Tradition dictates that Christmas is the time for bosses to reach into their pockets and thank employees for all their hard work with a bonus cheque or cash payment. But for small business bosses with a limited budget finding the resources for such rewards is hard, even if they want to be more like Santa than Scrooge.
The good news is that money is not necessarily as effective at motivating staff as you may think. What matters most is acknowledging individuals’ achievements, ensuring that your employees are doing a job they enjoy, and paying them a good basic salary, according to the Institute of Leadership and Management (ILM). While £36.9 billion was paid out in bonuses in the UK last year, there is little to suggest that these top-up financial rewards result in higher motivation, productivity or staff satisfaction. In fact, all evidence indicates that people who receive extra cash payments treat them as part of their regular pay. According to Globoforce, about 45 per cent of UK employees say that more frequent recognition from bosses is more important to them than a yearly bonus.
Make no mistake, people do like to be rewarded – eight out of ten say that incentives make them feel their work is valued, according to Ixaris, the payments firm. But recognition needn’t be in material form. The ILM research found that people’s enjoyment of their job was the single greatest motivating factor at work, followed by getting on with colleagues, being well-treated by managers, and feeling that they have some control over their work.
It is the employer’s job to facilitate these more emotional elements of the workplace, and the SMEs that take them seriously should win employee satisfaction and loyalty. You need an attractive employee package that includes opportunities for training and development, as well as being clear about how ambitious individuals might win promotion. Almost two-thirds of employees say that how they progress professionally is important to them, so ensure that you have annual staff assessments and talk to workers about what they want from their job and how to achieve it. Many small businesses have a flatter organisational structure, with one person fulfilling several roles, and this can be an advantage. Being smaller means that it can be easier to reorganise roles to give someone a new challenge or take advantage of emerging talent. In terms of your overall employee offering, be imaginative. You could tailor benefits to individual needs, such as allowing staff to trade salary for extra holiday. This has the advantage of cutting your wages bill and there are associated savings in National Insurance.
This isn’t to say that it’s wrong to spend money on your staff at this time of year if you can afford to do so. Some employees are motivated by money – about 13 per cent of them, according to the ILM. In fact, the institute divides employees into four rough categories:
- Financially focused – mostly men who are driven by the prospect of performance-related pay.
- Career climbers – interested in training, development and career prospects.
- Sociable workers – they generally enjoy their job and want most to get on well with their colleagues.
- Flexi-workers – characters who most value the ability to work varied hours or from home.
But the one financial aspect that does appear to make a difference to employee satisfaction is basic pay. It seems that many SME bosses recognise this, with the Federation of Small Businesses finding that most will increase wages when they can afford to do so, sharing the benefits of any business growth where possible. And, at Christmas, most small companies do also try to find some budget to allow staff to have a good time at the company’s expense.
- Two-thirds of UK firms provide a Christmas lunch or party for their workers, according to the Chartered Institute of Personnel and Development (CIPD).
- Almost one in five offers employees a hamper, gift cards, vouchers or other presents at this time of the year.
Even buying a round of festive drinks at the pub can make a difference, but, if you really have no spare money to spend at all, never underestimate the power of the written word. Send a hand-written note of thanks to individual members of staff at their home, outlining the ways that you feel that they have made a difference to the company in the past 12 months. This kind of acknowledgment takes only your time and the cost of postage, but it’s a Christmas bonus of a different kind that is truly priceless.
That you reward the people who work for you however you can is about more than being a jovial boss. It really matters to staff satisfaction and retention. One in four employees in Britain is actively looking for a new job, according to the CIPD. Those who are looking to move blame job dissatisfaction, disengagement, and everyday pressure at work. And, of course, January is around the corner, the time for resolutions about changing jobs and careers. Make your own vow to create a culture of recognition in your business. You should find that the rewards will be as great for you as an employer as they are for your happy, productive and terrifically loyal workforce.
Image courtesy of dream designs / FreeDigitalPhotos.net