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Step 5 - Compensate and Reward a job well done

Kind words go a long way, but rewarding with money, gifts and awards goes even further.  Compensating and rewarding employees goes a long way in helping retain employees for good job performance.  This is also a chance to really reward the best of the best.  Depending on the company and budget, you can be creative in some aspects, and traditional in others.  You as manager will sometimes need to come up with reward expenses and increased pay percentages out of your budget (see lesson 8 for more information on budgets).  On the other hand, you have to always be striving to keep costs and expenditures down.  It’s a fine balance, but one that can, and should, be achieved. 


To begin with, you should have a full list of everyone’s salary within your department.  You will most likely have a salary range for each position already established, if not you should set levels so that you do not have employees performing the same job functions with too much difference in pay.  Look to see if some employees are obviously underpaid for what they are doing, and others who are at a capped level of pay.  Past and present performance reviews are a good way to capture someone’s exceptional work in a way that justifies a larger than normal increase in pay. 


Here are 16 ideas for you to incorporate regarding compensation and other rewards:



  1. Try to pay them what they are worth.  When it comes down to it, if you offer an above-market wage, the employee usually matches it with more effort in their job performance.  HR or upper management usually sets the rate of pay for employees, so you need to be creative in order to get a raise for your best employees. 


The catch 22, when it comes to motivating, training, praising, and getting great results, is now you have employees who are much better than they were when they first started.  The better they are, the more they are in demand.  Usually you can give somewhere around a 3% to 5% increase during their annual performance reviews, but there are times when you need to give more to certain individuals who truly deserve it.  You don’t want to lose them to the competition.  This is when you need to do some creative talking to your boss or upper management.  With all of the positive data you have regarding the employee, it should be easy to at least state your case. 


Hopefully there is room in the pay scale to give them an increase.  Here’s a typical scenario: The yearly salary for the position is set at $30,000 to $40,000, and the employee currently makes $35,000.  You ask to move the rate of pay to $40,000.  That would be a little over a 14% increase.  Most companies do not give more than a 10% increase at any one time.  Even though $5,000 may not sound like a huge jump as far as dollars are concerned, it is regarding the percentage jump based on the existing salary.  It is up to you to present your case and see if you can bend that rule.  If you cannot get $40,000, and only get the 10% increase (which would bring it up to $38,500), at least your employee will know that you tried and will still appreciate the increase, even if it was not exactly what they were hoping for... 


The main goal here, besides the obvious increase in pay, is to show the employee that you and the company are eagerly looking out for their best interests, which in return, the employee should be looking out for the company, by exceeding job expectations in their work performance.


  1. A raise based on the Employee Appraisal/Performance Review.  The better the review, the higher the increase should be in pay.  It may be by only a percentage or two, but at least it is something.  A great review shows how much you value them, even if the reward is just a small increase in pay.  The most you will usually be able to give your employees, based on yearly performance reviews, ranges from 3% to 5%.  What usually happens is you have an overall department percent average that you cannot go over.  For example, if you cannot go over a department average of 4%, you could give one person 8%, one person 6%, one person 4%, one person 2%, and one person, due to extremely poor performance, 0%.  You would still be on target as the overall average is 4%.  This is why performance reviews can be so important. 


Your employees will no doubt know how the raise percentage is structured.  If you give a raise to your best employees that are above the average percentage, they will feel justified and happy.  In turn, you would give a lower than average raise to the under performers.  If you have been doing your job right, there should be no surprises.  If just about everyone in your department is above par, then you will most likely be giving average raises to most of the department.  They should understand, as they will realize that their co-workers are of equal caliber.


  1. Promotion is the reward.  This might seem obvious, but this is the best reward.  A good team member, who is motivated, continually praised for good work, and exceeds expectations on appraisals, might just be worthy of being rewarded with a promotion.  You should always be looking out for these possible growth opportunities for your top employees.


There also comes a time when an employee is at the top level of pay, or capped, for the position they hold.  You want to give them more money, but there is just no more room for them to grow in their current role as far as money is concerned.  The answer could be to promote them to another position.  There might even be times when you need to create a position just for this cause.  For example, you determine a lead technician is needed in your department.  Although you might be tailoring this position for just this one individual, chances are you will need this position in the near future anyways.


If you promote someone to a position that requires the supervision of others, start off on the right path using a personal development program.  Don’t just throw them off into the deep end and expect them to pick up the necessary skills needed to be successful.  Make sure you train the person on the skills associated with:


  • Thinking strategically.
  • Establishing priorities.
  • Giving and receiving feedback.
  • Developing communications skills.
  • Conducting effective personal interviews.
  • Conflict Resolution.
  • Understanding the full scope of the company strategy, policies, and procedures.  This is very important and is usually a mystery to people.
  • The use of the latest technology, tools, applications, and programs such as Excel Spreadsheets, Word Docs, and PowerPoint’s.


