THE KEY TO YOUR SUCCESS –
HOW TO FIND AND KEEP THE BEST EMPLOYEES
(Part Two)
“Keys to Your Success” is presented to improve your business, build your profit and grow your
sales. This article examines some of the issues companies face when hiring an employee, paying
a fair wage, and planning the career development opportunities that you offer. Part One focused
on the hiring process and staff development issues. Part Two focuses on compensation issues
and non-monetary alternatives to recognize performance.
Compensation
Employees are hired and promised compensation for performing specific tasks in a certain way
at a set time or interval. In return, the employee agrees to the terms and fulfills the duties in
anticipation of receiving a salary. You agree to provide a set amount of buying power (in the
form of salary), for a certain amount of productivity (in the form of work effort). This is your
work contract with the employee.
If you want to set salary consistently, consider either of these two methods to set compensation
levels:
1) Hire unskilled employees, set the salary at the lower end of the pay scale, and train the
employees to fulfill the assigned tasks. You get an employee trained to work in your
company, within your culture, who performs your procedures without a prior bias.
2) The second method is to hire skilled employees at the higher end of the pay scale who are
productive on day one and need little training beyond orientation.
Follow these guidelines consistently and you will filter most applicants with little effort.
Pay Raise
If you follow the above compensation approach, then employees receive a market rate of
compensation for the skill they provide to the company in the first year. The next question is
“How do I set pay raises each year?” The author’s response is: IGNORE ANNUAL PAY
RAISES. Yes, this statement will raise some eyebrows and cause employees some discomfort, so
read on. There’s more to the story.
Employees should receive an annual Cost of Living Adjustment (COLA) to ensure continued
buying power for fulfilling consistent duties. A COLA is not a raise, it doesn’t recognize
outstanding performance, and it’s not based on merit. It’s the company’s fulfillment of the
original work contract. Period. You should offer a raise anytime an employee proves a higher
sustained level of productivity that can be aligned with increased revenue or reduced overhead.
Is this harsh? Maybe, but when you run a business, you focus on achieving corporate goals.
There are many ways to recognize loyalty, innovation, bursts of high performance, etc. Giving a
raise that increases your costs permanently must be tied to permanent increases in profit.
Bonus
A bonus is a tool to recognize temporary or non-recurring achievement. Offer a bonus:
 When an employee works especially hard to finish a project on time (reward for
employee loyalty), or
 When a customer sends you a thank you note for the exceptional assistance from your
staff (reward for enhancing the customer buying experience), or
 When an innovative idea helps you to achieve your quarterly revenue estimates or shaves
three hours from your daily delivery cycle (reward for achieving growth or higher profit).
Commission
Offering a commission is a nice way for an employee to connect effort with results. Many sales
staff receive a commission for completed sales. However, you can offer a commission based on
improved productivity in a production environment, extend this concept to drivers who reduce
delivery time without incurring speeding tickets, or offer a percentage reward for innovative
ideas that reduce costs.
Rewards
There are many books that contain creative ways to reward employees at little or no cost. For
example, you can sponsor a car wash for an employee with the best customer service idea each
quarter. You can give a gift card for a free dinner to an employee who expedited an order for a
valued customer without impacting production. You can meet with an employee privately to
congratulate him/her on the exceptional performance you noticed as you overheard the employee
interact with a customer on the telephone.
Compliance / Disciplinary Action
When an employee fails to fulfill the duties and responsibilities of the position, management
must intervene. Consider the following steps to “fix the problem” prior to terminating the
employee.
Intervention. During this step, the supervisor steps in to correct the activity. This is necessary
when a customer sees poor performance, when safety is an issue, or when the company risks
incurring a high cost without immediate corrective action. Intervention should be followed by
re-training to ensure that the employee understands and is able to perform the correct process.
Disciplinary Action. If poor behavior is repeated, the next step is to apply disciplinary action.
The process should be clearly defined before the employee is hired and should be applied
consistently to all employees who repeat poor performance. Here are some common forms of
disciplinary action:
 Send the employee home for a period without pay. (Suspension timeframe depends on
the severity of the poor behavior.)
 Suspend a pending promotion until the employee shows sustained high performance.
 Demote the employee to a lower level of responsibility and allow the employee to earn a
promotion to the original position.
 Assign an employee to work under the direct supervision of another employee who
shares responsibility for current work goals. The supervisor should formally evaluate the
employee’s performance weekly until direct supervision is no longer required.
 Suspend employee perks, such as premium parking spots, paid parking fees, association
dues, or paid conference attendance. (However, do not suspend training activities that
can be accomplished through in-house training, web-based training, etc.).
The ultimate disciplinary action is a forced termination. This is a severe action and should be
used as a last resort or after management determines that the employee cannot be trusted to
perform the assigned duties.
980 Words
Richard Melancon CPA, author of Integrity-based Leadership, has helped companies to grow
and improve profit in any economy for over 25 years,. Own a business? Want to own a
business? Ready to make meaningful contributions to your current organization? Richard works
directly with your company or he can address your next conference with impactful insight and
vision. Phone: (504) 780-909, E-mail: richard@ramcpa.com Website: www.ramcpa.com.