One of the reasons I became an entrepreneur was that I wanted a direct connection between my performance and how that performance was rewarded.
Working for myself meant reaping the rewards of my achievements, as well as facing the risks. With that mindset, it was inevitable that I start my own business.
I’m not alone in wanting to link performance and rewards – more and more employers around the world acknowledge its importance.
There’s now mainstream appreciation of the need to incentivise and reward employees who can add value, regardless of their seniority or length of service. The discussion over how best to recognise and reward them attracts ever more participants.
There are bonuses of course, but there are other ways too.
Performance-related pay can improve productivity and results. Promotion and career development are also powerful tools. Over the past year, Regus has promoted about ten per cent of its workforce, giving them more responsibility and enabling them to perform at a better level. I believe the business has benefited as a result.
The advantage of having the right recognition systems is not just that you reward achievement and retain talent.
You can also galvanise the underperformers, the passengers and the clock-watchers. Most of them don’t actually start their careers saying, “I intend to spend the next 40 years treading water”. In many cases, they’re just not being incentivised properly. The right incentive systems can present them with a reason to perform better.
The difficulty with rewards and recognition is formulating the right scheme.
Do you reward individual achievements and/or team achievements? Who makes the biggest contribution to a team – the leader, the ideas generator, or the member whose personal qualities enhance morale? Do you link rewards to corporate results, when external factors can wipe out success? Do you include elements like gain-sharing?
It’s important to realise that no single rewards system is the “right” system. Different organisations need different systems; you may even need different systems within a single organisation.
In my view, dialogue is key to recognition. This is where performance reviews and goal-setting are important. They’re a vital opportunity to improve future performance, and to foster some of the elements that create long-term benefits but are difficult to quantify – willingness to collaborate; an ability to generate ideas; or an ability to make colleagues feel good.
Employees should have the opportunity to set their own targets – not just individual achievements but their contribution to the greater goals of the team and the organisation.
Performance reviews and recognition systems should not just be about money.
Rather, they should focus on how employees can develop their career, enhance their prospects, improve job satisfaction, and perform better as individuals and as part of a team. They need to understand exactly how they can do these things, and they must want to do them – ie they know they will receive recognition for doing so, and they feel they have a future with the company.
There are many reasons why people stay loyal to an employer.
Money is important, but there are other reasons: job satisfaction; intellectual challenge; career prospects; training opportunities; the convenience of a job with the right hours or location; a good working atmosphere; the feeling of being valued.
So, when setting rewards, don’t just think about bonuses and pay. Money talks, but so must people. Never forget the value of a simple ‘Thank you’ or ‘Well done’, alongside the right financial rewards and incentives.
Mark Dixon is founder and chief executive of workspace solutions provider Regus.
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