  1. Try to have the power to give on the spot raises.  In most companies HR will not allow such a thing, but if it’s possible, strive for the ability to give an increase at your discretion as long as you do not go over budget.  You can let upper management know that you will not abuse this power, and that performance levels will rise because of it.  This is because employees will tend to work harder knowing you have this capability.  If not, they might only put in the extra effort right before appraisals are due.


  1. Do your research when it comes to requested increases in pay.  Be sure the increase is truly due, and is justified through past performance results.  By checking the employees history of performance and pay levels, you can either be extremely confident when pursuing getting the increase, or content in denying the request.


  1. Give small gifts such as movie tickets, gift certificates, credit cards with a limited amount, and even cash.  For only a few dollars, you can give a small award for a job well done.  Do not make it a predictable thing or else it will lose its impact and become expected.  Be creative.  Try things like taking them out for lunch, letting them go home early, or giving them a $50 voucher.  The only potential problem would be a complaint that one gift is better than the other.  Maybe you can give them a choice?


  1. Employee of the week parking space.  Simple, but effective, especially in the bigger sized companies.


  1. Move the person to a better office or desk.  This is a nice reward, which is also motivational.


  1. Bonus for hitting the goals.  This is quite common and usually a semi-annual or annual event.  This is why setting clear expectations and goals with the stats to back it up are so important. 


  1. Paid time off and unpaid leaves.  Letting people go home early when it is slow, and still get paid, can be considered an award.  This can also go for longer lunch hours and extra vacation time.  Some people are happy to just go home early, even if it is unpaid. *Keep in mind that company rules and/or state laws can be a factor on the legality of these types of rewards. 


  1. Awards such as plaques, trophies, or certificates.  An employee of the month engraved on a plaque might work, but don’t be surprised if it gets a bit old after a while, especially if the same person always wins.  Another problem could be if it’s the same manager who always does the picking, it will look like favoritism.  Use something like this for a true major accomplishment or achievement that is more of a yearly type of recognized reward.  If it is truly treated as something truly special, it will be much more effective.


  1. Employee points used towards company provided gifts.  This would be for company merchandise such as hats, shirts, jackets, or even a product the company sells.  Have a program in which employees can award points to other employees for a job well done.  You can also give out these points.  Once you get a certain amount of points, you can redeem them for merchandise.  As long as it’s not abused, it is a fun and simple program.  It lets everyone decide who is deserving of a recognition award.  An example of abusing the program would be best friends who award each other just, because they think the other has a good attitude, etc.  


  1. Annual recognition banquet held for award events and ceremonies such as employee of the year.  Major awards like trips or cash, grossed up to cover taxes, can be given.  This can be a fun event for all, not just the winner.


  1. Make sure to reward as quickly as the achievement was accomplished.  Giving a reward out months after hitting a targeted goal does not go over very well.  Besides, at that point they are most likely already focused on the next target.


  1. Match the award with the person.  It is better to give an award out that means something to someone, and that they will truly enjoy.  If they like music, then give them a certificate to a music store.  If they like fine dining, then give them a voucher for a great restaurant.  When you get to know your employees, this will not be so hard to figure out.


  1. The reward should compliment the achievement.  The better the achievement, the greater the reward.  For example, don’t give the same $20 gift certificate for a person staying late one night to finish a task, as you would for a person who saved an important account through months of extraordinary effort.



Points to keep in mind:


    • Reward programs require a lot of planning and preparation.  Don’t just wing it.  Take it seriously so that your employees take it seriously.  You should get some kind of reward committee to help.


    • Don’t make rewarding predictable.  It will lose its effectiveness and not taken seriously after a period of time.


    • Do not reward if the goal was not achieved.  Seems obvious but it happens all the time.


    • When it comes to compensation you need to be careful.  Most of the time people do not know what the other is making, even when they are in the same department performing the same job functions.  You need to try and prevent employees discussing their rate of pay.  Some companies have a set rate of pay, so this will not be a problem.  You may need an interpreter or union representative with you when discussing pay.  Don’t make promises you cant keep, it not only demoralizes, but can also turn into a lawsuit.


    • You will have your favorite employees.  You most likely will, if truly deserved, promote them at one point.  You might even take them out to lunch or dinner.  The important thing is not to show too much favoritism in front of your department.  You need to make sure the whole department knows you are setting the same standards and goals for all.  You need to show that when it comes to business, you treat the people you don’t really like the same as you do with those you do like.  Just make sure to treat everyone in the same professional manner.  That is the key, always be professional to everyone, equally, to eliminate the possibility of being accused of favoritism. 
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