Engage employees with non-financial rewards

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By Ron Coleman

As owners/managers we often forget how our attitude permeates the organization. If we go into work all despondent, that negative energy flies through everyone we get in contact with – employees, customers, sub-contractors and suppliers.

The opposite is also very true. When we go to work and show our passion for the business, it also permeates. In order to show that we care for our employees, we must let them know on a regular basis how important they are to us. One effective way of doing this is to incentivize them and what better way to do that than by using time-proven non-financial incentives.

Implementing this process, or any of the other processes in our three previous articles on performance rewards takes commitment and can’t be done half-heartedly. Don’t even start the process unless you are sure you are going to implement it. Once you start telling your employees that you are looking at such a program, they will expect you to follow through.

Once you have decided in principle to implement a program, then it is time to engage them and let them help you design the process that best fits your organization. This empowerment will go a long way towards ensuring the success of the program.

Non-financial incentives are low-cost options to keep employees engaged and loyal. Also, they can add a level of happiness as they stroke the ego rather than the wallet. You are targeting the employees’ empathy and emotional intellect.

By fostering a culture of support, you will retain key employees and breed a culture of success. This is an opportunity to use your ‘power of influence’ to create a legacy by helping people achieve their true potential.

As businesses become more cost-conscious, they are likely to cut back on financial incentives as these can be very costly, particularly in construction and service businesses where labour is a very significant portion of the cost. This is less noticeable in a production shop, such as sheet metal fabrication, as labour is a lower percentage of the cost of production.

Where companies are paying competitive remuneration, these rewards can lock-in employees who might be tempted to move to a competitor. Despite the financial cost to the company, they can carry significant weight. Incentives of this nature are particularly effective for workers who are comfortable with their salaries or have been in the position for a long time.

 Relationships matter

Surveys have shown that 69 percent of customers change providers because of perceived indifference. This is likely true of employees also. I often ask business owners why they started up their business and often the answer is they felt unappreciated in their employment and saw no opportunity to use their talents to the max. Now that you are an owner/manager, are you falling into the same trap by not helping your key people reach their full potential?

In its June 2009 McKinsey Global Survey of 1,047 executives, managers and employees from a range of sectors, non-financial incentives were rated as more powerful motivators than financial incentives.

The top three financial rewards were performance-based cash bonuses, an increase in base pay, and stock or stock options. The top three non-financial incentives were praise and commendation from their immediate manager, attention from leaders, and opportunities to lead projects or task forces.

  • The most popular incentive for the survey was praise from the boss.
  • The second most popular was attention from leaders.
  • The least popular was stock or stock options.
  • All three of the non-financial incentives were more popular than the leading financial incentive.

According to the survey, the top two incentives are based on receiving praise and validation. These two elements are essential to all relationships, including employee-employer. Praise and validation should be the focus of non-financial incentives for employees.

This is where you as the owner/manager can shine. How can you expect others to be enthusiastic about the business if you, the boss, are not enthusiastic all the time? I know that’s difficult, but it is part of running a successful HVAC/plumbing business.

In the benchmark surveys that I have been doing annually since 1994 for the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI) we constantly find that the top 25 percent of participants generate more than 10 percent pre-tax profits (some in the 20 percent-plus areas) and that the bottom 25 percent either break-even or lose money.

Rewards to consider

There are four categories of rewards that you can consider. Some work primarily for office administrators, bookkeepers and estimators while others are suitable only for field staff.

* Indicates the rewards best suited for those not working in the field.

RECOGNITION

  1. Award presentation in front of peers.
  2. Enhanced responsibility and authority.
  3. Breakfast/lunch/dinner with senior management.
  4. A new truck, new equipment or tools.
  5. A new office or office equipment*
  6. Recognition or financial rewards for recommending new employees (good techs are hard to find)
  7. Recognition for having the highest ratio of hours paid to billing for service work .in a quarter
  8. Recognition for completing retrofit jobs below the budget – quarterly review.

REWARDS

  1. Gift certificates (get them from existing customers to enhance your relationships or from suppliers, who may offer them for free).
  2. Prizes (Get suppliers to donate them and promote the supplier). Use these to enhance some of the recognition rewards above.
  3. A paid cellphone (becoming more popular now that many companies are using cell phones for payroll purposes and job costing).
  4. Paid internet (can be used to dispatch employees to jobs or provide them with overnight updates).
  5. Recognition or financial rewards for recommending new employees (good techs are hard to find)
  6. Recognition for customer service awards based on customer feedback after service calls or retrofit jobs.
  7. Reward techs who take overnight or weekend calls.

OPPORTUNITY

  1. Opportunity to lead teams or tasks
  2. Paid training
  3. Promotion
  4. Mentorship program (match up apprentices with your best techs)
  5. Attend industry conferences (foreman and more senior)
  6. Attend industry association dinner meetings (techs and more senior)

FLEXIBILITY

  1. Flexible schedule ( four 10-hour days)*
  2. Ability to work from home one day per week*
  3. Schedule service calls that are closer to the tech’s home to minimize travel time at the start and end of the day.

Take charge of your attitude. Don’t let someone else choose it for you. (Dale Carnegie)

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