Which pay scheme will foster team spirit?

The sales force of my IT business operates a profit-related pay scheme. However, although it motivates each person individually, I have found it to be divisive as a way of getting them to work as a unit. How can I implement a pay scheme, which motivates my staff to work for the business as a whole and not just for themselves?


A. Jim Rogers of Grant Thornton writes:

Appropriate remuneration and reward structures play a central role in any company. Getting it right brings the benefit of a workforce that is motivated and incentivised, is rewarded for good performance and creates job satisfaction which aides retention. Getting it wrong can, quite literally, tear a business apart.

Unfortunately, it would appear that the profit-related pay scheme operated for your sales staff is failing to deliver these benefits. While it may succeed in motivating individuals, it is clearly not incentivising them to perform in a manner that is contributing to the success of the business overall.

 

The starting point of any remuneration and reward structure must be a clear articulation of the business’ main strategic objectives, measured by the achievement of clear goals. From here, the key indicators against which performance will be monitored can be identified. The role of each department and each employee in meeting these key performance indicators (KPIs) then needs to be developed and communicated throughout the business. The vital element at this stage is to ensure it is the KPIs for the whole business that remain the primary focus and the contribution to their overall achievement that is measured.

The next stage is to identify the various types of remuneration and reward structures which could be introduced. It is vital at this stage to gain an understanding of what employees actually value as there is little point in providing a reward package which does not deliver perceived value.

There are a huge variety of different possibilities, from equity participation mechanisms, to cash and bonus plans, to flexible benefit schemes. The ultimate structure will need to meet the dual imperatives of incentivising performance in line with business strategy and rewarding employees with benefits that they perceive to have real value for them personally.

This methodology will ensure that the company’s reward philosophy is aligned with business objectives. It will deliver a remuneration and reward structure which incentivises every employee to perform to the best of their ability in the achievement of the company’s objectives and which rewards each for their contribution. The result will be a motivated workforce, staff retention and company success.

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