The success of your business will ultimately be determined by the work of your people. How can you get the best performance from your workforce? The answer is two-fold. First, determine their priorities and goals, then incentivize them to reach those goals.
End the performance appraisal process
Scrap your performance appraisal process and instead challenge each of your managers to identify the (three, four or, at the most, ten) things they need to see from each of their direct reports in the next 30 days/quarter. Sit down with each manager to make sure they’ve identified measurable priorities that are aligned with company goals.
Offer incentive compensation for your lowest-level employees on the highest priority tasks
After you identify specific priorities, you need to ensure that your managers hold people accountable for their achievements. Offering an incentive to your lower-level employees is one of the best ways to get them to reach their goals.
Most organizations approach incentive/bonus compensation upside-down. They attempt to motivate their top executives (people who are already intrinsically motivated) with bonuses. Yet, the very people who most need an extrinsic motivator are those at the lower levels of your organization. Typically they have no opportunity for a bonus.
Base-level wages do not have the power to motivate, only the ability to satisfy, or dissatisfy the worker. The famous industrial psychologist, Frederick Herzberg, identified base-level pay as a hygiene factor. When adequately present, hygiene factors simply keep employees satisfied, but don’t necessarily motivate them to do an outstanding job, or go above and beyond.
Create an incentive/bonus compensation plan for each individual accordingly. But you say, “We can’t afford to do that right now. Our revenues are slipping in this economy!” More than likely, it’s more accurate to say, “We can’t afford not to do that right now.
The key is to specifically identify how much the collective achievement of those priorities is worth to the bottom line. You will need a number. Our suggestion is that you take 50 percent of that number and, if willing, distribute it in the form of incentive/bonus to the lowest-level employees (contingent, of course, upon the successful individual achievement of those priorities).
Vistage Speaker Daniel Meloni, MBA/SPHR, is the founder of Performance Point, a training & consulting firm that specializes in the area of HR-related management/leadership issues. Daniel received his M.B.A. from Governors State University (of Illinois) and has been a long-standing and active member in the American Society of Training & Development (ASTD) and the Society for Human Resource Management (SHRM).