Rewarding Employees: Setting Goals And Bonus Structures

When questioned about the things that satisfies most employees, they will typically list items tied into compensation, such as their salary, bonuses, and access to quality health insurance. 

Workable, a job recruiting site, conducted a survey that found the top motivator for employees is compensation. “While factors like fresh challenges and work flexibility matter, compensation remains the top attractor and area for improvement in current jobs, underscoring its importance in employee satisfaction.”  

In fact, 63 percent of respondents say compensation, which includes bonuses, are the most important thing that will keep them at their job.  

Christina Rita, COO of StoragePRO Management, Inc., in Walnut Creek, Calif., says her company understands the importance of compensation. “We like to do a pay survey to ensure we are where we should be when it comes to compensation,” she says. “We look at both internally and externally.”  

Performance-Based Practices 

Once your company has determined starting salaries for various positions, it’s time to analyze performance. Most companies set up periodic formal performance reviews that could be monthly, quarterly, or at the very least, annually. However, many companies check their employee’s work constantly through reviewing reports. “Our area managers are reviewing job performance constantly and are providing regular feedback,” says Sarah Beth Johnson, vice president of sales and development for Universal Storage Group (USG) in Atlanta, Ga.  

USG employees meet once a month on video conference, which allows area managers and training managers to address issues overall. The employees also have an opportunity to talk to one another about issues. Additionally, employees meet once a year for an in-person conference.  

If you’re not checking in weekly or monthly, experts agree it should be at least once a quarter. “I think you should follow up with employees at least every three months,” says Carol Mixon, president of SkilCheck Services, Inc., in Tucson, Ariz. “If you don’t, some things will fall through the cracks and become bigger issues if you let them go.”  

Mixon talked to one facility employee who hadn’t seen an owner in three years. “No feedback from them, no raises, nothing,” she says. “I know many people are afraid of talking to their employees, giving them feedback as they’re afraid their manager may quit, but if you don’t address things, they will just keep getting worse.”  

Annual Reviews And Raises  

Most companies base pay raises on a formal annual review. If you’re keeping in regular communication with your store managers, what you say in the annual review should come as no surprise, say our experts.  

The first step in reviewing your employees and giving pay raises is ensuring everyone understands your expectations of them. “We set a wide criterion for expectations; everyone needs to know the expectations and that they’re all on the same playing field,” says Jay Catrib, director of business support for Pogoda Management Company in Farmington Hills, Mich. “You can’t base salary on seniority or if you like them. We use best practices.”  

Lou Barnholdt, vice president of sales and development for Universal Storage Group, says their annual reviews are conducted at the same time each year “Our area managers start working on annual reviews in February and March, and if there is a pay increase, it takes effect in April,” she says. “We make sure there is clear communication and provide feedback.”  

USG’s goals include:  

• Meeting or exceeding income expectations for the property 
• PMG (Personal Marketing Goals)  
• Google Reviews  
• Reporting in on time and accurately  
• Complying with the six company core values  

StoragePRO’s are goal driven as well. “We previously gave them a rating one to five in their reviews, but we found that really wasn’t efficient in addressing the goals we have,” says Rita. “We now focus on three or four smart goals for each person.”  

Natolie Ochi, president of SKS Management LLC in Pleasanton, Calif., says they broach reviews in a more non-conventional manner. “We used to do formal reviews, but that is now seen as out of fashion,” she says. “We prefer to do casual check-ins. We have them write about themselves and what they would like to learn. If we coach it that way, it makes it less stressful.”  

It also helps the company learn more about their employees. “Through that process we learned one of our managers was working on an accounting degree; now they are working in our accounting department,” Ochi says, adding that 47 percent of their employees have been with the company more than 16 years.  

When you conduct the review, most of our industry experts agree you should:  

• Have the employee review themselves prior to the review. This allows them to self-evaluate and help identify improvement measures.  
• Meet in person, if possible.  
• Document the exchange in writing. 
• If there are elements which can be improved, make sure you line those issues out with the employee and they understand the expectations as well as the timeline in which to correct the issue(s). 
• End the exchange with clear direction and making note of what they are doing right. 

Advantages Of Bonuses  

Compensation doesn’t have to be just about the base salary. “Salary raises are for meeting expectations; bonuses are going above and beyond,” says Mixon, who mentions that bonuses at her company are based on mystery shops. “They have to do well selling on the phone to earn a bonus.”  

In the early days, USG gave their managers a $10 bonus per lease, but it is now tied into a budget and monthly revenue. “We give our managers a workbook and they can track their progress for making their bonus throughout the month,” says Johnson. “There is no guessing. You must make it easy to understand. If you don’t, they will just give up.”  

Pogoda’s employee bonuses are based on goals set by the company each year. “Our bonuses give our employees a piece of the pie,” says Catrib.  

Indeed, it’s important to make employees feel like they have ownership in the business. “Employees have to feel empowerment in their jobs as well as that they’re appreciated,” Ochi says, adding that employees at her company receive quarterly and annual bonuses. “The quarterly bonuses are for immediate gratification; many younger people expect immediate gratification. There are some companies even doing bonuses weekly.”  

Bonuses don’t necessarily have to be cash. “I will give managers a budget to spend to buy the office pizza if they’re doing a good job,” says Ochi. “We even did those butterfly cakes where butterflies come out of the box. Anything to show we appreciate them.”  

Helping Underperforming Employees  

Here are some tips to help underperforming employees:  

• Send an area manager to the property to role play scenarios with the manager.  
• Set up special training based on the manager’s preferred method of learning. 
• Pair the employee with a mentor. Sometimes managers learn better through networking with a mentor who is on the same level.  
• If you are a small company, take advantage of state association programs, as well as their mentoring programs.  

Despite utilizing various methods for increasing salaries and giving bonuses, these industry experts agree on two fundamentals: Employees should always be aware of the employment expectations and bonus structures must be easy to understand.  

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Kerri Fivecoat-Campbell is a freelance journalist based in the Ozark Mountains. She is a regular contributor to Messenger. Her business articles have also appeared in Entrepreneur, Aol.com, MSN.com, and The Kansas City Star.