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Managing Staff

Is Cash King? The Psychology of Incentives

If you are considering implementing an incentives scheme, consider approaching specialists that offer a variety of possible solutions. Their experience and understanding may prove to be vital!

David Sand

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In addressing the incentives space, it is perhaps prudent to examine the age-old question that arises time and time again: “why not just use cash?” Those in the business will answer that without hesitation and point out that non-cash awards are undoubtedly the way to go. But why is this?

Why do tangible awards work more effectively than simple, cold, hard figures in an ever deflated bank account? Intuitively, one may think that simpler is better, and that cash will always be king. But, as with many things that seem obvious, there is more to the incentives space than meets the eye.

Related: 5 Surefire Ways to Get Clients to Pay on Time

The Incentive Research Foundation (IRF) produces in-depth and insightful research, and we’ll be looking at some of their findings in this article. Specifically, the whitepaper examined is titled, “The Benefits of Tangible Non-Monetary Incentives” by Scott Jeffery, PhD and the idea is to represent some of the whitepaper’s highlights.

The research presents four psychological factors that tip the proverbial scales in favour of non-cash incentives. The first two (Evaluability, Separability) relate to how a participant perceives the value of an award. The second two (Justifiability, Social Reinforcement) contribute to the actual way an award brings value to an earner. Let’s jump right in…

Leaving an indelible mark

If I write “Relaxing Island Retreat”, you might visualise beautiful beaches, warm blue waters and stress-free leisure time. Along with these imaginings, you will also probably feel positive emotions and wish that you were there right now, sipping a long island ice tea.

In stark contrast, if I wrote “R20 000”, all the great images and positive vibes evoked by the island retreat would fade into the background and you may think about paying debts, bills, mortgages, and etc. This is pretty mundane stuff.

The psychological effect between the two is marked, and the first leaves a much deeper impression than the second. Simply, the psychological impact of a tangible reward is much greater than the impact of a cash remuneration.

Separating rewards from normal pay

The idea here is uncomplicated, and the suggestion is that people tend to view cash bonuses as being part of their remuneration package, while tangible rewards are seen as distinct from normal pay.

In other words, tangible awards are perceived to reflect the fact that the participant has gone above and beyond normal expectations, rather than simply working for extra pay.

Justifying it

This idea reflects the truth that people are conscientious about spending habits. One can easily imagine someone saying, “Sure those golf clubs are beautiful and exclusive, but I can’t justify the expense”.

If, however, the golf clubs are earned through a rewards programme, the participant can enjoy them without any pangs of guilt. The tangible award is earned through hard work, and is seen as an enduring and physical trophy. As Jeffrey’s points out, “earning the incentive eliminates the need to justify its purchase”.

Social reinforcement vs personal opinion

One of the most important rewards for a job well done is acknowledgement from one’s peers, supervisors, family, and friends. This social reinforcement comes from others knowing about the good performance.

Whereas the details of one’s financial standing are often a personal matter not open to public discussion, a tangible reward can be the topic of a conversation and doesn’t violate any social taboos.

The idea of trophy value is powerful here, and a physical object serves to remind both oneself and others of the achievement. Cash simply lacks trophy value.

 

The cash vs reward debate is a hot topic in companies looking to implement incentive solutions, and no end seems in sight. Research, however, strongly suggests that tangible rewards like travel, experience, merchandise and gift cards can have more of an effect on motivation than impersonal cash.

Related: How Staff Training May Help Increase Your Turnover

The reason for this doesn’t necessarily belong on the plane of the practical; rather, the distinction lies in the realm of human psychology, so it is human psychology that should be taken into account right from the outset.

Additionally, there are compromises that combine cash with physical rewards; one such alternative (like our Kudosh card programme) is a branded card that allows one to buy products at any POS that accepts MasterCards. These cards can also be used for online purchases.

If you are considering implementing an incentives scheme, consider approaching specialists that offer a variety of possible solutions. Their experience and understanding may prove to be vital!

David Sand – CEO and founder of UWIN IWIN (Pty) Ltd -1994, with offices in South Africa, Kenya, Egypt, Ghana, Nigeria, India and Brazil. 2013 Global President of Site Global, the professional association for leaders in the motivational events and incentive industry. Regarded as a pioneer in the field on online incentive point banking and online loyalty, recognition and reward fulfilment. David is also the founder of the Youth Employment Index a non-profit company that addresses youth employment issues in Africa.

Managing Staff

Why Small Businesses Are Unable To Pay Staff Salaries

Let’s look at it from a different angle and see if we’ll arrive at that same conclusion.

Matthew Mordi

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We’ve heard countless times the constant conflict between employers and employees over non-payment of salaries. Small business owners complain employees don’t understand what they have to go through to ensure the payment of staff salaries.

The moment they’re unable to meet up with the payment of staff salaries, workers accuse them of being wasteful when business was booming. So the age old story of members of staff not being understanding comes up again. The cost of running the business which includes maintenance of machinery, rents, paying off loans; all these and much more which sums up overhead cost.

