The duty of leadership to effectively reward is essential to the survival and prosperity of any organization. Issues between the leader and his or her people regarding incentive compensation can undermine the entire motivation process. We really are in the “timely rewards” business as company leaders.
Here are four principles for successfully rewarding your people for a job well-done:
Deploy your people to maximize the use of their unique gifts and talents
When we have people working in areas where their individual gifts and talents don’t match the position well, employee satisfaction and employee performance suffer. Why? Because expressions of trust and gratitude from leadership become much less natural and less frequent.
Contrary to a lot of conventionally accepted wisdom, “People cannot do whatever they want to do or are asked to do.” Rather, “People can effortlessly do whatever they were wired to do.” If people’s talents aren’t lined up with what is being asked of them, redeploy them to make the best use of their gifts.
A leader’s trust and gratitude generate a great deal of employee satisfaction
I believe the greatest reward leaders can give is sincere trust and gratitude. In fact, I consider creating trust and expressing gratitude to be primary leadership requirements.
This critical combination satisfies a nearly universal desire to be affirmed and appreciated. I believe financial incentives alone are necessary, but not sufficient to motivate and drive success. Trust and gratitude create more satisfaction, engagement and enjoyment.
Design compensation rewards in advance and in detail
Compensation plans must be well designed in advance of their implementation with simple, detailed and understandable quantitative measurements, which are really leadership expectations of desired outcomes. All too often, performance bonuses, sales incentives, project milestone payments, etc., rely on qualitative rather than quantitative measurements.
To fix this, qualitative wording like “used best efforts” or “used best judgment” can easily be coupled with added quantitative language: “Used best efforts to complete the project by June 30.” or “Used best judgment in screening five bidders to two finalists by Aug. 15.”
Verify and reward outcomes, not impressions
In my experience, there is often a great temptation to reward the impression of “progress,” the impression of “improvement” and the impression of “hard work.” Yes, these are important qualitative attributes in our people’s performance reviews, but they aren’t reliable measurements for incremental incentive compensation purposes.
To be effective, compensation-based rewards need to be treated as an arm’s length accounting practice including an audit-like review of the accomplishments and calculations. Reward financially only after completing a third party, audit-like review of the quantitative measurements by human resources or accounting. This will ensure the desired final outcomes actually happen and avoid the need to go back and reverse rewards. ●
Joseph James Slawek is the founder, chairman and CEO of FONA International, a full-service flavor company serving some of the largest food, beverage, nutraceutical and pharmaceutical companies in the world. For more information, visit www.fona.com or call (630) 578-8600.
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