Determining the Right Amount for a Bonus

We’re having that conversation about what to give for bonuses. No bonuses are bad for morale. I’m worried that if people get too much, they could sit back and take things easy for a while and that would be bad for productivity and profits. How do we get it “just right”?


THOUGHTS OF THE DAY: Use bonuses to give the company more flexibility as revenues and profits go up or down from one year to the next. Do a reality check on salaries first before deciding on bonuses. Check the trends on overhead payroll vs. revenue and cost of goods sold payroll vs. revenue ratios. Reward overall company performance to get everyone on the same page. If you have a 401k plan, check to see if bonuses are included in matching funds. Use a budget to stay realistic.

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Instill Passion in Your Workers

We have concerns regarding our sales and service people. We need to see more intensity and passion. How do we help these people get there?

THOUGHTS OF THE DAY: What is it that you’re trying to accomplish? Define your real objectives. Give people a mission worth caring about. Take time to prepare your message so that it’s well received. Practice being adaptable.

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Who’s Right for Sales?

We have an employee who we think, perhaps, is the wrong fit in sales — or is it too early to tell? Should salespeople have more experience? (Fortunately he’s doing well in account management.) What should we be looking for in a salesperson?

THOUGHTS OF THE DAY:  Should you hire for experience or train from the bottom up? When it comes to sales positions, there is no one size fits all. Account management can be a great starting position for people who want to go into sales. Does your candidate want to go into sales?

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Performance Reviews Essential for Progress

First line supervisors are definitely deficient on how to do reviews. Because of that some employees don’t get proper feedback, don’t get the recognition they deserve, and might feel disgruntled or overlooked. We need to deal with this now before anyone leaves for the wrong reasons.

Thoughts of the Day: Reviews are an essential communication tool, used to make sure employee, manager and company are all on the same page. Reviews should not be a surprise. Make sure that supervisors understand their responsibility for providing regular written feedback to all of the employees who work for them. Structuring how reviews are done will make it easier to teach entry level supervisors how to do them.

In reality, employees are getting feedback all day long. Do this, don’t do that. Try it this way. Take a risk. Don’t step out of bounds. It comes from all directions, some positive, some negative, some recognizing and some criticizing performance. Employees can easily get confused and wonder exactly where they stand.

It’s helpful for both employee and supervisor to take time periodically to sit down and more formally discuss how things are going. Using a written format increases awareness and retention. Using a review to also document goals going forward can give supervisor and employee a go-forward picture of what’s expected, and something to look back upon down the road.

Reviews can help identify and clear up misunderstandings. They can become training tools. Doing regular reviews helps the company better understand the depth and potential of its current human capital pool. Done well, reviews can enhance personal, team and department accountability and responsibility.

It’s important that employees receive constant feedback, both positive and corrective. Continuous dialog between supervisor and employee helps to insure that employees know what to do, what’s acceptable, what to fix, and what their current work is leading towards.

When it comes to review time, supervisors common fears include giving out bad news and dealing with confrontations. If supervisors are on top of their day to day feedback to employees, there shouldn’t be any surprises come review time. The goal of a review is to confirm what supervisor and employee have been working on all along.

Some supervisors will make the mistake of thinking that because they are constantly giving their employees oral feedback, there’s no need for a written review. The written review is essential. It confirms that both supervisor and employee are working with the same information. Reviews are a chance for employees and supervisors to review and update feedback that’s been handed out over time. Written reviews can also be used to inform managers who may be looking for internal recruits, to build company training programs, and to identify talent strengths and weaknesses throughout the organization.

Once reviews are done, make sure each employee has a list of go-forward actions to work on. Develop a training plan for each employee and for the company overall. Include internal and external training and development programs, reference how well they were used in the next review cycle.

Build a uniform format that everyone in the organization has to use to conduct reviews. Make as much of it in check off format as possible. Ask employees to provide their input and match that to supervisor input to see if there are any discrepancies. Give supervisors a chance to review employee input before having to meet with employees. Prepare written instructions for how to fill out the forms.

