The business world has some basic rules and guidelines about employee motivation that are common from company to company. In the last 20 years of owning small businesses, I have learned that these rules and guidelines are valuable to pass on because they work.

There are many ways to reward people who make above-and-beyond contributions to your business. Here are the most common rewards used by small business owners.

Financial Rewards

? Merit increases: Giving raises to people who achieve performance, production, customer satisfaction, or sales goals.

? Cash recognition: Giving one-time cash awards to people who make an extraordinary contribution to your business. Smarter than a raise (which goes on forever) and often more appreciated.

? Stock ownership: One of the highest forms of recognition can be to provide people with equity or a share of the company. Unfortunately, this type of reward is not available to most small business owners. Also, nothing is worse than having a former employee as a stockholder, so be careful here.

Non-Financial or Low Cost Rewards

? Public recognition: One-time events that celebrate a significant achievement or milestone. Presenting a plaque at the company picnic is a priceless example. So is a mention in the local paper?s Business People On The Move section.

? Extra time off: A free day or an extra week of vacation time can be a great reward for people who value lifestyle and extra time with family.

? Job choice: Let your best performer pick a choice job or pass on a particularly crappy job. Chances are (s)he?ll take the tough job anyway because (s)he knows how to get it done fast and right the first time.

? Professional development: Rewarding employees with attendance at a PWNA Boot Camp or convention (or other special training event) can be a positive incentive for people who want to stay current or learn new skills.

? Responsibility and advancement: Acknowledging the contributions of an employee through promotion or increase in responsibility can be a positive motivator for high achievers.

? Awards for specific achievements: Tailoring rewards to specific achievements or behaviors, e.g., productivity awards, employee suggestion awards, customer service awards, safety trophy, etc.

Three Smart Rules for Rewarding Your Best People:
Regardless of whether you are using financial or non-financial rewards, it's important to consider the following guidelines when rewarding and recognizing your best people:

1. Match the reward to the person. Reward people in ways they find truly motivating. Ask your top people to tell you want motivates them most. You might even consider asking the people who work for you to complete a "motivation survey".

2. Match the reward to the achievement. Effective rewards are designed to account for the significance of the contribution or achievement. For example, a salesman who just landed a major new account should be rewarded in a more substantial way than someone who worked a few extra hours to complete a project on schedule.

3. Be timely and specific. Rewards can have a big impact if they are given as soon as possible after the achievement. Rewards that come weeks or months after the fact do little, if anything, to encourage higher levels of performance.


With any incentive program, there are some elementary Do?s and Don?ts that can make a big difference. If you are just starting to think about a Bonus Plan, for example, consider the following guidelines:

GUIDELINE #1 ? Reward those who are critical to keep in your organization. In a long-term sense, it is only important to reward those who are critical to your success. Don?t waste time or money on rewarding those who aren?t the key players in your organization.

GUIDELINE #2 ? Bonus programs tend to be complex, because we often try to affect too many different behaviors all at the same time.

Focus a bonus plan on the ONE most important result you want to achieve. This focus can change every month, but should only try to affect one behavior or one result at any one time. Time and time again, simple plans motivate, while complex plans create excuses.

An effective program has a clearly stated goal and a clear time limit. Monthly evaluation (or even weekly) is best.

GUIDELINE #3 - Try to time the reward to be as close to the right behavior as possible.

Make it simple and achievable and easy to communicate. Have a clear picture of what you want to accomplish as you form your bonus plan. Start with simple behaviors and progress.

GUIDELINE #4 ? Keep the goal so simple that it will be obvious to all when it is met. If the goal is and increase of profits by 10% over this same month last year, then chart the results in a visible place week by week. If the goal is ?No Customer Complaints?, then post a chart with the number of days without a customer complaint for all to see.

GUIDELINE #5 ? Make the reward easy to understand. Don?t make the calculation of a bonus a burden for your bookkeeper. For example, if the profits go up at least 10% over last year, the employee gets a $500 bonus. Simple, easy.

GUIDELINE #6 - To get the most out of your bonus plan, make a big show out of ?paying off?. Everyone loves to be patted on the back in public.

GUIDELINE #7 ? Always pay what you promise.

NOTE: Is money the best motivator? According to a recent survey I read about, ?money? ranked 3?rd on a list of motivators by the actual employees. Surprised? Believe it or not, money was beat out by ?recognition for a job well done? and ?interesting and challenging work?. Number 3 ?Money? was closely followed by ?involvement in decisions that affect them? and ?opportunities for growth and promotion?. In spite of what you think, your people just might be looking for a pat on the back, which some bosses find is harder to give than a bonus or a raise.