Sharing Success

Companies that work well perform as teams. In sport, if the team wins everyone wins. It's the same at work. Make it clear that when the firm wins everyone benefits.

When You Don't Have the Cash

Sometimes when you're just starting out, you don't have the funds to reward your employees with financial bonuses. That doesn't mean you can't find other ways to show your appreciation. Perhaps a swivel chair would improve an employee's comfort level in a narrow office. Perhaps a team wants to help with a fundraiser for a medical charity that is close to one of their hearts. Create a fair, achievable, and proportionate target for them to deliver, and when they do, get that chair or join that fundraiser. Everyone benefits, and you are seen as both generous and magnanimous.

The incentive should be proportionate to the achievement. It might be a beer at closing time or a chocolate cherry cake on their birthday. Your thought and recognition will be remembered long after the chair is worn and the cake is no longer even a smudge around appreciative mouths.

Proportionate rewards are especially important where the form of recognition is financial. Your accountant will be asking some very pertinent questions if you show signs of being philanthropic. Yet bonuses (for completion ahead of schedule or sales targets met) need to be clearly separated from salary. In most instances bonuses are more productive than a pay raise. Increases in salary quickly become taken for granted. They diminish the link between work and achievement and become a fixed cost for years to come.

It's your task to choose the right balance between the security of guaranteed income and the reward of the further financial benefit. Salaries provide cake. Bonuses are the icing on that cake.

Although share options go in and out of favor as the stock market fluctuates, anyone who is interested in long-term employment has hitched their destiny to that of the company. Share options can be a just and fitting reward. They give loyal staff much greater faith in the company's sense of fair play beyond the actual value or equity disbursed.

The key issue is the selling of the shares. If firms are publicly quoted, shares acquired as options can be sold (or indeed bought) in the usual way over the Internet or through a stockbroker. If your firm is unlisted for the time being, you must set in place some index from the start that generates a rational value (for example, a percentage of the last audited profit) against the share, so that they can be sold at pre-agreed times.

Share options work least well when they are introduced later as a result of staff pressure. They provide the strongest motivation when they are introduced at a very early stage.

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