fbpx
SME Toolkit Caribbean Logo
No Result
View All Result
  • Contact
  • Starting Up
    • All
    • Business Planning
    • Starting a Business
    business owner surprised at start up business mistake

    A Brave New Entrepreneur for A Brave New World

    business checklist of things to look out for

    Things Entrepreneurs Should Watch Out For

    step by step business plan creation

    A Great Business Plan

    businessman using calculator seated at a table with spreadsheets

    Commingling – The New, ‘Dirty’ Word in Banking

    two young business owners give high five after they set up business

    How to Start a Business in Ghana

    entrepreneurs successfully open their business

    Top 10 Dos and Don’ts for Entrepreneurs

    business owner surprised at start up business mistake

    Start-Up Mistakes

    Building Your Business Series – Part 1

    Building Your Business Series – Part 1

    Building Your Business Series – Part 2

    Building Your Business Series – Part 2

  • Managing Growth
    • All
    • Accounting & Finance
    • Operations & Technology
    • People & Culture
    • Planning for Growth
    • Sales & Marketing
    finding business location on map online

    Business Location and Leasing Rules

    business owner thinking of expanding their business

    Rules for Business Expansion

    business owner holding ipad with cash flow icons floating

    Managing Your Cash Flow to Help Your Business Grow

    A businessman presenting in front a diverse group of professionals

    The Creditworthiness of Your Business

    A businesswoman selecting a Mortgage Approved business concept on a futuristic portable computer screen

    How Bankable is Your Business?

    employees give high five in office

    Ways to Motivate Key Employees: Reward and Recognition

    business owner facing problems

    Common Business Problems and Basic Rules to Handle Them

    business owner making cold calls

    Making Cold Calls

    section of a printed job description

    Creating an Effective Job Description

  • Scaling Up
    • All
    • Growth Finance
    • Operations & Technology
    • People & Culture
    • Planning for Scale
    • Sales
    Get Ready to Sell Online

    Get Ready to Sell Online

    young business woman sitting on sofa planning her insurance

    Top 10 Do’s and Don’ts of Insurance

    Insurance Coverage for Small Businesses

    Insurance Coverage for Small Businesses

    Effective Strategies for Closing the Sale

    Effective Strategies for Closing the Sale

    Guide to Preparing Your Cash Flow Projection

    Guide to Preparing Your Cash Flow Projection

    Creating a Business-Friendly Environment – Part 2

    Leading with Integrity; Leading by Example

    Integrity and the Entrepreneur at Work

    Integrity and the Entrepreneur at Work

    Creating a Business-Friendly Environment – Part 2

    Creating a Business-Friendly Environment – Part 2

    Creating a Business-Friendly Environment – Part 2

    Creating a Business-Friendly Environment – Part 1

  • COVID-19 Resources
    • All
    • Accounting & Finance
    • Business Planning
    • Managing Growth
    • Starting Up
    Stay Connected

    Staying Connected in the New Normal

    Rediscovering the leader

    Rediscovering the Leader From Within

    Personal Brand Development: What’s Your Story?

    Personal Brand Development: What’s Your Story?

    Customer Focus

    How Customer Focus Can Drive Innovation

    fair leadership

    Fairness in Leadership

    Coping with Covid

    Coping with COVID-19

    Online only

    Can Caribbean Banks Embrace Online Banking Only?

    business checklist of things to look out for

    Things Entrepreneurs Should Watch Out For

    business owner surprised at start up business mistake

    Start-Up Mistakes

  • Webinars
    • Home-Owner’s Guide To Securing A Mortgage
    • Getting Business Credit From Your Bank
    • Succeeding in the Low Touch Economy
    • Get Going With Ecommerce
    • Mindset To Success
  • Sustainable Development
    • Building Resistance to Disruption
    • Creativity and Sustainable Societies
  • Business Videos
SME Toolkit Caribbean Logo
  • Starting Up
    • All
    • Business Planning
    • Starting a Business
    business owner surprised at start up business mistake

