Alcohol Retail Column: Incentivizing Your Staff Works

Last fall we went to the university in Fayetteville, NC, to watch a football game. We had been invited to participate in a tailgate party that was to last all day. As we enjoyed the cookout, our host told of having parked at this location for many years. He went on to explain how he had been moved from one area of the acreage to another.

What caught our attention was his comment about the years when a bank had reserved a sizable part of the area for their employees. Knowing what our friend had paid for his parking area, the expenditure by the bank was quite sizable.

We were very surprised when our friend explained that for all the time the bank rented their area, not a single employee had ever used it.

Incentives, rewards and bonuses work only if they mean something to the employee. But aren’t all three just different ways of saying the same thing? No!

There is a difference. With a bit of clarification, you can make all three work for you and your store.

We first look at the “bonus.” A bonus is a gift to your employee. There should be no schedule or expectation to an employee receiving a bonus. Perhaps everyone pitched in to help decorate the store for Christmas. Treating everyone to dinner by having it delivered could be a bonus. The bonus does not have to go to everyone. The bonus does not have to tie to any particular deed or action. It is simply a way of appreciating an employee.

A “reward” is for an employee doing something that is unique. Perhaps it is for solving a problem. In either case, it is something that creates a substantial benefit for the store.

In the case of our store, we had an employee who found a way to produce significant savings with the cooling and heating system. The savings came when this person found a way to install a timer on the system. This eliminated the occasion when someone left the system on all night.

In our business this person received a sizable check for their effort. And the check was announced and handed to this person in front of all their co-workers, as a way of showing to everyone that we appreciate the extra efforts.

Perhaps, the “incentive” is what most of us think of. With incentives there are recognizable goals and measurements. Employee are told what it takes to earn the reward and how to do so. An incentive is like a game. You will find employees that want to participate because they want to win the incentive. Unfortunately, many of us find employees who would rather ask you to give them a pay increase. With incentives, you find out who understands what you want to achieve in your store and who is willing to work to achieve it. Incentives can be given to individuals as well as to a group of employees or all employees.

We offer a simple formula for establishing how an incentive works in your business. Is your goal a sales increase? Decreasing shoplifting? Diminishing expenses?

With each of these you should be able to determine a dollar amount for the value to your business. The second step is determining which employees are achieving that goal for your business.

Offered only as an example, perhaps you will take half of the value of the goal and divide it between those employees who make it happen. The other half of that money goes to the store. A sizable portion should go to your store because there is no reason to achieve a goal without your business having some benefit.

One last point. When I have explained the bonus, reward and incentive to a store owner, I have heard a response of, “I refuse to give something to an employee for doing something I am already paying them to do.”

My answer is, “I agree with you. And when you find a way to get all you want out of your employees without any of these three, call me. I would like to come watch as I would want to write a book about you and your store.”

I am still waiting for the first call. You can make a reward, bonus and incentive work in your store.

Tom Shay is a lifelong small-business owner and manager. He has authored 12 books on small business management; a college textbook on small business financial management and co-authored a book on retailer/vendor relations. Read his recent piece, Lessons from a Piece of Pie.

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