Rewarding performance

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Last updated on May 4, 2017
Rewarding good performance is just as important as motivating and monitoring performance.

Remember that rewards can include recognition and other incentives, not just money. It helps to consider the benefits that potential employees may be looking for.

Financial rewards

Performance is most commonly rewarded through remuneration. Remuneration is compensation, typically financial (pay or salary), for services rendered. Remuneration may also include non-financial benefits such as the use of a vehicle or computer.

There is a number of factors to consider in setting pay levels.

  • You should be willing to pay at least the same amount as your competitors do to hire similar employees. Market pay surveys may allow you to compare your own practices against those of the competition.
  • Business owners need to consider employees as assets and a source of competitive advantage.
  • As an employer, you still have discretion regarding the actual amount paid, over and above legislated minimums.
  • Based on the principles of job analysis and evaluation, it may be useful to develop a job structure so that the relative worth of various jobs in the business can be compared.

Employees pay levels may be based on:

  • the particular role and responsibilities of the job
  • the value of the employee’s knowledge and skills
  • the employee’s individual or team performance against a set of criteria
  • a commission, piece rate or production basis.

Note: there are legal requirements relating to wages and employment conditions.
Federal and state laws specify minimum wages and conditions of employment. Minimum wages are set by the Australian Fair Pay Commission and the Tasmanian Industrial Commission.

Fringe benefits and salary sacrificing

Fringe benefits provided by employers can include:

  • allowing an employee to use a work car for private purposes
  • paying an employee’s gym membership
  • providing entertainment, for example free tickets to concerts
  • reimbursing an expense incurred by an employee, such as school fees
  • allowing employees to sacrifice their salary in exchange for other benefits.

You should always get advice from your financial advisor or accountant before entering into any financial arrangement with your employees, other than paying wages.

Other kinds of rewards

Non-financial rewards may include recognition, higher status, positive feedback, more responsibility and greater participation in decision-making.

Having efforts noticed and valued can often be a great motivator and encourage employees to stay on with an employer.

Types of rewards that can motivate and help to retain your employees include:

  • extra leave
  • Christmas and birthday gifts
  • Work/life balance benefits, such as flexible working hours
  • subsidised staff canteens and free tea/coffee
  • cinema tickets, subsidised gym or sporting facilities membership
  • training that addresses personal development rather than simply the skills needed for the job
  • gifts for work well done
  • subsidised goods or services in relation to suppliers or business networks.
These other benefits are valued by employees because they:
  • enhance the quality of working life
  • reward their efforts and make them feel valued
  • add value to the employment contract.

There may be tax implications associated with some of the benefits mentioned, so ask your accountant to decide which of these types of rewards would suit your business.

 

 

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