Rewarding

How do we reward employees for performance? First is with a competitive wage and benefits package. How do we know what is competitive? There are survey results available via government agencies, professional organizations (SHRM), and HR managers can conduct their own surveys of local enterprises. Of major concern is the funding and distribution of annual salary adjustments. Some employers try to at least cover the increase in the Consumer Price Index sometimes called Cost of Living Adjustment (COLA). Profitability results from execution of the business plan. When the results do not provide for salary adjustments, Big Boss must find other methods to reward performance.

Non-monetary recognition includes: Service award banquets, peer recognition awards, discount coupons for local merchants, reserved parking spaces, "Thank You", assign to an important and interesting project, picnics, free coffee.

Note: No two enterprises have identical workplace cultures. Therefore it is extremely important that Big Boss not use a cookie cutter approach or copy what another enterprise does for their workforce. Ask workers what they want.

When the business operations provide funding for annual salary increase, there must be a process for distribution of the funds. There are countless methods for this process. A proven method is for the enterprise to budget funds equal to a pre-determined percentage of total wages paid in the prior year.

Example: If total wages for the prior year amounted to $5,300,000 and the pre-determined salary increase pool was to be 4.5% of that amount; the pool of dollars for performance rewards this year would be equal to $238,500.The pool of dollars would be allocated to each department head based upon each department's base salary amount as percentage of total base salaries. If your department's base salaries amount to 5% of total salaries, you would be allocated 5% of $238,500 or $11,925 for salary increase to your employees in your department. You, as a valued manager would be given the authority and be held accountable for how you distribute your share of the salary pool. The end result is very subjective and can be a source of resentment from employees, if not fully understood and perceived as being equitable. Not everyone will be pleased. Labor laws must be adhered to.

What do you do in the case of a worker performing at an acceptable level but has reached the top of their salary bracket and your process does not allow for a salary increase? You want to express gratitude for the employee's contributionsand give them reason to feel appreciated. Depending on the company policy, you may give a lump-sum; one-time "bonus" which does not become a part of base salary and does not become the basis for benefits tied to salary.

What you learned from the notes on "Rewarding".