A Remuneration Philosophy: Staff Motivation & Reward
Some time ago I was put onto the excellent e-book Breakthrough. Breakthrough covers team remuneration for businesses that want to be high performing. It is important for the business to have a remuneration philosophy regarding staff motivation and reward. This can then be communicated to the team. It also sets the foundation for future discussions about pay and performance.
There are 4 areas that need to be addressed for all staff members:
- Compelling future.
- Opportunities for growth (personally & professionally).
- Positive working environment.
- Financial rewards.
If all of these areas are addressed in a way that staff can see and understand, then you create an environment that can lead to superior performance.
There are 5 principles underpinning the philosophy:
Principle 1: Partnership
Everyone must feel like a partner in the firm. Anything less and you will only get average performance from some of your team.
Principle 2: Clarity
Everyone must have clarity around four questions:
- What does the future of our company look like to you?
- What do you think are the most important things that have to happen for us to grow and succeed?
- What contributions are you most excited about making to our growth?
- Why is the creation of our future company important to you?
To gain that clarity, you’ll need an internal communications campaign. One that helps every team member get perfectly clear on how you, as leader of the business, look at these four questions.
Principle 3: Engagement
To create a ‘we’ mentality, all partners (the team) must:
- Have something to strive for, that has meaning and purpose.
- Have responsibility and the freedom to execute on the plan.
- Know they will participate in the results.
Principle 4: Practices
‘How’ you pay people is different to ‘how much’ you pay people. It is imperative to get the ‘how’ right.
How should you pay your team to give you the best chance of fulfilling your business purpose?
The partnership philosophy underpins this. Shareholders are entitled to a fair return on capital. You can pay above market returns for above market performance, but if you don’t reach your performance standards you don’t expect to pay above market rates.
Principle 5: Productivity
Incentives are paid if you hit the numbers. But the really big rewards are paid if you hit the numbers and achieve measurable improvements in productivity. Otherwise you can create an entitlement mentality and complacency. This focus on productivity is very important as it drives the innovation that keeps your company ahead of its competitors. It challenges and stretches people.
In the marketplace we are seeing too many firms paying away too much to their self-employed advisers. All this does is make it impossible for the firm to make an acceptable level of profit. By going right back to the foundations of your remuneration philosophy you can address remuneration successfully for all parties and also generate a high performance team.
“I don’t pay good wages because I have a lot of money; I have a lot of money because I pay good wages.”
By Brett Davidson
James Roberts: Partners Wealth Management
I recently interviewed James Roberts of Partners Wealth Management on Why Engage External Help?
Click to listen to a snippet of Why Engage External Help and let me know if you’d like to hear the full interview!
Partners Wealth Management are a City based Wealth Management boutique. They specialise in the partners of large legal and accounting firms, city executives and entrepreneurs in London.
- Turnover is between £5M – £6M pa
- 45 staff (includes 25 advisers)
- AUM is £750M