#23 of 37 Lessons – Don’t Nickel and Dime Your Employees

Don’t Nickel and Dime Your Employees – Having worked in both the private and public sectors, I have first-hand knowledge that neither sector is immune from frustrating employees with financial rules that frustrate or over-scrutinize trusted employees. Two cases that give me pause:

·      A CEO’s Happiest Day should be the day an appropriately incentivized employee earns more than the CEO. When that happens, the sales person is kicking butt and that is a good thing! Though I have some issues with incentivized sales, it is the bane of existence for many of the most successful companies. Therefore, I’ll go along with the practice with the caveat that the sales person, or his company not sell customers things they don’t need and buyers remain aware of what they are buying and from whom

By appropriately incentivized, I mean an incentive compensation plan that is carefully designed to reward employees for bringing in meaningful business revenues. There must be no questions about how incentives are calculated, administered, or awarded. The plan should be transparent with no opportunity to manipulate numbers subjectively by either party. 

Designing an incentive pay plan is not easy and should involve open and honest communications between management and the sales team. The plan must be easily understood and agreed to by both sides – employee and company.

Problems arise when a combination of unclear rules, unreasonable expectations, and greed kick-in. Employees must be trusted to not manipulate the plan to their benefit and the same goes for the company. After a “great” year, the company shouldn’t change the plan drastically because their employees did “too good” and made too much money – that only leads to strong demotivation. Likewise, the plan should not be used as a weapon to target poor performers by setting unrealistic goals. This needs to be a two-way street that is a win-win situation. Failure to accomplish any of these tenets will only lead to disgruntled and unhappy employees.

·     Simplify, simplify, simplify the expense reporting process. Ask almost any employee about submitting expenses for reimbursement and they will voluntarily tell you some great stories. 

I once had an employee’s expense report get severely scrutinized because he spent an extra night at a conference site. When he was first seeking my approval to go on the trip, he showed me that changing his departure date would reduce his airfare by an amount that would more than make up for the additional hotel and per diem costs. A whopping savings of $16.14, but a savings none-the-less. Without hesitation, I gave him the go-ahead.

Months later, internal auditors required us to spend what amounted to be more than $1,000 in staff time to justify the extra night. In addition to what I already told you, we pointed out that the employee chose to take a red-eye flight on the way home saving another justifiable $250+. On top of all this, he booked flights that were Super Economy fares where you almost need to pay for air to breathe. In the end, I still think the auditors felt that me and my employee should have both been severely disciplined for having such a lapse in judgment. 

Have you been nickel and dimed? I hope not, and if you’re in a position to do this to employees – DON’T DO IT!!