When you start a new business and have just one or two employees, it’s both easy and practical to make salary decisions on a case-by-case basis. As your business grows, however, this approach likely will cause staff to speculate, often inaccurately, and gossip about who earns how much. This dynamic can distract them from doing their jobs.
In an effort to avoid such fallout, some entrepreneurs make all their employees’ salary information available to everyone in the company. At the other end of the spectrum are those business owners who think this approach is completely crazy.
So who’s right? Should your company’s salary information be transparent? In my experience, many entrepreneurs debating transparency don’t see the underlying issues.
When you look at employee complaints about salary, they usually stem from at least one of the following three core issues:
- Employees perceive salary decisions as arbitrary and presume they’re unfair.
- Employees view their performance differently than you do.
- Employees are confused about how the performance and compensation system works.
Here are three ways to address these issues:
1. Develop a salary formula.
Stop making case-by-case salary decisions. Instead, define every job in the company and develop a salary formula for each one. To eliminate any perception of arbitrariness, the formula should take into account factors like an employee’s skills, experience level and performance.
For example, say the salary range for a customer service agent is $20 000 to $30 000. An employee with average skills, experience and performance would earn $25 000. You can then rate the employee on a scale of -10 to +10. For example, if the employee had no experience, they would receive a -10 for experience. The combination of these ratings would then determine where in the salary range the employee falls.
With this formula, employees will stop asking “Why does Mary earn more than me?” and start asking “What do I need to do to become a senior customer service agent like Mary?” Instead of complaining about seemingly arbitrary salary decisions, employees will focus on improving their skills to earn more. It’s a subtle, but important distinction.
2. Regularly tell employees where they stand.
Every job in the company should have a written set of objective performance expectations. Employees should know how their performance compares to those standards. In addition to an annual formal review, it’s critical to provide frequent informal feedback.
Let me illustrate this point with a personal example on a smaller scale. I have three daughters under the age of nine and they all have “jobs” (household chores) around the house. If I gave them feedback on their “job performance” only once a year, they certainly wouldn’t keep up with their chores. While employees don’t need the hourly feedback my kids seem to need, a single annual review just isn’t enough.
When you provide frequent performance feedback – say, monthly – employees have no reason to be resentful about salaries because you give them ample time and guidance to improve. Conversely, when you tell an employee on 31 December that he or she has been doing a bad job since 1 February and, as a result, won’t be getting a raise, expect him or her to be rightfully resentful.
3. Educate employees on your performance and compensation system.
Once you’ve adopted a systematic performance and compensation system, communicate it to all employees, department by department – even if employees don’t (or are afraid to) ask about it. In a department-wide meeting, explain the hierarchy of job titles, the skills needed to qualify for each level and the performance criteria for each job level. (Also be sure to include the same information in materials for new employees.)
For example, you might announce that the customer service department now has only two job titles – Customer Service Agent, and Senior Customer Service Agent. To qualify for the latter, one must have mastered computers systems X, Y and Z; be certified on product lines A & B; and have a quality rating of 9+ for the last two years.
Before the new system goes into effect, give each employee a “sneak preview” performance and compensation review, based on the new guidelines.
This gives everyone a chance to get used to the new system and to identify any conflicts without salary changes at stake.
Once you’ve followed these three steps, you’ll have an objective, systematic and well-communicated approach to inform your company’s performance and salary decisions. At that point, whether or not you make salaries transparent will be a moot point because you’ll have effectively eliminated the underlying issues.
How To Know If You’re Mismanaging Your Staff
Wouldn’t you like to free up some of that time to increase your company’s productivity and profitability while providing solutions to admin issues and organisational hazards? Workforce can show you how.
The average manager can spend up to two full days a week on administrative tasks. You aren’t a machine and neither are your managers or HR team. However, to gain the most from your temp staff, a machine is exactly what you need. A smart one.
WorkTRACZone is the definitive product that’s been especially developed to offer you ultimate control through technology.
WorkTRACZone ensures that you surpass the 80% of businesses that are floundering in misadministration, and guarantees that your temp staff are utilised to the maximum.
Keep clear of the danger zone
Research by UK-based company, Service Now, found that eight out of ten companies still use inefficient manual tracking to drive productive work processes, putting their company’s temping situation in the danger zone. Are you one of them? Ask yourself these five questions:
- Are you aware of all the skills available to you through your temp workers?
- Can you remotely access your temp staff’s work rosters anytime, anywhere?
- Do you know exactly how much overtime is being generated in your business?
- Are your temp staff’s absenteeism records completely up to date?
- Do you have convenient access to all your temp staff’s work histories?
Related: Finding Your Staffing Partner
If you answered no to any one of these questions, then your temporary staff are gravely underperforming.
Manage your temp staff better today
As specialists in the temporary employment field, the designers behind WorkTRACZone are well aware of what businesses need to make the most of their workforce.
