MicroMentor is Responding to the Coronavirus (COVID-19) Impact on Businesses

Have concerns related to your business? Are you a mentor looking to help? Visit our Coronavirus and Small Business Resources page.

Report question

Note: your identity will not be shared with the person who sent you this message.
This field is required

How do I set up a pay for performance model for my nutrition business? My employees are costing me a lot and I'm feeling burnt out doing all the work to fill their schedules.

Sign in to answer

2 answers

Hi Ryan, great question. Performance for pay models often depend on the type of work that you task an employee with and your ability to associate a quantifiable outcome with the output of their work. I'll share some examples to illustrate.

In a field such as sales, commissions is a popular tool used to motivate employees towards certain sales goals and/or selling certain products or services (this is popular for both B2B and B2C models). In a field such as marketing, you can associate a fee that you pay employees based on the amount of internet traffic they bring to your website (popular for B2C models). In a field such as operations, you need to identify the relationship between an operational activity and certain objectives you have for the company, such as quality targets, efficiency metrics, etc. A financial incentive can be attached to achieving these objectives based on how you value the outcome.

Incentives such as these are great ways to motivate behavior, but it will be important that you have the capability to track these goals. Incentives often are contractually stated for employees, so you may need to build the system and task someone to track any metrics you introduce. You may consider basing a portion of employee pay on incentives and the rest on labor time or salary to make sure that employees do not shirk on non-incentivized responsibilities and lessen the number of metrics that you need to track.

There are some other structural considerations to pay for performance models that I'm happy to discuss if you are interested.

I'll wrap my response by discussing alternative ways to help you manage your time management problem. Individual employee skills, the definition of roles and responsibilities, ways of working/teaming, and management structures are important to assess in your business for potential areas of weakness. If any one of these is not optimal, you naturally are going to feel the need to get involved more to manage the day to day. Think about whether you need to introduce training, segment responsibilities between employees, define models for collaboration, or introduce more leadership opportunities for your employees to step up to and help reduce your managerial workload.

I hope this helps! I am happy to discuss this topic with you further if you have questions. Feel free to message me if you are interested.

JF

Report Jonathon's answer

Note: your identity will not be shared with the person who sent you this message.
This field is required

Hi Ryaan,

A 14% growth rate per month is really a dream, not sure what the absolute numbers are though. This growth will need quick ramp up for next few months. Any change, specially in compensation need to be carefully thought not only for new employees but existing employees too.

You will have to work overtime to manage this growth stage that will have other challenges as well.

Regarding performance linked pay, you can have a part of the compensation as variable pay based on performance. You can think performance at multiple levels as organization performance, team performance and individual performance, and give weight based on what you want to encourage. You could give option to existing employees to switch to this model, and create some gains for them.

The important thing to consider is how simple and objective you can make the performance measure such that there is a buy-in by the employees. When done well, it can really work wonders.

Let me know if you need specific inputs in this regard.

regards

Report Amitava's answer

Note: your identity will not be shared with the person who sent you this message.
This field is required