Small business promotion with retail speaker Tom Shay
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It's All Fun and Games

Developing a system of rewards for your employees

Many retailers have told us that they use a "traditional" method of establishing starting pay and pay increases for their employees - the traditional method being to have a starting pay that competes with other retailers. Some stores give annual reviews, some have bonuses
at year's end, but few have a program that ties payroll to sales and profitability. Take a look at this profitable business that has developed a very talented staff.

Employees are required to attend a bi-weekly staff meeting. They are shown sales techniques, merchandising and displaying as well as learning more about the products they sell. The staff meeting is also an excellent opportunity to review goals and enjoy the rewards of their efforts. Each of the employees has an assigned area of the business for which he or she responsible. Newer employees have a more experienced team member available to give them direction and assistance.

The owner explains that previously they made a point to review payroll every six months. They looked at longevity, how the employees were performing on the sales floor, and how they managed their assigned area. A pay raise was merited if there was an increase in productivity or if they had been assigned additional duties.

While the owner continued reviewing payroll every six months, he began to do so using some new tools. Each employee was asked to review him or herself in 10 categories. The owner reviewed the employee using the same form. During the review, the employee and employer created a list of goals that they wanted to have accomplish. Together they agreed on expected completion dates for each goal. The goal sheet was kept in the team member's file for easy referral in the coming weeks and months.

Each month, there were also a number of opportunities for each employee to receive bonuses. Because the owner was into sports, each of the opportunities was called a "game." The first game dealt with overall sales goals. The goal for each month was a 4.5% sales increase over the same month the previous year. When the business surpassed this goal, the owner took 4% of the gross increase over goal and divided it among the employees according to the number of hours they worked during the month. Sales were tracked and posted to a bulletin board on a daily basis so employees could keep track of their efforts.

The second game of financial reward was one of bonus items for add-on sales. Certain products that were not usually selected by customers had a bonus paid to the team member who suggested and sold the item. The first item was usually what the customer came to our store to buy. The second item was the "add-on" sale. When an employee sold the pair, he or she was entitled to the bonus - usually $1 to $5.

With the first two games, bonuses were given during the bi-weekly staff meetings. With a bit of flash and show, the owner rewarded those who had accomplished the goals, with all employees seeing how much each other received. Those team members who did not achieve in any of the games had to settle for their base pay.

The third game of reward, like the first, was one in which everyone participated equally. The goal was to increase the average sales ticket by $1. Like the first game, progress was tracked on the office bulletin board. The owner commented about how often his employees checked the bulletin board to see how they were doing. When they increased the average sales ticket by $1. for the month, the owner would then employ the services of one of his customers. The instructor of culinary arts at the nearby vocational school prepared a steak dinner at the owner's home for all of the employees, their spouses and families.

This owner also used games to resolve problems. One situation they experienced dealt with their office manager and the amount of time necessary to perform the daily audit of each of their cash registers. Creating a score sheet, the office manager kept track of which cashiers were most efficient. Those cashiers with an acceptable score were rewarded with a 35-cent-per-hour bonus. Not surprisingly, this worked well to resolve the problem, and that freed the office manager to perform other duties.

The greatest benefit this owner saw from their "fun and games" was having employees understand that customers and their purchases are what drive the business. They knew how pay raises were created, and how to earn them.

Tom Shay is a fourth generation small business owner providing proven management and business building ideas through his Profits Plus Seminars, Profits Plus Solutions coaching, books authored, and articles written. Tom can be reached at 727-464-2182 or through his web site:

Profits Plus Solutions, Inc.
PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179