If you would like to protect your company from all the possible failings hiding behind mismanagement, visit www.workforcestaffing.co.za, or call 087 135 8888 to take the first step in distinguishing your business.
Solutions to your biggest temp staffing issues
1. When I don’t have information available now, my business fails later
WorkTRACZone is a digital portal that is available to view from any smart device at any time. It provides complete transparency on all of your temporary staff, from work rosters to up-to-date labour costings. Have access to your outsourced staff’s information, collected onto the WorkTRACZone digital dashboard, and integrate time and attendance with payroll and invoicing systems.
2. How can I be sure staff aren’t taking advantage of overtime?
Mismanaged overtime is one of your biggest risks to profitability. WorkTRACZone records all overtime recorded by temporary staff, allowing you to spot dangerous patterns or misused hours before it becomes a drain on profits.
3. I’m not totally aware of what my temp staff can offer me
From clock number to ID, WorkTRACZone makes searching easy with editable fields and succinct categories. Workers’ skills are available to you at a moment’s notice with this digital portal.
4. I hardly monitor staff backgrounds, equipment issues, and other details
Having this information on hand is the first step to ensuring complete control over your outsourced staff. If you skip this step, all other processes often fall to disorder. WorkTRACZone provides the best solution to ensuring all this information is captured and easy to access.
5. With worker turnover, predicting salaries has become near impossible
All your temporary staff’s past and current work rates are viewed on demand via the WorkTRACZone digital dashboard. This provides accurate salary projections, allowing you to plan ahead and foresee any potential complications.
Have Your Incentive Scheme In The Palm Of Your Hand
Mobility solutions are making incentive plans faster, simpler and more impactful than ever before.
- Contact: Maud Botten, +27 (0)11 557 5700
- Visit www.uwiniwin.net for more information.
According to GSMA, the body representing the interests of mobile operators worldwide, lower smartphone prices are driving a digital revolution in Africa, allowing mobile phone users to access the Internet at unprecedented levels.
The number of smartphone connections across the continent almost doubled over the last two to three years. More than half a billion people across Africa now subscribe to mobile services. Operators recorded data traffic growth of more than 50% in 2015 and this trend will keep on expanding. Operators and developers are also leveraging the power of mobile networks to transform services in the health, agriculture, education, and other sectors.
Another service that is transformed by this mobility is incentive schemes. When it comes to the implementation of incentive programmes, being mobile means ‘on the move’ motivation and keeping in touch with your valued workforce and channel partners.
Incentive schemes can be driven by the participants
Uwin Iwin’s innovative digital platform driving incentive schemes, uses the power of mobility to its greatest advantage. The custom-developed, white-labelled interface (which looks like a website), enables participants to enter the rewards portal online anytime they want. They interact with their incentive programme by entering sales and performance figures, which will be processed by the system.
Participants can view their leaderboards and immediately determine their advancement. Automation ensures that the participant can diligently track their points and progress. It delivers immediate feedback to keep participants motivated. In addition to that, the easy rewards cash-out system, digital catalogue, or virtual mall, enables participants to convert their points into tangible rewards, providing a full incentive management system.
Further motivation is provided through social media, emails and programme-specific websites.
The message can be reinforced throughout the duration of the programme and participants are reminded of the plan, motivated towards the goal and informed about current progress.
The more interaction, the greater the impact on motivation, success of the programme and ultimately the all important ROI.
Mobility saves money
By allowing participants direct access, less personnel are needed to run the programme and that means lower costs and a higher ROI. Another benefit is that accurate reporting is instantly available. The effectiveness of the incentive scheme can be monitored in real time.
Rewards that appeal to the target audience
Uwin Iwin believes strongly in giving participants choices when it comes to awarding rewards. The reasoning is that adopting a ‘one size fits all’ approach alienates some of the workforce as the rewards may be undesired. Giving a participant a choice for their reward is a reward in itself, as they can choose a prize that they desire. Uwin Iwin uses a catalogue of over 14 000 products (available online, of course) that can be exchanged for points or e-cash earnings.
Bringing the incentive schemes to the participants means that Uwin Iwin has to keep innovating and keep on searching for ways to keep participants interested. There is nothing more exciting than to be part of an ever-changing solution. That is their business — to keep finding bespoke solutions for specific clients’ needs.
Uwin Iwin Incentives is at the forefront of innovation, especially when it comes to mobile/digital/e-solutions. Notably, they were the first in South Africa to migrate onto a digital platform and understand its dynamics well.
Moreover, the platform has evolved over time to become highly sophisticated and efficient, so get in touch and make sure that your incentives scheme exploits the latest technological developments to the benefit of your enterprise.
Why I Stopped Doing Annual Employee Reviews
Why wait months to discuss problems that matter now?
When my company Phone2Action launched in 2013, we tried to manage employee performance with annual reviews. It was pointless. Why wait months to discuss problems that matter now? In a start-up, we needed to move faster and calibrate more often than annual reviews permitted.
