The right way to reward employees

Think about a woman who works for me. Her job, boiled all the way down, is to get more people to do more this week than they did last week. Most weeks, she pulls it off across the majority of my staff. How valuable is a person like that? I have thought about it, and I believe the word is priceless.

I have talked before about finding the hungry people and rewarding them when they do better, and the question that always comes back is the practical one. How do you gauge better? How do you actually watch it happen? Because if you cannot see it, you end up guessing, and guessing rewards the wrong people.

My answer has not changed in forty years: statistics. I measure what people produce, week against week, and I let the number tell me who earned the reward. Let me show you the machinery.

Anything can be counted

Every position in my companies has a product: the thing that position exists to produce, done properly. Even the small stuff qualifies. I ask for a cup of coffee, it shows up, I sip it, and it is exactly right. That is one properly made cup of coffee, and if one of tomorrow's cups comes out wrong, the percentage moves. Silly example, real principle. There is nothing in a company too small to carry a number.

Anything can be counted if you are clever enough. Anything. The work is deciding what you actually want from a position. Name the product, and the counting takes care of itself.

So all across my companies, every employee has a statistic. Not a vibe, not a reputation. A line on a graph that went up or went down this week. Keep that picture in your head, because the reward system sits right on top of it.

The executive I would reward first

Here is a real one. The first area of any company is personnel: somebody has to make sure my employees know what they are supposed to do. The executive who runs that division for me has her own product like everybody else, and her statistic is built out of everyone else's.

A graph can only do a few things. It can fall hard, drift down, sit level, climb a little, or climb steeply. The two I want are the climbs, and the small climb is the one we call normal. So her stat is simple: what percentage of the staff finished this week at normal or above? In plain English, how many of my people did more this week than they did last week?

Now go back to the question I opened with. When her number is up, it means the majority of a whole company out-produced its own last week. She is not priceless because she works long hours or because I happen to like her. She is priceless because her statistic says so, and that is exactly the person the rewards should be flowing to.

Pay the ups, not the downs

So here is how I reward people, guys. I use statistics. I take what somebody did this week and set it against last week and the weeks before. The ones who do more, I make sure they get paid more. That is it. That is the whole ceremony.

And when the numbers do not go up, they do not get more. I want to be very honest with you about this, because it is where most owners go soft. Handing a reward to somebody whose statistics are down means you are paying for the down, and paying for the down is what is wrong with the world. Do it inside your company and everybody learns the real lesson fast: the number does not matter, so why chase it?

Run it my way and the fairness is automatic. Nobody has to campaign for a raise and nobody has to wonder why the other person got one. The graph is right there. Up gets rewarded. Down does not. Every person on my staff knows exactly how to earn more, because the scoreboard was never a secret.

A down number can be handled

One warning before you go swing this hammer. A down statistic does not mean a bad person. If the work is not getting done, there are only two reasons: they do not know how, or they do not want to. That covers every case you will ever meet. Take that one to the bank.

And both of those can be handled. Somebody who does not know how can be taught. Somebody who does not want to can be confronted with the truth and given a real chance to change. So you never reward the down stat, but you never write off the human being behind it either. It always can be handled. Be certain about that.