We all need to reward our staff for great work done. I can think of five ways to do this –

1) Genuine and sincere praise

2) Give them an increase

3) Give them an annual bonus

4) Pay them a commission

5) Give them a surprise

Let’s take a look at these options.

1) Genuine and sincere praise. Who doesn’t like to be told they’re doing a great job? This is undoubtedly one of the greatest motivators, but it must be sincere. The “Worker of the month” approach falls outside this category, because it is (a) not sincere and (b) detracts from the recognition of the co-workers.

2) Increases. The problem here is that your company’s fortunes will inevitably ebb and flow, so what seems like a managable increase now can become a serious burden in the future. It can sometimes happen (as it did with us) that a worker is so good at their job, they become overpriced. Then technology makes their job readily performable by someone else on lower pay and you’re stuck.

3) Annual bonuses. These are a no-no because once they are expected, they are no longer an incentive. The entire question is whether the bonus will be more or less than last year. If more, then you have a brief moment of sunshine. If less, then you are worse off than if you never gave bonuses at all. And, of course, the bonus has to be paid when your cashflow can least stand it.

4) Commission. I guess this can be made to work, but I have yet to see it successfully applied. The problem is that when you get a really good commission earner, their pay goes through the roof and often they can sit back and collect without bringing in new business. Then you want to re-negotiate their commission structure and you have a very unhappy bunny on your hands.

5) Surprise. This one I owe to Linda Pampallis, the CEO of Thompson’s Tours. It came to me second hand when my daughter was her PA. Very occasionally, Linda would put a stash of cash into an envelope and present it in private to an employee who had impressed her in some way. It came as a complete surprise and the effect was magical. The beauty of this approach is that if you can’t afford it, you don’t do it. Be careful of the tax implications. Don’t fiddle the cash. I always take the money out of my own pocket (my after tax income) rather than out of the company’s funds.

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