    A Brave New Entrepreneur for A Brave New World

    business checklist of things to look out for

    Things Entrepreneurs Should Watch Out For

    step by step business plan creation

    A Great Business Plan

    businessman using calculator seated at a table with spreadsheets

    Commingling – The New, ‘Dirty’ Word in Banking

    two young business owners give high five after they set up business

    How to Start a Business in Ghana

    entrepreneurs successfully open their business

    Top 10 Dos and Don’ts for Entrepreneurs

    business owner surprised at start up business mistake

    Start-Up Mistakes

    Building Your Business Series – Part 1

    Building Your Business Series – Part 1

    Building Your Business Series – Part 2

    Building Your Business Series – Part 2

  • Managing Growth
    • All
    • Accounting & Finance
    • Operations & Technology
    • People & Culture
    • Planning for Growth
    • Sales & Marketing
    finding business location on map online

    Business Location and Leasing Rules

    business owner thinking of expanding their business

    Rules for Business Expansion

    business owner holding ipad with cash flow icons floating

    Managing Your Cash Flow to Help Your Business Grow

    A businessman presenting in front a diverse group of professionals

    The Creditworthiness of Your Business

    A businesswoman selecting a Mortgage Approved business concept on a futuristic portable computer screen

    How Bankable is Your Business?

    employees give high five in office

    Ways to Motivate Key Employees: Reward and Recognition

    business owner facing problems

    Common Business Problems and Basic Rules to Handle Them

    business owner making cold calls

    Making Cold Calls

    section of a printed job description

    Creating an Effective Job Description

  • Scaling Up
    • All
    • Growth Finance
    • Operations & Technology
    • People & Culture
    • Planning for Scale
    • Sales
    Get Ready to Sell Online

    Get Ready to Sell Online

    young business woman sitting on sofa planning her insurance

    Top 10 Do’s and Don’ts of Insurance

    Insurance Coverage for Small Businesses

    Insurance Coverage for Small Businesses

    Effective Strategies for Closing the Sale

    Effective Strategies for Closing the Sale

    Guide to Preparing Your Cash Flow Projection

    Guide to Preparing Your Cash Flow Projection

    Creating a Business-Friendly Environment – Part 2

    Leading with Integrity; Leading by Example

    Integrity and the Entrepreneur at Work

    Integrity and the Entrepreneur at Work

    Creating a Business-Friendly Environment – Part 2

    Creating a Business-Friendly Environment – Part 2

    Creating a Business-Friendly Environment – Part 2

    Creating a Business-Friendly Environment – Part 1

  • COVID-19 Resources
    • All
    • Accounting & Finance
    • Business Planning
    • Managing Growth
    • Starting Up
    Stay Connected

    Staying Connected in the New Normal

    Rediscovering the leader

    Rediscovering the Leader From Within

    Personal Brand Development: What’s Your Story?

    Personal Brand Development: What’s Your Story?

    Customer Focus

    How Customer Focus Can Drive Innovation

    fair leadership

    Fairness in Leadership

    Coping with Covid

    Coping with COVID-19

    Online only

    Can Caribbean Banks Embrace Online Banking Only?

    business checklist of things to look out for

    Things Entrepreneurs Should Watch Out For

    business owner surprised at start up business mistake

    Start-Up Mistakes

  • Webinars
    • Home-Owner’s Guide To Securing A Mortgage
    • Getting Business Credit From Your Bank
    • Succeeding in the Low Touch Economy
    • Get Going With Ecommerce
    • Mindset To Success
  • Sustainable Development
    • Building Resistance to Disruption
    • Creativity and Sustainable Societies
  • Business Videos
No Result
View All Result
SME Toolkit Caribbean Logo
No Result
View All Result
employees give high five in office

Ways to Motivate Key Employees: Reward and Recognition

Adapted from content excerpted from the American Express® OPEN Small Business Network

0
SHARES
ShareTweetLinkedinMail

Let’s first set a definition of recognition: It is creating a business structure where your key employees are given authority and responsibility, which is tied to profit and accountability. This becomes a “profit center” that the key employee manages. Each profit center has separate profit and loss accountability, which is determined frequently. (Many fast food stores operate on weekly profit and loss statements!) The idea is to create an atmosphere where your key people feel they have entrepreneurial decision-making authority and are paid incentive compensation based on their own center profits. But, they are not given authority in two non-delegated roles, which remain your sole responsibility:

  1. Capital expenditures
  2. Signing checks

 

This suggests that your key people will be given enough latitude in operating their profit centers that they might make some mistakes.

By the two restrictions stated above, plus frequent financial reporting, you can recruit well-motivated managers and at the same time limit your exposure to big losses.

