A great post from Workforce Management answers this question as follows:
Don’t hide the truth. Be open and honest about your current economic condition,
and explain to your employees why pay increases are not being offered.
Be sure you place extra focus on praising each individual for their positive
efforts and responsibilities they handled successfully. For those who have areas
where improvement is needed, be ready with a detailed development plan that you,
as their manager, will provide and/or coordinate.
Focus on the company’s future plans for rewarding their efforts. A goal-driven
bonus, such as a certain level in sales, a specific number of outbound calls or
company profits, will likely motivate them to work toward that goal.
Identify your top performers, or those employees who you feel are most important
to the company’s future success, and consider sharing a more promising approach
that involves higher rewards for these individuals...
The one common theme here is communicate. Communicate. Communicate.
Openly, openly, openly.
And, answer the three questions in everybody's mind:
- What's in it for me?
- Security, such that it is these day;
- Respect
- Data to make the right decisions
- A foundation of trust and openness for the future
- Why should I care?
- Because the company cared enough about you as a valuable stakeholder and as an adult to engage with you in an adult conversation.
- Why should I believe?
- Faith is what's needed when data is incomplete. The only data missing in a plan like this are the future results. The company shares current data and its impact. A plan is created, together, with reachable goals and meaningful rewards. And now, a little faith is needed.
I'm not keen on the 4th point in their answer. Inevitably, those talks are heard around the company.
It's a redundant step that's ultimately counter-productive. The content of this point is included in the previous point about future plans. Top performers have higher expectations and higher rewards, regardless. Your plan should reflect those expectations and rewards on a consistent basis. And it should be a reward plan that can be shared with everyone.
One solution:
- Create company-wide awards for overall profit, revenue or cash-flow goals.
- Create a goal for reducing expenses within each department.
For instance:
- a 10% increase in positive cash-flows generates a one-time 10% increase in current incentive bonus based on those cash-flow results.
- a 10% decrease in overhead expenses for a department generates the same one-time bonus for those in that department.
These are metrics you can share publicly to engage, inspired, enlist everyone's ideas and energy in reaching these goals. You'll create volunteers out of employees.
And...the rewards are public, consistent, but without revealing the detailed, confidential and delicate information about...salaries.
This way, everyone is incented to work together towards corporate goals.
And within each department, the opportunity exists to innovate more solutions and be rewarded for those results.
What solutions have you seen or created?
What's your company doing to keep your best talent in this current economy?
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