Management Styles - Employee Performance

The task of planning and executing how employees will be compensated at any company is usually faulty at best. To add to the complication, different types of employees have different compensations, and different goals so measuring performance and rewarding based on excellence or progress is sometimes convoluted.

But, don’t make the mistake of implementing “bonuses.”

If bonuses are distributed when, “things go well” at your company, or for holidays, this will quickly turn into entitlements.  And, unfortunately many bosses or managers have a nasty habit of discussing them as such (have it as part of the compensation package when employees discuss raises or new hires discuss wages). So bonuses lose what their very name implies. They are no longer additions, to be paid out when performance is exceptional (more on this in just a second), but simply a nice chunk of salary to be distributed at a certain point in time.

So, what is the problem? When these types of tools are used without mention to meeting or exceeding expectations and goals, they are nothing to work towards and quickly become the “norm.” Additionally, if the inverse happens (for some reason the bonus is not paid), for example if business declines or expectations are not met, this lack of “deserved compensation” can have a huge effect on productivity and general attitude.

So, as soon as possible, across all facets of your business you should set up a system of performance compensation, where by employees performance is directly linked to compensation. Here are some general reules for success:

• Set specific standards for the job that are measurable
• Make routine payments (not one lump sum)
• If it makes sense for your situation, choose increases in performance compensation as opposed to pay increases or general raises

Utilizing this kind environment, particularly setting measurable goals with your employees and watching their progress (and allowing them to watch their own progress) will help lead to a more successful working environment.