Managing a team of driven people is a complicated task. Each person has their own talents they bring to a group of workers trying to accomplish a collective goal. Tying individual performance directly to rewards is one approach to motivating employees to get their work done. Discover why and how this approach works when it comes to rewarding goal-oriented tasks.
Defining Individual Performance
The key to measuring individual performance is to create a system where each person has clearly defined goals. Managers must outline precisely what goals must be met, and in what time frame, for performance-based pay to work properly. Once an employee reaches that goal, he earns the reward specifically spelled out in a contract.
Examples of Direct Individual Performance
Piece work represents one clear example of tying a worker's performance directly to rewards. Think of a factory floor where employees make wooden rocking chairs. Perhaps Steve makes one rocking chair for every three hours and earns $60 per rocking chair. That hourly wage comes out to $20. Suppose Steve becomes really good at making these rocking chairs and gets his time down to two hours. Now, Steve earns $30 per hour.
Sales have a similar background as piece work. Stacey sells a $100 vacuum, and she earns a commission of 10 percent on that vacuum which is $10. If Stacey sells two vacuums per hour, her commission is $20 per hour on top of an hourly wage. The more she sells per day, the higher her wages.
Why This System Works
This reward-based system works because it empowers employees to develop their own ways of working. Steve and Stacey create their own methods for getting more work done in a more efficient manner. Their wages do not change, but their bonus amounts do. Having this type of bonus system in place saves companies money by reducing hourly wages, but it also benefits employees by giving them the freedom to make as much money as they want to.
Work Hard at Managing the Team
As a business professional, this type of reward system takes hard work and dedication to maintain. First, you must set absolutely clear goals for everyone on the team. You have to give each individual the tools they need to succeed through training, development and technology. Keeping accurate records is crucial, because you must monitor every individual's performance, goal and reward to ensure each employee gets a fair chance to earn bonuses.
Resourceful managers need to give everyone a way to work with easier-selling products versus ones that aren't as marketable. For instance, if Stacey's job one week is to cold-call sales prospects for a product that doesn't sell well, the next week, she should get a chance to prove her sales acumen by convincing customers who are almost ready to buy a more marketable product. Even during Stacey's down week, you should have a measurable way to reward her work that is equitable with the rest of the team.
Individual performance and rewards work very well when everyone on the team knows how much to do and how much they earn. As long as the system is fair to all, this way of working can benefit the company as a whole, leading to more profits while giving workers a higher paycheck.
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