I’ve long been an advocate of some form of performance related pay, but I sometimes waver. What do you think about giving your staff a bonus, do you think the advantages of performance related pay outweigh the downsides?

I’ve seen it motivate some people, especially sales teams; although on a personal level have never really been motivated by such schemes at all.
That is of course not to say that a financial bonus, unexpectedly after the event wouldn’t help make me feel appreciated, or one given to others who (in my view) performed worse than me wouldn’t demotivate me.

Smoking thought about Performance related pay is it evil?

What do you think about including some sort of bonus scheme in your small firm?

Does performance related pay motivate the right behaviours?

The fingers of evil, coming from performance related pay?Many of the pay schemes seem to motivate the wrong sort of behaviours, which can include not working as a team and not helping colleagues. Ultimately they can include some of the behaviours that contributed to problems in the banking sector over the last few years.

But, the very fact that this statement is often made suggests that performance related pay does motivate.

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Can bonus schemes work?

champagne-glass5I have seen bonus schemes work well, when they’ve been constructed and managed to encourage and reward behaviours rather than just results. I’ve seen staff improve productivity, client service levels and sell more.

I’ve also seen them work (but they can get more complex) where they’ve been adjusted for longer term performance (e.g. signing up new clients, that remain profitable for 2 years).

The fact that your’s is a small firm doesn’t mean that your staff don’t need motivating and that money can be a an incentive. What do you think? You may find “Motivation? People choose how hard they want to work“, very interesting.

If you think there’s more than money to it, download our guide to getting more from your team, it's free and waiting for you to download right nowClick here for instant access (email address required).

Does Money reduce trust?

An interesting BBC news article chimed with several discussions I’ve had recently with professionals and my views briefly outlined above.

This may explain why small firms are not as keen to use performance related pay schemes. To quote the article:

But within small groups a team found that introducing an incentive makes people less likely to share than they did before. In essence, even an artificial currency reduced their natural generosity.

The article introduced the concept of motivational crowding out, where paying an individual to do a task which they had already planned to do free of charge, could lead people to do this less. Do you think that applies to staff in small firms? Does this suggest they won’t, or will work harder – if there’s a well constructed scheme?

Did you read Motivating your staff: Does money motivate staff?

What are your views about performance related pay, or giving bonuses?

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Written by Jon Baker The 5-50 Coach. I help professionals grow their firms from 5 to 50 employees, sustainably, profitably and still have fun. Have you got your "next step kitbag yet"? It's stuffed with guides, reports & templates helping you grow from 5 to 50 employees Click here for immediate access

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