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Posts Tagged ‘Employees’

Designing a Performance Pay Strategy For Your Business

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performance pay

Citigroup investors last week let the Board of Directors know that they would not approve executive pay when the company’s performance was less than stellar; last month Citigroup failed the Federal Reserve’s latest stress tests. Further, investors saw an inequity between shareholder value and executive pay. In short, they wanted performance pay.

Whether executive pay on Wall Street, sales incentives, or company-wide bonuses for performance, incentive packages can be tricky business. I’ve learned the hard way that rewarding the performance you want more is not as simple as it seems. Here are my top five tips to designing performance pay plan that your employees are excited about and that increases your bottom line.

  1. Understand and incent for the behavior or performance you truly want. Creating marketing materials within a tim eframe may be a goal, but if no one remembers it or picks it up, you haven’t achieved anything. Another desirable goal is to increase client loyalty, but never lose sight that the bottom line objective is revenue. While it could make sense to reward for repeat appointments, incorporating a pay component based on increasing revenue is also critical.
  2. Understand that by rewarding one behavior, you may discourage other behavior. By rewarding the retention of customers, you may inadvertently incent employees to avoid marketing and building the customer base. It’s about balance.
  3. Engage the employees in the process to make sure your goals are in alignment. Incorporating the employee’s goals is a win-win; if they’re enthusiastic about meeting or exceeding the goals the company more easily meets its goals. Understand what rewards are valued by the employee; not everyone is motivated by financial reward. Ask what motivates them and incorporate their goals and motivators.
  4. The behavior or performance being rewarded needs to be measurable. If systems need to be built just for the purpose of calculating incentive pay, think again. You are either not incenting a behavior directly in line with your goal, which are generally simple (increase revenue, decrease inventory levels), or you need to break it down into smaller, simpler components.
  5. The employee ought to be able to easily calculate where they stand during the performance period. Performance pay strategies should be so simply designed that whenever a sale is made, an appointment booked, or customer payment received, the employee can quickly calculate the associated pay.

If you don’t see the desired results from your performance pay plan, get ideas from employees and adjust. When incentive pay is done well, it’s easy and you’ll see your desired outcome quickly.

 

 – Helen Dutton, Business Coach

You Can’t Afford NOT to Hire

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For Hire

“Wait, you’re thinking. You’ve got it all wrong. I can’t afford to hire.”

Hiring additional employees, and especially your first employee, is a decision most often postponed by business owners. “I can’t afford it” is the battle cry but I wonder how many business owners have actually calculated the affordability. Instead, it’s a general statement that allows us to put off taking action. Trust me, I know. I’ve been there.

Of course, the first piece of information needed is an understanding of what you need to hire for, what tasks are best done by someone other than you. To answer this question, you first need to know how you are currently spending your time. Track your time for a few days, recording everything, and I mean everything! The first time I did this, I realized how much time of the work day I spent driving my kids around. My first hire? A dynamite babysitter who I now consider my “oldest son”. Gaining two hours a day for three days a week gave me six hours that I now fill with writing, client time, and sometimes, sitting in my office reading chair getting caught up on the never ending pile of books. If I had listened to my fear, “I can’t afford it” would have been loud and clear. Instead, I weighed all that I would gain against the $60 per week and it was an obvious answer. Although this first hire was not directly for my business it gave me the ability to provide more quality time both in my business and with my family.

My second hire added business capabilities that previously didn’t exist. I knew my time was best spent on my unique talents – coaching, speaking, and helping business owners see their livelihood through a new set of lenses. Sure, I could muddle through the tasks I outsourced, but that would have been my fear running my business, rather than my strengths. Instead, I pay an expert to handle what she’s best at while I spend more time doing what I do best. It’s simple math: my hourly rate is more than what I pay to outsource per hour. Of course, it’s critical that I use those hours productively, using my given talents.

Take a stand for your business and your unique talents; get comfortable with the value of your abilities and you’ll hear yourself saying, “I can’t afford to not hire!”

