Small businesses have the most to gain and the most to lose in the marketplace of talent because one employee makes up a much larger portion of the team. Without the infrastructure to buffer the failings of an underachiever, small businesses can live or die on just a few hires.

So why do managers in small businesses give so little thought to how they reward (and thereby attract) talent? My experience is that these managers think they lack the resources for competitive compensation, but what they really lack is imagination.

Talented employees don’t need a complicated “Compensation and Incentivisation Program.” They need rewards. Done properly, this gives you the tools to attract great talent and to develop your employees. Fortunately for managers in small businesses, one only needs a few kinds of tools:

Salary, Wages, Benefits

This is what you give employees for showing up on time, working as part of the team and not screwing anything up terribly. Sadly, this is the beginning and end of most “Compensation and Incentivisation” packages. Since it’s the baseline, it only encourages baseline behavior.

Performance-based Rewards

Most fast-talking, book selling “management gurus” like to call this “incentivizing” employees. I chose not to call it that because the ideas and culture that have grown up around the term are limiting. Performance-based rewards are useful for any behavior you can measure and track responsibly. Sales Commissions are a good example, but unfortunately most businesses stop there.

Example

A common performance-based metric in service and repair businesses is turnaround or time-to-completion. The faster you repair a customer’s car, computer, or appliance the happier the customer is. In scope-limited, repetitive tasks, employees can be rewarded for getting faster. In variable-scope tasks employees can be rewarded for the degree to which they surpass a productivity baseline.

Warning

Performance-based rewards can be powerful, but consider what you measure very carefully because quantitative metrics will always sacrifice a qualitative human factor. You need to balance this with other rewards or corporate culture.

Warning Example

Because shorter support calls mean shorter wait times, nearly every call center on earth tracks and rewards call times (that is to say, they fire reps with long times). But fast Reps are likely to be terse to the point of curtness and focused on closing the call quickly, not on empathy or customer experience.

Targeted Rewards

Encourage positive behaviors that cannot be easily or responsibly measured. That may seem challenging, but it is by far the easiest reward to implement. Pick out a handful of positive behaviors or positive outcomes and publicly share competitions or rewards for them. You won’t be able to find these behaviors in your timekeeping or business process systems, you have to actually work with your employees and customers to find them. Anything that you’ve had to repeat in staff meetings is a candidate for a targeted reward.

Example

Errors in pricing and informational signage are embarrassing and potentially costly for a retail business. Reward employees for pointing out errors, discrepancies, or out-of-date information. Don’t give away the farm, but make sure your rewards scale with the value of the behavior.

Spontaneous Rewards

Encourage positive behaviors or outcomes that you have not stated–or even decided upon–in advance. This requires constant vigilance on the part of managers, but can pay off in a big way. I’ve noticed that spontaneous rewards are most effective when they’re frequent, small, and non-monetary: two movie tickets are often more appreciated than a $20 bill.

Spontaneous rewards also have a valuable ripple effect: they encourage employees to look for and practice new types of behaviors–often subconsciously–in hopes of earning a reward. To capitalize on this you must recognize behavior regularly, or you’ll lose momentum and instead encourage dissatisfaction among employees: they will think, and rightly so, that your rewards were all lip service.

Example

An employee stops in the parking lot to pick up trash in front of your building on the way in. It demonstrates that the employee cares about the business: that it is clean and well-perceived. A targeted reward for this would be unmanageable or dangerous (encouraging coordinated littering and cleaning) but the positive impact on your culture and business as a whole is worth recognizing and the attitude behind it worth cultivating.

Here are a handful of questions that just about any business could answer:

1. How did you choose your location?
2. How do you set your pricing?
3. What is your marketing strategy?
4. How do you set staffing levels?
5. How do you set your compensation packages?
6. How are you different from your competition?
7. How did you settle on your technology infrastructure?

Here is one question very few businesses can answer:

1. How does your corporate culture contribute to your profitability?

Actually, that was a little disingenuous. A good many businesses can answer that question, but the answer is “It doesn’t.” Not because culture and profitability are unrelated, but because their relationship has been given no thought.

If you could make employees more productive by removing workplace conflict and confusion about expectations, would you do it? If your employees looked forward to Monday morning, would they hit the ground running and work harder? If employees enjoyed their jobs, would customer service improve? If your employees were excited about your direction as a company, would your customers notice?

If you employ human beings, then your corporate culture is important. It’s also hard. Harder than any of the items on the list above because people are much more complicated than a technology infrastructure. But if you don’t leave your location, pricing, or marketing to chance, why would you leave your culture to chance?

The Mission-less Statement or Mission-less Business?

I’ve mentioned worthless mission statements in the past, but this week I had the extreme misfortune of encountering a wholly unremarkable business with the following “mission statement:”

Our Foremost Mission is to Empower our Customers with Solutions through Trust and Knowledge and Provide Experience above and Beyond Expectations.

Capitalization aside, is it any wonder that there was nothing about this company worth remembering? Is this a product company or service company? Business, Education, Government or Consumer focused? In what industry?

This mission-less statement feels like the kind of thing a business should say, it contains all appropriate buzzwords, and is properly paced. But it says nothing; it’s worse than nothing. It obscures all meaning, feigning communication with meaningless business-speak.

There is a chicken and egg question here: do wholly unremarkable businesses write wholly unremarkable mission statements or do wholly unremarkable mission statements create wholly unremarkable businesses?

The answer, of course, is “Yes.” Or, to be for a moment less cynical, “They correlate, of course.” If a business doesn’t have a succinct purpose is it any wonder that it grows amorphous, fumbling in the dark?