WORKING FOR THE FUTURE (5): REWARDING PERFORMANCE
The object of a successful reward system is to motivate teams to improve their overall performance. Calculate rewards with care, and choose the most appropriate types. Financial and incentive-based schemes – or a combination of both – are popular.
Broadcasting Figures
When targets and results are used to encourage and reward performance, both sets and relevant figures must be known and accepted by all the team. Publicize the numbers – whether by memo, bulletin board, electronic means or newsletter – and explain to everyone exactly how the reward system will work. Make sure that each team member understands the bonus system, has access to the target they are expected to reach, and can see their actual performance figures. Only then will they appreciate what they are working towards and how they will benefit – both as a team and in individual capacity.
Setting Reward Levels
It requires judgment and experience to set a reward system at just the right level. Fix too low a rate, and team effort and morale fall off. Be too generous, and you will not stretch the team. When calculating rewards, work out what you can reasonably expect from your team by looking at their past performance, and that of similar departments and organizations. As the team gains in experience and skill, you will need to raise your sights by setting a higher reward base in order to encourage team members to continue stretching themselves and performing at their best.
CHOOSING REWARDS
| REWARD | IMPLEMENTATION | BENEFITS TO TEAM |
| PAY RISERise in salary not directly related to performance and with no direct teamwork element. | Requires no extra action above approval of overall salary scale and placing particular jobs within the scale.May go hand in hand with promotion up the job scale. | Members of the team know where they stand financially.The uncertainty of variable payments is avoided.Can take away elements of competition within team. |
| BONUS PAYMENTCan take several forms, including sharing of financial savings made as a result of team effort. | Needs meaningful measures on which payments can be based.Can allow team to decide how gross sum should be divided.May reveal how members of the team regard each other. | Members have incentive for cost-cutting and quality drives as the bonus paid out from team funds will increase.Acts as a good long-term motivator of individuals. |
| PROFIT-SHARINGUsually a given share of the profits is split between employees, either on corporate or divisional basis. | Management must find a fair method of profit distribution. If of equal benefit to whole team, you need to confront the fact that individual performances are not being singled out. | Profit-sharing is popular with employees and is a great motivator of individuals.Increases the sense of people belonging to a team working towards a common aim. |
| SHARE OWNERSHIPRewarding team members with shares is moving down from top levels in many corporations. | Is directly linked to corporate results rather than individual staff performances.Helps to close the “us and them” gap between management and lower levels of staff. | Pride of ownership encourages tea sprit, but hinges on the share price, rather than team effort or success.Identifies team members with overall group results. |
| RECOGNITION REWARDSPossibilities are legion, ranging from formal prizes to holidays and parties. | Management must be careful to avoid implying that doing a great job is the exception instead of the expectation.Encourages people to perform as rewards are motivational. | Members love recognition, even if only verbal, and cost is often little or nothing.Can reward team or individual.The better these rewards, the better the team atmosphere |
| COMPOSITE REWARDSReward types are often combined for maximum team and individual effect. | Should always include and emphasize individual recognition.Allows management to combine individual with company-wide rewards, with elements tied to teamwork. | Reward packages stimulate and motivate: variation helps to keep interest fresh.All senior-level recognition of teamwork elements will help to boost team spirit and morale. |
TIPS
- Allow your staff to have a say when it comes to setting reward levels.
- Avoid using league tables – the team member at the bottom will become resentful.
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