This article is to share – and hopefully start a discussion on – the reasoning for giving incentives to some of your employees. How leaders, managers reason for incentives? What do we see as different approaches in the small business world? Which approach would you prefer?
In the today economy the financial challenges are very quickly and often negatively change the direction a business have to take to stay profitable and competitive. Often, business revenue is tied to government and/or commercial contracts. If any of the major contracts is lost, the business may change strategy in every segment.
So if your business learns today that one of your major revenue-earning contracts is not going to be extended and will expire in 6-9 months, how do you make sure you keep your best and brightest people, and those who you can’t keep but you need until the full completion of the project?
The two ways to deal with the situation I often see are:
1. The business makes a decision who would have continued employment with the company following the expiration of the contract, no matter what. These are key talents who must stay so the company can bid for more new work. These ones receive the incentive payment only and the conversation with their supervisors about their job security.
2. The business gives incentive to those only, who will not have a job following the expiration of the contract but play a key role in the completion of the project. Often enough these incentives are coming in installments, the earlier the smaller; and the last, biggest piece at the very end of the project.
Can a business in the given situation afford doing both? Incentives are costs to the company. It also adds to the payroll taxes businesses pay after every paycheck given to an employee. Since these are not “direct working hours”, incentives can’t be invoiced to the clients – it often comes out of the overhead or profit.
Overhead dollars however are badly needed to work on new proposals, spend on marketing – all the necessary activates to put the business in a better position on the marketplace.
Would you pick one of these, or mixing them into a different option? What would be the message to the other employees if you mix it – because people talk? What would you do? What was the best and worst scenario you ever seen? What would be your personal solution in a given situation?
My name is Sylvia Pacher, managing director for the Virtual Corporate Services team (www.myvirtualcorporate.com), and I invite you to discover what a virtual corporate service group can take off of your shoulder to make you more billable, profitable, and probably happier because you can focus on what you do best. Please let me know if you have questions – I am always here to assist you with making your business grow bigger, stronger, more profitable and competitive. Please email me personally: spacher@myvirtualcorporate.com
In the today economy the financial challenges are very quickly and often negatively change the direction a business have to take to stay profitable and competitive. Often, business revenue is tied to government and/or commercial contracts. If any of the major contracts is lost, the business may change strategy in every segment.
So if your business learns today that one of your major revenue-earning contracts is not going to be extended and will expire in 6-9 months, how do you make sure you keep your best and brightest people, and those who you can’t keep but you need until the full completion of the project?
The two ways to deal with the situation I often see are:
1. The business makes a decision who would have continued employment with the company following the expiration of the contract, no matter what. These are key talents who must stay so the company can bid for more new work. These ones receive the incentive payment only and the conversation with their supervisors about their job security.
2. The business gives incentive to those only, who will not have a job following the expiration of the contract but play a key role in the completion of the project. Often enough these incentives are coming in installments, the earlier the smaller; and the last, biggest piece at the very end of the project.
Can a business in the given situation afford doing both? Incentives are costs to the company. It also adds to the payroll taxes businesses pay after every paycheck given to an employee. Since these are not “direct working hours”, incentives can’t be invoiced to the clients – it often comes out of the overhead or profit.
Overhead dollars however are badly needed to work on new proposals, spend on marketing – all the necessary activates to put the business in a better position on the marketplace.
Would you pick one of these, or mixing them into a different option? What would be the message to the other employees if you mix it – because people talk? What would you do? What was the best and worst scenario you ever seen? What would be your personal solution in a given situation?
My name is Sylvia Pacher, managing director for the Virtual Corporate Services team (www.myvirtualcorporate.com), and I invite you to discover what a virtual corporate service group can take off of your shoulder to make you more billable, profitable, and probably happier because you can focus on what you do best. Please let me know if you have questions – I am always here to assist you with making your business grow bigger, stronger, more profitable and competitive. Please email me personally: spacher@myvirtualcorporate.com
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