The rewards structure in your business is the fuel that will either uplift your performance or shut it down.
Active Knowledge Questions:
How do you view the rewards structure in your business? Is it designed simply to be competitive with other employers? Or do you actually use it to attract the type of people your business needs to be successful?
The first question that you must succinctly answer is: Are your employees a cost or the most important source of competitiveness in your business?
Consider, are they a cost to be managed and minimised to maximise profit? Or are they the most valuable asset you should nurture to yield their greatest efforts? I do not believe you can effectively respond ‘both’ because each answer sits at different ends of the spectrum.
The failing of many leadership teams today is that they say employees are a valuable asset but in every way deal with them as a cost centre to be minimised. That approach simply doesn’t work, and the mediocre performance of many businesses is a result of this conflicted approach. It is a result of the profit-first motive that permeates many businesses.
The paradigm of employees – and therefore wages and salaries – as a cost centre is well entrenched. It will take some considerable effort and persistence to erase this thinking.
The starting point in creating competitiveness through employees is to change the paradigm of what employees represent in your business. Only then can you move forward to building a bond of trust and, thereafter, engagement.
Trust must be the foundation of the relationship you build with your employees to activate their ability to contribute effectively to your business. Trust first, and then engagement will flow.
Your reward structure will reflect how your business actually views its people.
Your Reward Structure
When I speak about reward structures I am referring not to the actual benefits offered but, more importantly, the inherent design principles that underpin those benefits.
Here are examples of what I would consider to be design principles of a reward structure:
- Equal opportunity to gain the rewards, regardless of culture, faith, gender, age or any other similar attribute.
- Advancement based upon character and capability against clear performance benchmarks.
- No personal bias allowed in recognising achievement or determining rewards.
- Market competitive remuneration and benefits as a foundation.
- Transparency in attributing rewards.
- Recognition of the individual or team for achievements, and rewarding them, and not the hierarchical structure above.
- Rewards granted being the evidence that underpins trust.
In essence, you are seeking to achieve an open reward/incentive program where everyone has an equal opportunity to contribute and succeed to the greatest of their capability. These principles truly reflect how you view your people – either as the source of your competitiveness or a cost to be managed.
The Right Rewards
The reasons why someone works for your business is critical in developing a competitively fit business:
- Would you prefer a team who are simply working for you for the money? (‘I hate the job, but the money is great.’)
- Would you prefer a team who work for you because they have no other choice? (‘It’s a terrible place to work but at the present time I have no other choice, but I will bail as soon as I can.’)
- Would you prefer a team who work for you because they believe in what you are doing? (‘Look, the pay is fine but I just love the work we do, the people I work with, and the opportunities it provides for me.’)
I would hope that most business leaders would choose the last option and opt for a team who love their work. How else would you expect to engage a team to contribute their all in the pursuit of the business’s purpose and goals?
The love of money only gets you so far and its appeal wears off pretty quickly. Last year’s bonus is just that – last year’s. Where and what is this year’s incentive? Monetary rewards also tend to be limited to the upper tiers of the business’s workforce, therefore, failing to engage the bulk of those working within and with the business. Money as a principal reward just seems to have the knack of bringing out all the bad aspects of human nature.
The incentives you offer to all those who work within and with your business form a vital part of your competitiveness.
The Engine As A Source Of Reward
The competitive engine within your business can provide a rich source of reasons, rewards and incentives, to attract the right people to power your business’s success:
- Purpose (‘I want to be involved in what you as a business are doing and the people whose needs you are meeting.’)
- Motive to compete (‘I want to work for a business like yours.’)
- Worthy leaders (‘I want to work for you because I know you will uplift me.’)
- Culture (‘I love the people I get to work with.’)
- Vision/quest (‘I want to be part of your journey.’)
- Trust in leadership (‘It’s a great business to work for.’)
- No barriers and great rewards (‘This is somewhere where I can excel.’)
- Customer focus and capabilities (‘I can contribute and learn so much.’)
If your competitive engine is well-tuned, then your reward/incentive program should be designed to draw these strengths to the forefront as they will provide the fuel to attract and energise the right people for your business.
An entirely new level of performance.
Want to become a part of the Entrepreneurs+ Community and learn how to make your business competitively fit? Join now.
All the best in the success of your business,