Written by: Brandon Gray, MBA – Crabtree, Rowe and Berger Consulting Team Lead
Many people have a misconception of entrepreneurs. They can sometimes be viewed as greedy, money hungry, and only looking out for number one. I have been fortunate to work with entrepreneurs for the past 14 years and have found this view to be far from reality. Most entrepreneurs care deeply about their team and want to give back, even to the point of being too generous. At some point, almost every company we work with will ask us to help them with an incentive or bonus plan for their team. This has allowed us to gain some insight into what works and what does not.
Almost every study published has determined that money is only a temporary motivator. Don’t get me wrong, it is very important. However, do you truly get your bang for the buck with a bonus plan? The answer is yes and no.
First, it is important to keep in mind that not everyone on your team thinks like you. One of the reasons that you are an entrepreneur is that you like the idea of effort equating to the possibility of financial reward. This way of thinking is perhaps how you are wired. That said, not everyone else is wired this way. If they were, then instead of working for you, they would likely be entrepreneurs themselves!
However, it is likely that some of your team is primarily driven by financial reward. These team members are usually at the management level and have some entrepreneurial spirit. Given their role, they have an ability to drive bottom line results, which helps create a connection between performance and reward. For these team members, a structured bonus plan can be great.
Those in the 2nd group of your team, which is most likely the largest group, do not see themselves as having direct control over bottom line profits and are likely motivated a little differently. To them, recognition can be just as important, if not more important, than money. This is where we recommend a “spot bonus.” When a team member does something worth recognizing, give them a gift certificate to their favorite restaurant and, most importantly, recognize them in front of their peers. This should be as soon as possible after their actions.
These two bonus approaches can help you make sure that you get the best bang for your buck. If you would like to discuss more about bonus plans, feel free to contact us.