We scrapped reviews and implemented a performance management system developed by Martin O’Malley, former governor of Maryland. He “disrupted” conventional management techniques well before Agile and Lean Start-up methodologies swept through Silicon Valley.
Today, many companies use “data-driven” management techniques. However, they struggle to find a balance between team and individual accountability, transparency and privacy, and actions and goals. O’Malley’s approach may help you find the sweet spot.
The CitiStat story
When O’Malley become mayor of Baltimore in 1999, the city suffered from chronic absenteeism, excessive overtime and poor response times. He implemented a data-tracking and management approach called CitiStat, inspired by the New York City Police Department’s CompStat crime analytics. Between 1999 and 2007, CitiStat saved Baltimore an estimated $350 million yet the programme cost only $400,000 per year (spent mainly on staff salaries), according to the Center for American Progress.
CitiStat required city departments to track performance metrics unique to their responsibilities. The Department of Transportation, for example, recorded how quickly it filled potholes after being alerted.
The department heads met with the CitiStat team every two weeks to review the data. If it was trending in the wrong direction, the CitiStat team and department head would brainstorm and test a solution. At the next meeting, the data would reveal whether the follow-up actions had made a difference. By 2007, the Department of Transportation was filling 97 percent of potholes within 48 hours of notification.
Other cities took note of O’Malley’s success. Mayor Adrian Fenty introduced a version called CapSTAT in the District of Columbia Government, where I learned the system. We used it to track major initiatives such as school openings.
“CapSTATs” were intense accountability meetings that gathered all the agency heads. When an initiative hit delays, there was no place to hide. The numbers, the colors (green for on track, yellow for delayed and red for behind) and mapping revealed the status of everything.
Having observed the effectiveness of CapSTAT, I wanted to create a version for Phone2Action. We called it ActionSTAT.
Why it’s different
There are different schools of thought in performance management. ActionSTAT addresses three conflicts that arise in most performance evaluation systems.
1. Team v. individual
Traditional employee reviews often happen in isolation and emphasise individual achievements. In contrast, ActionSTAT holds both the team and individual accountable by measuring how people spend their time. The system connects individual actions and goals to departmental and company goals.
This kind of “systems thinking” is hard to achieve in government but comes naturally in technology companies, which have standard measures of success. In software-as-a-service (SaaS), these could include annual recurring revenue (AAR), monthly recurring revenue (MMR) and gross retention.
For example, let’s say we ask each salesperson to make 40 calls per day. The salespeople who perform this “leading action” close more deals than those who don’t. The action appears to work, so we keep doing it. If salespeople made the 40 calls but didn’t close more deals, we’d test other leading actions. Ultimately, we trace the salespeople’s work to AAR and MMR.
2. Public v. private feedback
One of the hardest aspects of performance management is giving and receiving feedback. When a manager gives an employee feedback in private, the company doesn’t gain institutional knowledge. Only two people learn from the experience. When performance management is a team activity, a culture of continuous learning, improvement and transparency can emerge.
Phone2Action holds ActionSTATs every Thursday at 10 a.m. The meetings are open to everyone but focused on one department each week. We start ActionSTAT by reviewing a dashboard that shows the most important metrics of company health. Those include our load time, conversion rate and retention rate.
Next, we look at the department’s lagging indicators (marked green, yellow and red, just like in CapSTAT) followed by its “leading actions.” Often, we look at individual leading actions, too. The data sparks questions, conversation and feedback from across the company.
Over time, a few things happen:
- Everyone in the company gets used to providing and receiving feedback.
- Everyone gets used to discussing performance publicly.
- Everyone sees what people do in other departments and therefore learns how each team member contributes to the company’s goals.
The health metrics never change, but how teams spend their time can. By discussing the leading actions of each department, we set and correct behaviours.
3. Actions v. goals
ActionSTAT distinguishes between how people spend their time (leading actions) and lagging indicators (goals defined by metrics). This is crucial because companies that manage solely by objectives cannot address the behaviors that drive the outcomes.
If we want to lose weight, jumping on the scale everyday won’t change anything. What we eat and how much we exercise will. The same applies to companies. If we measure lagging indicators but not the activities that influence them, we will not identify what works.
Every ActionSTAT becomes a chance to refine leading actions. If we wait one full year to evaluate an employee, we see if she hit the metrics, but we cannot correct behaviours along the way. Performance management is about continuously identifying the actions that produce desirable outcomes.
A thing of the past
Every tech company wants to be “agile,” but traditional employee reviews hinder that culture. Annual reviews exhaust managers and stress out employees who might have spent months working tirelessly – in the wrong direction. Neither the company nor the employee can afford to wait a year for the feedback.
Today, people choose work environments where they can learn continuously and understand how their actions contribute to the company’s success. Annual reviews are thing of the past.
This article was originally posted here on Entrepreneur.com.
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