Human Resource Blues

What do you think is the most commonly found difficulty in owning and running your own business? Some may say access to capital, access to markets or managing a work-life balance. Ask a handful of business owners and you’ll find that managing employees is their toughest challenge.

From hiring, firing and counseling through the dramas humans attach themselves to, maintaining a happy, productive and cost effective workforce in any business is challenging. To make the challenge more interesting, the workforce is seeing dynamic differences in the generations represented within most companies. These differences have frustrated both ends of the spectrum.

Yet, one of the most commonly seen problems with employees is the tie between salary and production. Business owners have seen trends in employees arriving at work with an entitlement mentality. Often times, employees assume their work is solely for the benefit of the business owner. In reality, most business owners earn less per year than the bulk of their employees.

Employees go further in their entitlement mentality, buy expecting yearly pay raises and bonuses. However, the amount of work being produced by the employee seldom increases. In order for a small business to prosper, the business needs to prosper financially in order to pay an increased salary.

Michael Alter with Inc.com recently wrote about employee compensation. He noted, “most employers don’t have a problem giving raises to their employees if the employees are doing their part to ensure business growth and profitability.” Michael went further by stating: “However, in many companies that’s a big ‘if.’ When profitability plateaus, employees generally interpret flatline compensation as a sign of disrespect instead of making the connection between compensation and job performance.”

One way business owners can escape from the employee entitlement mentality is by creating a performance incentive program. Rather than paying employees their salary and bonuses automatically with the assumption they he/she would earn at least a cost of living raise every year, turn the table onto them. If an employee wants a raise or bonus, develop an incentive program with clearly defined goals the employee has to reach in order to receive more money.

In establishing goals for the employee, make sure they are realistic, fair and have value for the company. Communicate with the employee throughout the year about where they are, what they have achieved and what may be going wrong. Have conversations with the employee at least once a quarter or more.

As a business owner, also utilize noncash rewards for good work being produced. In between the pay checks, if an employee or a team rises above the your expectations, take the time to thank them. You can get creative in ways to encourage their work. From buying lunch to putting a thank you card on their desk, small personal incentives often go much further in motivating than cold cash.

Finally, remember employees typically seek work that is rewarding to them rather than seeking large sums of money for their time. Creating an environment where they feel appreciated and motivated to deliver the productivity the company needs is a win-win situation.