Why You Get What You Pay For

A familiar warning, and one we usually think about when we're buying something, is: "You get what you pay for." Pay $995 for a car and chances are you won't be getting a late model Corvette. More likely, you'll just get the bruised and battered rind from someone else's lemon. On the other hand, when you need a tool and want it to last a lifetime, you're best off shopping where they've never heard of a blue light special.

The same principle applies every day in business. In rewarding employee performance, you get exactly what you pay for. What some managers don't think about is the many ways they pay their employees that go beyond wages and benefits. That's the subject today: how you pay your employees beyond the paycheck, and making sure you get what you think you're paying for.

"Getting what you pay for" has two parts: what you pay and what you get. Let's look at each part separately.

How Managers Pay Their Employees Without Cash

As managers, your currency includes many items that aren't part of a paycheck. You can "pay" an employee with any one of these:

• Attention
• Time
• Compliments
• Respect
• Praise
• Public recognition

Spending this currency wisely requires that you spend it at the right time and in the right place. Because intrinsic rewards like these (as opposed to extrinsic rewards like bonuses or time off) are so powerful, it is vitally important that you use them well to encourage the behaviors that will make your business grow.

As a manager, what you get when you reward an employee is a continuation of the behavior that brought the reward.

Five Guidelines to Using Rewards, Incentives, and Motivation

In order to get the most out of your "non-cash payroll," you'll need to follow these important guidelines.

1. Reinforce behaviors you want. In order to encourage excellence in your employees, you have to reinforce the behaviors that create that excellence. All people thrive on encouragement and praise. In fact, numerous studies have shown that employees value recognition more highly than money. When you see an employee doing something that you value, let him know. When an employee performs beyond expectations, praise her excellence publicly.

2. Do not reinforce behaviors you don't want. Sometimes you can unwittingly encourage a behavior that you really don't want. If you join in while your salespeople are goofing off, what's the message in your behavior? If you laugh at an inappropriate joke, what have you reinforced? Remember that as a manager, your words and actions have great power in the eyes of your employees. Use them (spend them) wisely.

3. Failure to stop unwanted behaviors is the same as rewarding them. Everyone knows when they do something out of line. If you know an employee repeatedly breaks one of your rules, and the employee knows you know, then the rule doesn't really exist any more. This is how managers lose control of employees who get the right results (for example, sales totals) using all the wrong methods. Once you allow one employee to act this way, others will follow.

4. The value of a reward is in the eye of the receiver. Many managers make the mistake of giving out rewards that they think are valuable without thinking about how the employee sees the reward. A traveling salesman who receives a free night at a hotel for exceeding his sales targets might not feel as honored as you'd like. Give him a new golf bag, maybe with the company name on the side, and he might just feel on top of the world. At the same time, keep in mind that most people forget cash bonuses almost immediately because they end up spending them on bills or daily necessities.

5. Rewards reveal company values. I can't tell you how many times I've worked with companies that honor the idea of teamwork by making it one of their values. And some really do. However, in two different companies I have seen a poster praising teamwork as a company value on a bulletin board right next to the announcement of a sales contest that would have only one winner. Guess what the employees in those companies thought of the company's values!

In the end, you really do get what you pay for. You just have to be very careful to "pay for" the right behaviors and only the right ones.

When you reward results, you also reward whatever behaviors went into generating those results. Be sure that's what you want.

Napoleon is credited with saying, "No amount of money will induce someone to lay down their life, but they will gladly do so for a bit of yellow ribbon." Remember that the "piece of yellow ribbon" was a symbol of the country's gratitude and respect for the soldier who earned it. They fought and risked their lives for the gratitude and respect.

Rewards can be both formal (plaques and celebrations) and informal (a word of praise, time spent listening to an employee's ideas). Mix them up.

The rule of 4 X 4 X 4: for every four informal rewards, give an employee one formal reward. And for every four formal rewards, give one major reward. A raise or promotion counts as a major reward.

The best reward you can give a good employee is a job worth doing well. You can bank on it!

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