - when that is possible at all. According to Arthur Muscat, Group Human Resources Manager for Farsons, this will remain close to impossible until a performance-based mentality is instilled.

Through our vast experience in the recruitment industry, we have noticed that employees tend to feel that their respective employers own them a living, and vice-versa. FORGET IT! No one owes anything to anyone! When an employer hires someone to fill a post, both parties have agreed to a business relationship, where the employee is selling his services to his/her employer. Remuneration should be based on how well that employee performs, and not just because he/she comes on time to work.

Until we start thinking about performance, enticing staff with financial rewards could be a dangerous game to play for anyone involved.

Article prepared by Commercial Services Bureau (CSB) Ltd.

Since 1987, CSB Ltd. has been servicing the local and international business community with its range of employment/recruitment related services. It has helped thousands of employees improve their job conditions and careers, and employers obtain the ideal staff for their organisations.