While it’s true that overhead cost is usually the main challenge of small businesses, it’s true only in part. Let’s look at it from a different angle and see if we’ll arrive at that same conclusion.

Usually a lot of small business owners don’t save for the rainy day, neither do they invest income generated by the business for the benefit of the business. Personal savings and investment isn’t the same with that of the business. Small business owners tend to save and invest income generated by the business in their personal names.

Related: Start-Up Law:  I’m A Start-up Founder. Can I Pay Employees With Shares?

Let’s look at this scenario:

Mr A. is the owner of a grocery shop. People are patronising the business. Business is booming, everything seems perfect. At this point there is usually no problem paying salaries and overhead. This is the tricky part, what the employer does with the income the business is generating at this point apart from ploughing the money back into the business will decide whether he’ll be able to pay salaries when business is slow.

One would expect the owner of the store to not only save but also invest some of the income made by the business.

This is usually not the case because it’s at this point of booming business and perceived excess cash that the owner remembers he’ll pay himself more than he usually does (and that is if he pays himself salary), needs to move to a bigger apartment or better still, buy a bigger car.

The moment there is downturn in sales as a result low patronage, the problem of payment of staff salary begins. Mr A. makes it clear to his employees that the business isn’t turning in a profit and he’s using his personal money to pay staff salary. Therefore, he can’t keep on doing it and he’ll have to owe salaries.

This could have been avoided.

Do diligent – don’t dilly dally

What happened to the excess profit of years before? It’s obvious the employer hadn’t been diligent with the funds. Instead of investing the money to ensure it generates further income for the benefit of the business for the rainy day, the employer would instead use the profit for his own personal benefit.

If Mr A. had saved the money and income generated by his grocery store in preparation for the rainy day, the company wouldn’t be caught up in the quagmire it was put in.

A business is a separate entity from the founder, whether it’s a small or a large corporation they should stay so; separate. I’m not talking about the technicalities of whether it’s a company or business name. We have to realise that in order for the business to not only survive but also succeed, it must be separate from the owner.

This is one aspect small businesses must learn from large corporations with sound financial plan. There are times these corporations declare losses, yet they’re able to pay salaries! Money made by the business should be for the business. It’s not the time to buy that new car. If employers work with the mindset of paying themselves salaries (not excessive), it would go a long way to ensure the business is afloat even during uncertain economic times.

Related: How To Structure A Fair Salary That Will Motivate Your Sales Team

In fairness, some employers who own small businesses have been exceptional in this regard. However, the fact is, majority of small business owners don’t function with this mindset. Businesses, just like it obtains in our personal lives, have their ups and downs. The things you do or don’t do during the ups are equally as important as what you do during the downs. Save, save and save. You can’t go wrong with this. Invest, invest and invest. You can’t go wrong with this either.

That profit isn’t for spending; at least not yet. Invest the money like you would do with yours. Invest it in the name of the business. Let your business own shares in other businesses. This is sound business practice.

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Managing Staff

Stop Fooling Yourself. Productivity Tools Like Slack Are Secret Enemies Of Collaboration

Taking off your headphones and talking to the people you work with is the most effective way to foster collaboration.

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Walk into any company these days, especially those deemed “innovative,” and you see rows of desks with people plugged in to their computers – our best and brightest trying to be productive and get lost in their work. And to make sure they get lost in their work, they put on their headphones and hop on Slack.

Co-workers alternate between Spotify, Pandora and YouTube, and jump into a Slack chat room – places that are never distractions themselves, because Slack is all about increasing productivity, right? Yeah, until Slack goes down, like it has recently, and people are forced to actually interact with each other, panicked at the idea that they might have to start and maintain real life conversations.

I’ve come to realise that headphones, Slack and the other productivity tools that are supposed to help us focus are actually a threat to our future workplaces. Genuine collaboration comes from human interaction. We need the ability to clarify something in real time through an actual voice and not a endless email chain that leads to more confusion.

Our increasingly divided employees and workplaces destroy all of that – the heart of the human condition that needs to connect. But it doesn’t have to be this way. Here’s how to unplug and save the future of work.

No cliques allowed

Headphones aren’t just real world hurdles to collaboration, they’re also metaphorical. They represent a desire for employees to stay disconnected from each other, filtering out challenging new voices or ideas. It’s the same reason people seek out comfortable echo chambers.

In any workplace focused on innovation, it’s important to bring different team members together. Don’t be lured into staying siloed by department. Go further. Bring in someone from sales to gain their opinion. Add a software developer who works on the website. Everyone thinks about the company in different ways. Don’t be intimidated by that. Take advantage of it!

Related: The Tools That 5 Highly Productive Entrepreneurs Use

No brainstorming

Use exercises or approaches that allow all voices to be heard. Ideate in small groups of four or even groups of two. This allows people to feel comfortable and not intimidated by the loudest voices in the room. Remember, you’re trying to introduce a new way to collaborate, but you also want to make sure to get genius ideas out of the heads of those who don’t speak as loudly.

Try a change of venue

boardroom-venue

Leave the conference room for once. Movement is a validated promoter of new ideas. Find an unorthodox space somewhere in your building, whether it’s the parking garage, the kitchen or elsewhere, where people can walk around and ideate. This will force employees to spend time with each other and interact in new ways.

