Act Now Before Employee Burnout Burns You Out

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A key player in our operations area is getting burned out. We can’t afford to lose her. How do we find the balance between getting work done on time and keeping burnout at a minimum?

THOUGHTS OF THE DAY: Burnout comes from stress, so step back and figure out where the stress is coming from. Teach staff about delegation. Focus on the most essential things. Give employees control and mean it. Create healthy outlets to work off tension. Continue reading “Act Now Before Employee Burnout Burns You Out”


Hire for Passion Instead of the Task

Thoughts of the day: When searching for new hires, lead with what your business is all about. Find job candidates who are already passionate about what your company does. Stop looking for last-minute job fillers. Make sure that current employees are good role models and start new hires on the right foot.

Thoughts of the day: When looking for new hires, advertise your company as well as the position. Make what your company does stand out. Look for people who want to talk to you about that. Be aware that people who come in looking for a job are different from people who are on a mission to apply themselves to specific kinds of work and market needs…

Continue reading “Hire for Passion Instead of the Task”


Hiring and Managing Millennials

I’m getting a lot of applications from millennials, but it seems like millennials are just looking for the next best thing and are not willing to work as hard as generations before. Is it just bad stereotypes? How do I manage their expectations and mine, and use them to move the company forward?

Thoughts of the Day: Raised to be the best inside a protective bubble, millennials may need help to succeed. Harness the enthusiasm of youth, marry it with the wisdom that comes from experience, and you’ll have a winning combination. Stop generalizing. Know that millennials want to buy in. Learn to harness a millennial and maybe one day they’ll help to run your company.

Continue reading “Hiring and Managing Millennials”


Consider Bonuses Instead of Raises

There are lingering questions and disagreements about what to tie our employees’ bonuses to. Historically, we’ve given out raises, not bonuses. A suggestion was made to give one-time bonuses tied to profits for this year. How do we figure out what to give our employees?

Thoughts of the day: There’s a huge difference between raises and bonuses. Compensation tied to profits is a great way to focus everyone on a common goal. It’s not just executives or salespeople who need to be rewarded for higher-level output. Figuring out how to divide up profits can get complicated.

Raises are something employees expect to keep year after year. Taking away a raise means a demotion to most people, or signals a business that’s fallen on hard times — neither of which might be the case. It may be that you’re simply tired of paying more than you have in the past for the same old results.

What this conversation is leading to is a discussion about compensation at risk, which is money paid, usually in the form of a bonus or commission, if something happens and not paid if something doesn’t happen. Basing bonuses on a common set of results, i.e. profit of the company, helps to focus employee attention on the company’s overall goals. Under these conditions, bonuses are above and beyond payments, given to some or all employees as a result of achieving some specific goal.

Employees may expect to see bonus payouts year after year if that’s been the historical precedent. The best bet is to teach employees that bonuses are not an entitlement but rather are awarded when good things such as profits happen to the company.

It is usually best if funds to go into bonuses are calculated based on some clearly measurable outcome. Give the bonus participants a way to track progress toward the outcome so they can see how their efforts are having an impact.

Think about what it is that you want your company to achieve. Increasing revenue and expanding profit are two of the most common objectives. Safety improvements, increased productivity, on-time delivery, keeping all positions fully staffed, managing within budget — these are all things that can be measured that ultimately should contribute to profit enhancement.

Decide how increased revenue or improved performance will translate into additional profit that the company can use for employee bonuses. Don’t plan to distribute all, or even most, of the increase in profits as bonuses. First you’ll need to pay taxes on profits, add money to reserve funds to keep the company safe, and pay down credit lines and loans.

Only a portion of additional profits should go to an employee bonus plan. The key word here is “additional.” Make sure your plan rewards increases in profit, output, performance, etc. Give people something to strive for. Don’t reward maintaining the status quo from previous years.

The next decision is who gets to participate in the bonus plan. It’s common to pay top executives a bonus for improved performance. The other people in your company who may be used to compensation at risk are salespeople. Why not get everyone in the company focused on the same set of goals and use a bonus pool to reward the results you’re hoping your company can achieve.

