Page 219 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes Be careful to avoid these pitfalls:
1. Diluting your controlling interest in the venture
2. Rewarding some people while alienating others who are also productive
3. Prompting the wrong behaviors or the wrong values

4. Diminishing a sense of camaraderie and teamwork
5. Increasing your tax burden
6. Bickering over accounting practices for stating profits
7. A one-compensation plan fits all mentality

8. Enabling disgruntled ex-employees to own significant stock
Compensation systems create consequences—whether they are intended or not. You must make
a careful decision about how you are going to pay your employees. Even if you pay straight
salary or hourly wages you’ve still got a monetary compensation system. The right compensation
system can go a long way to building the kind of company you desire.

Did u know? By making rewards contingent on performance, experts agree that an
organization is likely to increase employee motivation.

Providing Rewards

Effective reward systems include all forms of monetary compensation plus a wide variety
of other motivators that are important to people in a work setting. You will be surprised
at the benefits your company will reap when you reward good performance with job
assignments, recognition, growth and learning, additional responsibility, trust, authority,
and autonomy.
The effectiveness of any reward system requires two primary factors. First, the recipient must
perceive the reward as a positive event, and second, the reward needs to encourage the desired
behavior. The desired behavior must be consistent with the strategic goals of the company. It is
your responsibility as the entrepreneur to make sure the reward system is set up to support the
right behaviors.
To make this two-part principle work for you, you’re going to have to understand rewards
from the perspective of your workers, which requires you to spend time with your team and
learn what’s important to them. Monitor the results of your rewards to see if they’re really
having the effect you want them to have. Remember, what you perceive as rewarding may not
be rewarding to your employees. For example, many companies reward salespeople for their
efforts by basing some or all of their compensation on a percentage of the dollar amount of
sales revenues. This approach is a proven winner in most cases, but some companies—notably
those who want to have their sales people act as consultants to their customers—have found
that poorly conceived commissions can push salespeople away from their role as consultants,
making it less likely that the client will turn to the salesperson in the future or that big-ticket
projects will be developed.
Instead of relying solely on monetary rewards, try some of the following approaches to increase
motivation and productivity:
Say thank you: Acknowledge people for their good efforts and superior results. You may be
surprised what sincere acknowledgements will do. Consider both public and private
acknowledgements but keep your employees’ preferences in mind.

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