Are You Getting the Best from Your Employees?– September 07, 2012

As an employer of a private company, you have the unique opportunity to closely align your interests with those of your employees — and that can mean great success for everyone involved. Your employees, like all human beings, react according to how they are compensated and incentivized. Essentially, you will get what you reward, simple as that. The behaviors of your employees may be conscious or subconscious in nature, but we all respond according to the positive or negative incentives in our lives. And, from a business perspective, those incentives can make the difference between a successful, thriving organization and a mediocre one.

As you look at the growth and sustainability of your business, take a hard look at how your management team and employees are incentivized. Many companies don’t even realize they have policies in place that reward the complete opposite behavior they are hoping for. For example, a company that uses only top line revenue for determining bonus compensation will likely get increased sales but at the sacrifice of gross margin. Or a company that incentivizes employees strictly on the hours that they work will likely get increased hours but decreased productivity per hour.

Aligning the interests of you and your employees doesn’t necessarily mean increased compensation. Incentives could include public recognition or extra time off. Motivating employees may be as simple as reviewing your performance management and compensation programs to tweak certain criteria, formulas or inputs. Or it could mean that you hold monthly or quarterly “state of the company” meetings to discuss your vision with your employees so that they can understand your perspective and goals. These meetings are not only helpful from an alignment standpoint, but they are also a great opportunity to thank your employees for their efforts and recognize special achievements. Every business is certainly unique in its own way; but the issue of alignment transcends all types of organizations and groups—from companies to sports teams!

We routinely assist our clients with strategic planning, meeting facilitations, performance management systems and compensation structures. Contact Rob MacKinlay at 216.774.1181 or rmackinlay@cohencpa.com for more ideas.

 

This communication is for information only, and any action should only be taken after a detailed review of the specific situation and appropriate consultation.

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