It’s important to let employees know how bonuses are calculated. For example, you can establish a single bonus pool and then divide it based on everyone’s portion of total salary. That rewards employees based on seniority and position within the company.

You can pay out of the bonus pool based on job performance — higher job performance ratings entitle people to a higher portion of the bonus pool. You can reward an entire department as a group or calculate rewards by individual. The permutations are endless.

Bonuses can come in the form of cash, gifts, travel, entertainment or any other reward. When considering what form bonuses should take, make sure it’s a form that employees will value. Generally the lower the income, the more likely employees will value cash. Keep in mind that any gifts or travel have to be included in the employee’s W-2 and they have to pay taxes on the benefit.

Looking for a good book? Try “Performance Management: A New Approach for Driving Business Results” by Elaine D. Pulakos.


How to Balance Benefits and Profits

We’re not sure what to do about health care. We’re worried about getting hit with increases in premiums this year, which could eat into our profits. How do we sort it out?

Thoughts of the day: Figure out what your company can and can’t afford to pay. Health care has been in constant change for the last several years for every company — it’s time to discuss that reality with your employees. Considering encouraging employees to turn to your state’s exchange for insurance? Be sure you have someone lined up who can help explain all the policy options. Make sure you can explain what you’re doing and why.

Look at your ratios. Set a target range for all salaries and benefits calculated as compared to revenue and to gross profit. As you consider adding or adjusting benefits, and paying out bonuses, make sure that your changes don’t blow the target ratio.

Ideally, any growth in benefits and bonus payouts comes from growth of the company. Forecast increases in revenue and gross profit, and figure out if you’ll need any additional personnel. Deduct that increased personnel plus any material costs from the increase in forecasted revenue and gross profit. What’s left over is the amount of income you can use to build up profits, pay additional benefits and bonuses, invest in savings and infrastructure and use to pay taxes on profits.

Not sure whether your salaries and benefits are in line with your industry? Turn to your industry association for advice and benchmarks. Some industries have stats posted online, so check that as well. You can also contact peers in your industry across the country and ask them what they’re spending. Keep in mind that both coasts tend to have a higher cost of living.

Many companies struggle as they take on additional health care costs, benefits and pay increases without sufficient revenue growth. If that’s a problem your company is facing, be honest about what’s going on before potentially sending the company into a financial black hole.

Raises and additional benefits should happen as a result of increased profits. Over the past several years, companies have had to absorb a number of mandates regarding how employees are paid and what benefits they receive. The cost of these mandates is equivalent to annual cost-of-living pay raises and then some.

Many companies have taken on substantial increases in cost of pay without seeing significant growth in revenue or improvement in profitability through increased productivity.

Show your employees how much the company pays on their behalf, above and beyond salary. Start with federal insurance and unemployment contributions; don’t forget to add in the costs of medical, dental and life insurance, child care, time off from work, and any other benefit programs your company provides.

Have a rationale and set limits on how benefits are distributed and paid for. The simplest way to handle health care is to pay for the company’s individual premium or a percentage of that. Employees who want to elect more coverage for their family can do so and use a portion of their paycheck to cover the cost.

Be careful when considering higher benefit costs for managers. Keep in mind that managers tend to be more expensive in salary. Loading additional costs onto an already expensive manager may make that person so costly that they can’t prove they can deliver enough profits to allow the company to break even.

When getting ready to give out raises, calculate the raise as a percentage of the existing salary. One company decided to give employees an hourly raise, without realizing it was a 10 percent to 15 percent increase in pay across the board. They would have been better off giving this money as a bonus and making it clear to employees that it was only going to continue if profits stayed up.

There are some great reasons for providing employees with benefits. Employees who take time off regularly tend to be significantly more productive. Those who can afford to see a doctor regularly are more likely to be healthy and productive. Employees who can afford to stay home when they’re sick recover more quickly. Employees who know their children are safe are less distracted. The list goes on.

Looking for a good book? Try “The Employee Benefits Answer Book” by Rebecca Mazin.