Set up training classes and require all supervisors to attend before conducting their first reviews. Include experienced managers who have been hired from the outside; they have to learn about your company’s practices when it comes to doing reviews. Allow time for supervisors to practice during training sessions to increase their comfort and effectiveness.

Set a schedule of what reviews need to be done by when, and who will be doing them. Assign the responsibility for tracking review progress to make sure that each supervisor and employee is on track. As an owner, reinforce the importance and quality of your company’s review process: do reviews regularly with your own direct reports and get feedback on how they view the process. Ask employees for input on what else they would like to have discuss or have happen.

Looking for a good book? The Essential Performance Review Handbook: A Quick and Handy Resource for Any Manager or HR Professional, by Sharon Armstrong.


Engaging Employees in Order to Get Feedback

Employees may speak more freely when the Owner isn’t in the room. Or they may play safe and keep silent altogether. Dealing with employees is a never ending struggle for me as a business owner. When things go wrong I’m least likely to get honest feedback – just when I need it the most.

Thoughts of the Day: Communication is a 2 way street. Deal with the frustrating situations, so you can get them out of the way. It takes time and practice to build a culture of open, constructive feedback. Sometimes it’s hard for owners to accept criticism. Sharing information openly with employees is a good start. Find a major payoff through idea sharing, collaboration, and engagement.

Most business owners are as uncomfortable with silence and anyone else. They rush to fill the quiet spots, thinking people are waiting for them to provide information and guidance. Could be that people are only waiting for a pause so they can get a suggestion in edgewise.

Make sure that you allow employees to put in their two cents. Look the person you’re talking to in the eye. Practice patient stillness. You’ll find it only takes a few seconds for someone else to jump into the discussion.

Acknowledge that you heard what someone had to say by playing it back. Try repeating the last word as a question. Or, ask them to keep going, to clarify, to expand on the thought. Do it with a smile and a nod of the head.

Recognize that because you’re the boss, people need to be encouraged to speak up. And they need to know that if they express an opinion, they won’t get in trouble for it. If you don’t like what someone has to say, bite your lip instead of snapping back with a contradiction. Sleep on it before responding.

Ever felt stuck, frustrated, unwilling to get on board with something? Be honest with yourself. It’s a common reaction.

Without an opportunity to have a say, it’s hard to be in a positive frame of mind. It’s normal to want to walk away and not be involved. That happens to employees all the time, as they wish to be heard and get frustrated when they’re not.

Reading about South Africa’s experiment with the Truth and Reconciliation Commission, led me to some observations about how to engage people in working through difficult circumstances. Encourage:

  • Accurate and complete sharing of information
  • Impartial conduct of hearings when problems arise
  • Accountability
  • Inclusion of all parties in economic advancement and political power sharing
  • Follow up designed to move people from airing grievances to planning a way forward together.

Share examples of when employees told you not to do something and they were right. Talk about how their taking a risk to stand up to you helped the company to succeed. Show people you can accept being wrong.

Make it safe for people to bring issues forward by allowing them to be heard without rebuttal. Practice saying thank you when the news delivered is critical, even when you don’t think it’s well deserved. If the employee is wrong, take them aside and discuss the issue one-on-one.

Speak to employees as grown ups. Treat each person with respect, honesty and dignity. Give them information they need to do their jobs. Let them sort out the details and learn from their mistakes.

There are significant payoffs to the company for getting employees to provide honest and open feedback. Here are just a few examples: lower turnover, better payoff for training budgets, higher output for similar paychecks.

Employees who are heard are more likely to engage and collaborate. Recognition for speaking up reinforces the behavior, leading to greater degrees of risk-taking contribution. People start looking for the next opportunity to step up, going from avoidance to garnering additional recognition.

Looking for a good book? Try… It’s OK to Be the Boss: The Step-by-Step Guide to Becoming the Manager Your Employees Need, by Bruce Tulgan.