Obviously, the incentive plan must be tailored to each business situation and be based on the profit and loss report of the individual’s separate responsibility.

By rewarding managers through profit participation, you create the engine that will drive your managers to success. And, the greater their success (and reward), the more your overall business will benefit.

Here are three types of plans (there are many) that have been used to structure a manager’s incentive:

Leveraged profit sharing plan

Managers receive all, or a large part of, unit earnings over a fixed target. This has been used successfully by fast food chains that are company owned and operated (rather than franchised units). Here is an example of a simplified weekly income statement of a donut shop that is operated by a company employee-manager. This plan is “leveraged” because every penny saved becomes a penny going into the manager’s bonus check.

Sales $5,000
Wages $1,500
Purchases $1,500
All other expenses (including co. profit) $1,500
Total expenses $4,500 $4,500
Weekly profit and manager bonus: $500

Unleveraged profit sharing plan

In this case, your manager receives a percentage of earnings of his or her profit center. Here is an example:

Sales $5,000
Wages $1,500
Purchases $1,500
All other (actual) expenses $500
Total expenses $3,500 $3,500
Net profit $1,500
Manager bonus @ 10%: $150

Commission plan

In this plan, the manager receives a percentage of sales for the accounting period. Assuming, as above, that sales for the period are $5,000 and the commission is 5%, the compensation would be $250. In many instances, commission incentive is not appropriate because it does not include provisions for expenses. Your manager could get rich while you go broke. But commission incentive can work well when the manager does not control pricing. Salespersons in a retail-clothing store would be a good example of a commission structure.

 

Copyright © 1995-2016, American Express Company. All Rights Reserved.

How useful was this post?

Click on a star to rate it!

Related Articles

Related Posts

finding business location on map online
Managing Growth

Business Location and Leasing Rules

September 13, 2019
business owner thinking of expanding their business
Managing Growth

Rules for Business Expansion

September 13, 2019
business owner holding ipad with cash flow icons floating
Accounting & Finance

Managing Your Cash Flow to Help Your Business Grow

September 13, 2019

Must Read Articles

Episode 8: Get Organised for the Future
Business Bites

Episode 8: Get Organised for the Future

December 10, 2020
Episode 7: Pitfalls to Avoid While Your Business Grows
Business Bites

Episode 7: Pitfalls to Avoid While Your Business Grows

December 10, 2020
Episode 6: Best Advice for Young Businesses
Business Bites

Episode 6: Best Advice for Young Businesses

December 10, 2020
Episode 5: Plan for the Worst Case Scenario
Business Bites

Episode 5: Plan for the Worst Case Scenario

December 10, 2020

Popular

Business Bites

Episode 8: Get Organised for the Future

December 10, 2020
Business Bites

Episode 7: Pitfalls to Avoid While Your Business Grows

December 10, 2020
Business Bites

Episode 6: Best Advice for Young Businesses

December 10, 2020
Business Bites

Episode 5: Plan for the Worst Case Scenario

December 10, 2020
Business Bites

Episode 1: Planning for Risk in the New Environment

December 10, 2020
Next Post
two young business owners give high five after they set up business

How to Start a Business in Ghana

Business Stage

  • Managing Growth
  • Starting Up
  • Scaling Up
  • COVID-19 Resources
  • Business Bites

Key Topics

  • Accounting & Finance
  • Business Planning
  • Operations & Technology
  • People & Culture
  • Planning for Growth
  • Sales & Marketing
  • Starting a Business

Additional Links

  • Webinars
  • Contact
  • Privacy Policy
  • Terms

© 2021 Republic Bank Limited. All Rights Reserved.

No Result
View All Result
  • Starting Up
  • Managing Growth
  • Scaling Up
  • COVID-19 Resources
  • Webinars
    • Home-Owner’s Guide To Securing A Mortgage
    • Getting Business Credit From Your Bank
    • Succeeding in the Low Touch Economy
    • Get Going With Ecommerce
    • Mindset To Success
  • Sustainable Development
    • Building Resistance to Disruption
    • Creativity and Sustainable Societies
  • Business Videos

© 2021 Republic Bank Limited. All Rights Reserved.

Cookies

We use cookies to improve your browsing experience on our website, to analyse our website traffic, and to understand where our visitors are coming from. By continuing to browse our website, you consent to our use of cookies. Find out more.