Congratulations, you’ve built a great team! They come to work everyday, produce great quality work and are very efficient. You know they should be paid more, and you want to pay them more, but you are still in the first years of your business and with start up costs still being paid off, it’s not financially feasible. What do you do?
Communication is Key
- Be honest. Explain to your employees how much you appreciate them and how you know their work is shaping your company’s success. Also explain to them the company’s compensation strategy in terms of when and how increases are calculated and distributed. If there is no budget for increases, explain why, and explain it in advance to manage employee’s expectations. People understand that money doesn’t grow on trees. If you are open and transparent, they will be more understanding.
- Have an open-door policy; be ready and willing to have discussions about compensation so you can clarify any assumptions that are incorrect.
- Share your business plans and goals with all your employees. Explain to them the current position that the company is in and plans for growth. Let them know the rewards that they can expect once you achieve those desired results.
Get Creative with Compensation Strategies
- Align your team’s individual performance objectives with your organization’s overall strategy and goals. When targets are met, consider one-time performance-based bonuses rather than salary increases that may not be fiscally sustainable.
- Consider providing employees with a variable compensation package such as a base salary plus commission if their work results can directly translate into sales dollars and/or profit for the company.
Rewards Don’t Have to Be Monetary
- Recognition is an effective tool of engagement. Tell each employee individually what they are doing well. Make sure that the recognition and feedback is specific and authentic.
- Check out our blog on recognition to learn simple and effective ways to do recognition right.
Do you want more information on how to set up an effective compensation program while also engaging employees? First, download our resource “Performance & Development Questions” to help you strategize an approach to your employee development process. Next, give us a call! We can help you build your compensation program in a practical, hands-on way.