Small business best practices
INCENTIVES , REWARDS AND BONUSES WORK
BY TOM SHAY
Last fall we went to the university in Fayetteville , NC , to watch a football game . We had been invited to participate in a tailgate party that was to last all day . As we enjoyed the cookout , our host told of having parked at this location for many years . He went on to explain how he had been moved from one area of the acreage to another .
What caught our attention was his comment about the years when a bank had reserved a sizable part of the area for their employees . Knowing what our friend had paid for his parking area , the expenditure by the bank was quite sizable .
We were very surprised when our friend explained that for all the time the bank rented their area , not a single employee had ever used it .
Incentives , rewards and bonuses work only if they mean something to the employee . But aren ’ t all three just different ways of saying the same thing ? No !
There is a difference . With a bit of clarification , you can make all three work for you and your store .
We first look at the “ bonus .” A bonus is a gift to your employee . There should be no schedule or expectation to an employee receiving a bonus . Perhaps everyone pitched in to help decorate the store for Christmas . Treating everyone to dinner by having it delivered could be a bonus . The bonus does not have to go to everyone . The bonus does not have to tie to any particular deed or action . It is simply a way of appreciating an employee .
A “ reward ” is for an employee doing something that is unique . Perhaps it is for solving a problem . In either case , it is something that creates a substantial benefit for the store .
In the case of our store , we had an employee who found a way to produce significant savings with the cooling and heating system . The savings came when this person found a way to install a timer on the system . This eliminated the occasion when someone left the system on all night .
In our business this person received a sizable check for their effort . And the check was announced and handed to this person in front of all their co-workers , as a way of showing to
PHOTO CREDIT : © WLADIMIR1804 - STOCK . ADOBE . COM everyone that we appreciate the extra efforts .
Perhaps , the “ incentive ” is what most of us think of . With incentives there are recognizable goals and measurements . Employee are told what it takes to earn the reward and how to do so . An incentive is like a game . You will find employees that want to participate because they want to win the incentive . Unfortunately , many of us find employees who would rather ask you to give them a pay increase . With incentives , you find out who understands what you want to achieve in your store and who is willing to work to achieve it . Incentives can be given to individuals as well as to a group of employees or all employees .
We offer a simple formula for establishing how an incentive works in your business . Is your goal a sales increase ? Decreasing shoplifting ? Diminishing expenses ?
With each of these you should be able to determine a dollar amount for the value to your business . The second step is determining which employees are achieving that goal for your business .
Offered only as an example , perhaps you will take half of the value of the goal and divide it between those employees who make it happen . The other half of that money goes to the store . A sizable portion should go to your store because there is no reason to achieve a goal without your business having some benefit .
One last point . When I have explained the bonus , reward and incentive to a store owner , I have heard a response of , “ I refuse to give something to an employee for doing something I am already paying them to do .”
My answer is , “ I agree with you . And when you find a way to get all you want out of your employees without any of these three , call me . I would like to come watch as I would want to write a book about you and your store .”
I am still waiting for the first call . You can make a reward , bonus and incentive work in your store . BD
Tom Shay is a lifelong small-business owner and manager . He has authored 12 books on small business management ; a college textbook on small business financial management and co-authored a book on retailer / vendor relations .
6 Beverage Dynamics • July 2023 www . beveragedynamics . com