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For every motivating idea, there’s another that could derail your entire program. Here are common mistakes to avoid when you’re creating or refining a compensation plan.
• Remember that it takes more than money to motivate an employee, says Bob Cooper president of Elite, a Rancho Santa Fe, Calif., company that provides business-building solutions for the automotive industry. You must incorporate non-monetary incentives into your plan, too. Throwing money at any situation is a short-term solution at best.
• Do not try to “manage” your staff through the pay plans, says Tyler Robbins, president of Automotive Training International, an automotive fixed operations training and solutions company in Taylors, S.C., and Halifax, Novia Scotia. Too many shop owners do this and the result is a plan that is so complicated the employee doesn’t understand it or each element within the plan doesn’t amount to any significant amount individually so the employee feels that the individual elements are “not worth it.”
• Avoid overly complicated pay plans, Robbins says. Make sure they are simple and easy to understand to the point where the employee knows instinctively what they stand to gain with every task they complete or every milestone they achieve.
• Give your employees a chance to advance in the company and to earn a higher income, Cooper strongly advises. Too many owners think, “This is what I’ll pay you for doing your job,” but they fail to go beyond that and provide a clear career path for employees who want to excel.
• Resist the urge to create incentives or objectives that are so aggressive that they are unattainable, Robbins advises. They are demotivating.
• Don’t tie a bonus to net profit unless the employee who stands to gain from it has significant say or direct control over many of the bottom line items. In many cases, there are too many elements beyond the employee’s control, making the plan a demotivator.
