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PKF Australia

Accountants and Business Advisers

You get what you reward

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Chad Russell

Partner

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You get what you reward

Are you wondering why your team just won’t deliver the outcomes you are after? You keep on banging on about results this and cashflow that and what about those sales targets – they just don’t seem to get it.

I see it all the time and my first question is either; what’s in it for them or how are you using incentive-based remuneration to drive those behaviours or outcomes? The usual answer is “I give them a job that should be incentive enough,” or “That’s what I pay them for,” – but is that how to get the best out of this generation?

This generation is transient, they don’t play by the same rules as their parents or grandparents, they spend money before they earn it and they want to know how they can get what they want right now – so why not use that to your advantage and give them a way. These traits are not all bad because what it means is that using bonuses or incentives to motivate them will often be extremely effective – if it gets them to whatever it is they are after sooner.

I’m not suggesting this means you should throw more cash away than what you are now, unless of course the reward for you outweighs the cost. E.g. if your bonus structure was that a certain employee gets 10% of any profit above budget, that could be a lot of money if they really outperform, but not compared to the 90% that you get to keep.

So as an employer, how do you make this work for you?

  • Get clarity on what outcomes or behaviours you want to drive. E.g. more sales, beat budget, reduce wastage etc.
  • Ensure that the outcome is controllable by the particular employee. I.e. improving efficiency might be a great outcome to expect from an operations manager but not necessarily great for your sales manager.
  • Work out how to measure success and make it I.e. what does beat budget mean? Is it sales, gross profit, net profit? For a division manager it might be something like – your bonus will be 20% of any gross profit that your division produces in excess of the $1m that appears in the annual budget.
  • Come up with a reward that will excite the employee while still producing an outstanding result for the business.
  • Get agreement on the outcome, the measure and the reward.
  • Stick to it – if you have effectively linked the bonus to outperformance, the big winner will be the business owners. If you have got this right, you should want to pay a bonus and you should want it to be uncapped – let them outperform as far as they can because you get to keep most of it.
  • Celebrate success.

I  recently wrote an article about engaging your next leaders (which you can find HERE) about some of the motivation theories out there and how they apply to your people. Consider things like whether you want your team performing at their absolute best, or merely satisfied to have a job. Whether you want them second guessing if you’ll come through with the reward or that they have absolute faith that you are good for your word.

This is the time of year to get this in place. Make it part of your budget process – use the budget as the basis for setting KPIs and rewards, remembering anything that results above what was planned becomes a win for both the employee and employer.

If you really get this right, you will have a truly high performing team, better results and more free time. If that sounds good to you then make a start today and remember, you get what you reward.


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