 

– Helen Dutton, Business Coach

Small Business Employee Handbook

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Small Business Employee Handbooks rank right up there with Business Plans; you know you “should” have them, but there are about 1,001 other things you’d rather be working on. All too often, an owner gets around to creating a Small Business Employee Handbook after an incident. I’d rather just cover the legal and recommended necessities simply and then address the critical piece: culture and fit.

The basic required elements can be found at the Small Business Administration’s site: http://www.sba.gov/content/employee-handbooks and there is even a link to a free template. Two words of caution on the template:

  1. It is not a SBA document as they claim and it contains links to a ‘for profit’ enterprise who wants to sell you something;
  2. It is lengthy, and may be more than you need. If the length could potentially scare you off, avoid the template!

Also, be sure to check if there are State requirements that you need to address.

Once you have the legal requirements covered, the rest of your employee handbook is uniquely yours. Upon reading your handbook, anyone should have a pretty good idea of what it’s like to work at your business – the “feel” of your business. The best place to start is with your values – either personally, if you are a very small business, or the company’s values. This is not a poster or a plaque with 4 or 5 words on it; these are those qualities that define you. What must you, your customers and vendors, see and hear if your values are present? What qualities, if missing, draw your attention to them?

Your values serve as the backdrop for your small business employee handbook; the next step in creating your handbook is telling employees what it’s like to work in your business, what your expectations are, and how you handle different situations. Address as many subjects that you can up front and you prevent problems in the future. Consider these items: do they earn “comp” time? What is your philosophy about client complaints? Does the customer really come first? Feel free to give examples that speak to your desired customer interactions.

A well-thought out small business employee handbook can prevent nasty legal situations. More commonly, it will create an environment of employee actions in line with your values, build trust, and easier staff management for you.

If you would like help defining your company’s values or creating your small business employee handbook, schedule a free 20-minute consult with me.

– Helen Dutton, Business Coach

Your First Hire; Hiring in a Small Business Environment

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Your first hire is exciting and scary at the same time. You may be worried if you can afford it, you’re not sure what to hand off and if there’s enough work for an employee, and if you’re really honest with yourself, you’re worried about what that new employee will think of you and your business. So instead, you postpone hiring and just keep doing it all yourself. But there’s a cost.

If you’ve been on the fence about hiring for awhile but the data points to hiring, decide what your fear is about and address that. Next step is to define what the person will do. This is where many small business owners stop: they say “it’s a little of this, a little of that” or think they can probably do it better themselves. If you make the right hire, they will be phenomenally better than you! Make a list of everything you do during the course of a day or week; those tasks that aren’t part of your unique abilities can be handed off to an employee. Group the tasks to be handed off into general categories, such as marketing, bookkeeping, or customer care. What attributes and skills are a “must have”? I encourage you to have them complete a behavior profile, such as DISC or Kolbe. Both of these will tell you, for example, if the candidate is detail-oriented or a risk taker.

Yes, your first hire is an additional cost to your business, but look at the upside. What can you do with the time you free up? If you’re a professional who is booking appointments several weeks out, tasks now performed by an employee allow you to schedule more appointments, which equal revenue.  That revenue should be several times the hourly rate of your new employee. If the demand is not quite there, make a list of how you will spend your newly found time building interest that becomes revenue.

– Helen Dutton, Business Coach

Helen Dutton, A Vision of Your Own, has provided business and personal coaching for small business owners since 2000, providing online and face to face coaching for entrepreneurs, small business owners, start-up businesses as well as established businesses across the country. Clients come from New Hampshire, her home state, but she has also acted as a mentor to business owners in Atlanta, Chicago, Los Angeles, the Denver area, and closer to home in the Boston area. Helen helps her clients develop their small business ideas, create marketing plans, improve operation efficiency, build customer service systems, build management and leadership skills, and develop confidence as a business owner. Helen provides business tips and resources through her blog and her newsletter, where you can also find business templates to help your business prosper.