Naturally, a business will never mean as much to staff as it does to the owner. Employees, as loyal and hardworking as they may be, are not nearly as emotionally or financially invested. When employees can connect their own financial success directly to that of the business, there is an increased level of motivation. Compensation is an effective motivator, and incentive-based compensation plans can foster a culture of participation.
Here are three of the best ways to motivate employees through compensation:
1. Performance Based Bonuses – In addition to making an employee feel valued, which is one of the primary methods of increasing employee retention and a key element of any successful business, performance based bonuses also give employees a measurable representation of their efforts beyond their day to day responsibilities. It shows an employee that they are important to the company while simultaneously driving them to become better.
2. Alternative equity participation plans - Sometimes business owners are not ready to give up ownership in their company, have no stock to issue or there is no readily available market for their stock but have certain employees they would like to incentivize through the growth of the company. These plans known as phantom stock or stock appreciation rights plans, settled in cash, are an alternative means of compensating key employees through the growth of the company. It provides employees a chance to see the business from the business owners’ perspective and also allows the business owner to assess if a key employee could succeed into ownership.
3. Stock Appreciation – If an employee holds stock in a company, they literally have a vested interest in the company’s growth. Every success for the company becomes a personal success for the employee. As the stock value increases, so does the employee’s pride in the company.
Rewarding employees for hard work and connecting their interests with the success and growth of the business, is a huge motivator. A motivated employee is an engaged employee, and an engaged employee is one of a company’s most valuable assets