How to Incentivise Employees in a Small Business

In our latest blog Neil McLeese, Director at BeyondHR, explains what you need consider when thinking about how you can incentivise your employees.

Good news! Money isn’t everything…

Professor Adrian Furnham wrote in The New Psychology of Money: “Psychological research has consistently suggested that where money has motivational power it is nearly always negative”.  The main reason for this is that money crowds out our innate desire to do a good job and leads to behaviours that work against employers’ interests.

Don’t get me wrong, financial reward is important but only to a point.  People expect to get paid the ‘going rate’ for the work that they do but if you want to motivate your employees to deliver your organisational objectives you need to introduce incentives that influence their intrinsic motivations (i.e. their innate desire to do a good job).

There are never ending possibilities on the different practices you could introduce to create this influence.  But because each small business is different I have outlined the principles I think you should consider:

• Employee Involvement

People generally feel more motivated and incentivised when they feel involved in something and feel like their opinion is listened to. Largely this involves meaningful two-way communication and where “employees views are sought out; they are listened to and see that their opinions count and make a difference. They speak out and challenge when appropriate.”  It isn’t by accident that a government commissioned study identified this point as one of the pillars of employee engagement.

As a business owner it can be daunting to seek out opinions of your employees because you might well disagree with your employees’ opinions. Thankfully, research has shown that it is the fact that opinions are sought out, rather than whether or not they are actioned, that is the motivating factor.  However, if you do disagree, it is important to explain why you disagree so you are not perceived as you ignoring employee opinions.

Another part of meaningful communication is making sure that you communicate your vision for the business and how each employee fits into that plan.  That way employees can buy into what you are trying to achieve and will understand how they can help achieve success.

• Development Opportunities

Generally speaking, people want to develop and grow their skills.  This means that they may move jobs every few years in order to develop their portfolio of skills.  As the leader of a small business you will want to try and maximise your retention rate while ensuring that employees have the skills to meet the current challenges as well as developing skills that may be needed in the future.

This can either be in the way of formal training, in-house / on the job training or development projects. While formal training is sometimes necessary in order to get a fundamental grasp of a subject area it is worth pointing out that are many opportunities for development in a small business. Through your conversations (or appraisals) with employees you may be able to ascertain what their ambitions are. Keep this information in mind and try and get them involved in areas / projects that can help develop their skills. 

The following exchange sums up the importance of employee development:

CFO: “what if we spend our time and resources developing our employees and they leave?”

CEO: “what if we don’t train them and they stay!”

• Flexibility

I’m sure everyone has heard the saying ‘you can make more money, but you can’t make more time.’ With the hectic pace of life, more employees than ever are struggling to find the time for family, friends and hobbies.

By offering your employees some flexibility in hours, or perhaps the ability to work from home occasionally, you’re acknowledging that you know they have a life outside of work.

Even if you can’t offer your employees benefits like everyday core hours or work-from-home days, you might still be able to grant some flexibility. Even being understanding when a family emergency happens or when their car breaks down can make the difference between fostering loyalty to your business or sending your employees back to the job boards.

• Recognition

Nothing is more discouraging than working hard on a project, only to have your hard work ignored and unnoticed.

You should provide your employees with recognition for their hard work on a regular basis. Don’t let a hard worker spend weeks or months thinking you didn’t notice when he or she helped with a new product launch or went above and beyond the call of duty when helping with an emergency.

BeyondHR are a team of professional HR Consultants with offices in Northern Ireland and Scotland. We have more than 25 years’ proven experience of providing HR advice for employers including employment law support through our range of outsourced HR services and HR projects. If you would like more information on this blog please do not hesitate to get in touch.