Performance related bonuses

Steve Bailey, Recruit with Confidence

It’s only once you’ve fixed the management basics that you should then look at bonuses and benefits. David Wreford, a senior consultant at Mercer Human Resource Consulting, says firms should be careful about how they introduce performance related benefits and who they introduce them to.

"If you are paying bonuses, you have to reward excellence rather than mediocrity. Otherwise the top performers will be disillusioned and the poor performers will feel justified in their mediocrity."

So make sure you use them selectively among staff you want to motivate so you retain the good people and manage out the slackers who are holding the company back.

When it comes to choosing enhancement to staff benefits packages you should also take care to ensure that they benefit the company at the same time, advises Steve Bailey of Recruit with confidence: “Make sure the commission, bonus or other reward schemes are understood and enforce the strategy and direction of the business as a whole," he warns.

Other options

One good example of this is share options. Provided your company isn’t about to go bust then, these can lock in long term loyalty from senior staff in the business. They don’t cost anything at the time of issue, they are cheap to administer but show your staff you are committed to their future in the business and can be extremely valuable if the business is sold on or floated on a stock market.

You can also consider low cost perks like health insurance, staff mobile phones which have obvious benefits for the business as well as the employee and can cost as little as £100 per head per year.
Another area to look at is holiday. This can be either informal half days or increases in annual leave.

Neil Thomas, director of independent financial advisers Simpsons of Brighton, says letting hard-pressed staff off the leash keeps the office bubbling, but you have to time it well to not let work and customer service suffer. The three partners will occasionally release their 10 staff early on Friday and man the phones themselves. "These days, the most valuable commodity you can give anybody is time.”
Simpsons also recently gave a staff member a three-month sabbatical to visit South Africa. “It is important staff don't go stale. I'm under no illusions, I know people come to work to earn money, but a little flexibility can keep staff fresh. We also encourage them to come up with ideas to improve the business, and either follow those ideas through or explain why they won't work.”