Working is more than an action, it’s a communal space we share with others. We need to build our offices into spaces reserved for more than plugging in, with our meaningful conversations packed into the 10 minutes when we drink coffee or unwind at the December holiday party.

Motivate and celebrate

Collaboration should be open but, at the same time, focused. Don’t just diverge – converge. It’s important to go wide, to take advantage of the different voices in the room. But it’s also key to build on a process that makes it easy for collaborators to converge and narrow down ideas.

Help people to understand what the priorities are to evaluate. Be clear about goals so that conversations don’t become personal and demotivating. Most importantly, remember to celebrate the collaboration itself as much as the ideas it produces. If you continue to collaborate and destroy silos, motivating participants along the way, you will unearth new ideas that resonate and a group eager to build on them, because everyone will be invested.

Related: 7 Tools To Increase Productivity And Efficiency

A Slackless future?

At the end of the day, we’re all human. We want community and to be part of something bigger than ourselves. The thing is, this simple truth about humans also extends to work. It’s not like our need to connect goes away the second we walk out of the house in the morning. But for some reason, once we walk into the office, we succumb to a process that demands headphones and Slack. We are fighting our innate desire to connect with others in reality, not only through software and collaboration tools.

The history of innovation is rich with stories of people with different experiences and personalities coming together to sit in rooms or buildings with the intention of working together in a literal, not virtual, sense. I believe that people still want to do that, we’re just missing a work process that truly represents an enjoyable collaborative experience, endorsing human connection and enjoying each other’s time, while also being productive and solving problems.

This article was originally posted here on Entrepreneur.com.

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Managing Staff

What To Include In Your Induction Training

Induction training ensures that new workers adopt good working habits, helps them to feel as though they are part of your company and alerts them to the expectations that your company has for employees.

Amy Galbraith

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Introducing new employees to your company and your processes is a vital part of hiring new talent. You will need to teach them about any administrative processes that will happen during their onboarding period, as well as show them the ropes of their new position.

This is known as induction training, and is of vital importance to any new employee who enters your company. Induction training ensures that new workers adopt good working habits, helps them to feel as though they are part of your company and alerts them to the expectations that your company has for employees.

The description and expectations of the role

This is one of the most important parts of your induction training and should be the first step you take for your new employees. This should start as soon as they have accepted their role, as it will make the onboarding process easier and more efficient.

You will need to send them an offer letter, two copies of the contract (one for them to sign and one for them to keep), details of all benefits and a copy of the employee handbook. On their first day in the office, you should describe their new role to them in detail as well as how they are expected to perform. By taking this simple step, you are preparing your employees for the rest of their time at your company.

Related: As An Entrepreneur, Be A Motivational Leader To Your Staff

Health and safety in the workplace

You are legally required to provide your employees with any health and safety information they need to carry out their roles. You will need to provide them with a copy of the company’s health and safety policy. And ensure that they sign it once they have read over it and understood it.

You must inform all new workers of the fire safety procedures and tell them what to do if the alarm should sound.  Health and safety in the workplace also involves your policies on using the kitchen in your office, so be sure to show them the kitchen and educate them on any rules you might have.

Tour the premises

It is important that your employees know the layout of the inside and outside of your office, especially if an emergency should occur. It is also helpful for them to know where the kitchen and restrooms are.

A tour of the premises will also allow new employees to familiarise themselves with the different departments. If they need to speak to the client services department, they will know exactly where to go rather than having to wander the halls lost. While this might not seem to be a vital part of induction training, it is helpful in making your employee feel welcomed and accepted in the company.

Introduction to their colleagues

Introducing new workers to their colleagues is an important part of induction training. You should start by introducing them to their line managers, the HR department, the health and safety officers and the employee representatives.

Meeting their line manager first will allow your new employee to get a feel for the role and get to know who they will be reporting to. It can make first days less stressful and maintain a friendly office atmosphere. Have a moment during your morning discussions to introduce your new employee to the rest of their colleagues, but be sure that they are okay with you doing this beforehand.

Related: What must I include in an orientation pack for new staff?

Provide ample orientation

The orientation period of the training should not be forgotten, nor should it be lackadaisical. You will need to include an introduction to the processes of logging on to computers, where to find stationery supplies, and the policy on use of phones during working hours.

Show your new employee how to turn on and log into their new computer, including how to access folders, emails and the company’s drive. It might be a good idea to assign a “work buddy” to your employee to help them with any new tasks at first. Providing ample orientation will make the transitioning process easier for your employees, but be sure to have regular catch up meetings during their first three months to see how they are handling the position.

Induction training is important

If you own a fast-paced company, you might not think that induction training is very important. However, nothing could be further from the truth. Induction training is immensely helpful for new employees, just as courses for team leaders are for more established employees.

You will need to provide a thorough description of their role, explain the health and safety procedures of your office and introduce new employees to the rest of the office on the first day. From here, you should have regular checkups during their first three months to ascertain their progress.

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