Since it’s a new year, and resolutions are always popular around this time, let’s look at the subject of motivation. It’s pretty hard to follow through with a resolution without motivation.
Practically everyone agrees that money is a prime motivator. But part of the success of money as a motivator depends on how it is used to motivate. Most employees are motivated by money. Some employees may have other considerations, but pay, and the prospect of better and more pay is always welcome to an employee.
Money is most effective when the recipient can somehow control the reward. Commissions are a good example of this. This is why raises not based upon performance are not good motivators. If part of an employee’s reward is based on how effectively they perform, then they can be motivated to perform better. This works for most employees, but it does not work for everyone. There will be more articles about different types of motivation, and you will need to know more than one method of motivating people. Today, we will focus on money.
Before you can do anything else, you must obtain and use accurate information. If part of an employee’s monetary reward depends on his/her productivity or company/project profitability, you must be able to access correct information and use it correctly to determine a reward.
Let’s say that for each project, the company sets a budget amount (estimated cost of project). Now let’s assume that the project manager’s bonus is a percentage of the difference between the estimated amount (as may be revised by budget change orders) and what the job actually costs. The project manager has a real stake in completing the job on time and on budget. (As discussed in the Scheduling article, reduction in time will result in lower costs.)
To be effective, this system must yield accurate job costing and the effective use of the reports that are available. The reports must be easy to read and “provable” so that everyone will have confidence in their use. The use of reports like a job summary report and a job cost journal can help everyone see what costs are included in the total job costs and detail of each cost if certain items need to be examined.
The reason I mention “everyone” above, is because it’s inevitable that one employee will compare incentive pay with another. It’s the nature of employees. When questions arise, documentation is important (even if it’s never displayed). Just knowing that you have your reason for granting a bonus of a certain size makes it easier to manage your employees.
Please contact us if you would like to learn more about instituting a comprehensive training process. Thank you.