5 Ways to Incentivise Employees Without Burning a Hole In Your Pocket
Small and medium-sized businesses are pitted against the likes of large multinationals in the battle for talent on a daily basis. Indeed, from salary budgets to fancy offices, it appears small businesses are on the losing end when it comes to attracting top talent.
That’s not to say small businesses should concede defeat!
According to the World’s Most Attractive Employers report for 2016 by Universum, today’s employees look beyond salary and monetary benefits when it comes to deciding if a particular job is aligned with his/her career goals and work style:
This means that there are opportunities for small businesses to be creative with offering employee benefits, without having to burn a huge hole in the balance sheet. The following are some popular ways:
1) Offer Employees Share Options
Your earliest team members take on a huge risk when they decide to work for you – they might have given up on alternative job opportunities and/or taken a significant pay cut, and joined your company at a stage where there was perhaps no traction, revenue, or in some cases, a validated product. Most of them do so in exchange for a share in your entrepreneurial dream, and it is not uncommon for founders to reward employees with shares by way of Options.
Employees are often offered this “sweat equity” in the form of an Option to Purchase Shares. First, you will need to put an Employee Stock Option Plan (ESOP) in place (also known as a Share Option Plan). The ESOP sets out qualifying criteria for employees to receive the option, which is comparable to a bonus scheme, when they can “exercise” the option, and what happens if they leave their employment.
With the ESOP in place, you can then have a discretion to give your employees to an Option to Purchase Shares in your company at a set price with an expiry date of, say, 1 October 2017. This means that, at any time before 1 October 2017, the employee can pay the company the offered price and require that the company issue him shares. In other words, the employee effectively buys the shares at a discount, making the Option to Purchase Shares akin to a bonus.
Key clauses to watch out for in your ESOP
2) Be better than minimum requirements under the Employment Act
Most employment laws mandate that employers must provide the following types of leave to eligible employees:
- Adoption leave
- Annual leave
- Childcare leave
- Maternity leave
- Paternity leave
- Shared parental leave
- Sick leave
- Unpaid infant care leave
As employers, you have the option of offering employment terms and conditions that are more favourable (but not less) towards employees. This means that on top of the minimum for the mandatory leave options listed above, you can additionally offer employees extended breaks, or even birthday leave, marriage leave, and compassionate leave.
All of these should be clearly set out in an Employment Contract or Employee Handbook.
3) Allow flexible work schedules
Do you require that employees report to work at 9:00am every morning? Do you then just have a team of clock watchers who leave the office at 6:00pm sharp everyday?
Productivity = Output
Output ≠ Time spent
At Zegal, we are made up of a diverse team of students, millennials, moms, dads, and travellers… we understand that sometimes you just need to take an afternoon or two off to attend a night class, pick up the kids, go to the bank… and we trust them to do so because we measure productivity by level of output and not by the amount of time spent in the office.
Trust your employee to work from home and he/she may even be able to do more without all the unnecessary distractions from those who pretend to be busy in the office!
If you are sold to the idea of flexible work hours, but are put off by the additional administrative hassle, consider using cloud tools such as Deputy or Zeus that can help you schedule and track employee time and attendance, and improve workplace communication.
Plan your workforce budgets, create employee schedules and notify staff in just one single click with Deputy.
There are even organisations such as the Remote Year that organise year-long remote working programmes and encourage both startups and Fortune 500 companies to get on board with the remote-working philosophy.
Michael Katz said in a memo to his former employees at Interclick before it was acquired by Yahoo, “Treat adults like adults and they will behave like adults. Rules are for children.” Do you trust your employees to have flexible work hours?
4) Beyond work, remember to have fun as a team!
Small businesses have the advantage of being, as the name suggests… small. This is actually the best time to organise team building activities – consider that it will not be long before it becomes too expensive or too much of a logistical nightmare to go on a company trip!
If setting aside a budget for overseas travel is still going to be a problem, consider local providers such as the Mega Adventure. It is not all fun and games; their team building programmes are led by experienced facilitators and promise tangible results:
- Improved team cohesiveness
- Heightened leadership skills
- Developed problem solving ability
- Enhanced creative thinking
- Encourage intelligent risk taking
Source: Mega Adventure (see programmes)
5) Consider flexible benefit schemes
Traditional employee benefit schemes provide the usual mix of health insurance packages, like coverage for medical and dental expenses for example. The problem with a “blanket” coverage is that it could be great for some but not for others. Budget spent on unutilised coverage is as good as money gone down the drain. For instance, some employees may already have their own insurance coverage, or are covered under a spouse’s plan, and rather have gym membership as a benefit instead. Companies know this, but find flexible benefit plans too difficult to implement, and hence concede that they can’t please everyone.
Companies like ConneXionsAsia (CXA) have identified this problem and offer a solution that “allows employees to shift their unused insurance dollars to prevention, while helping employers to cap their premium inflation”. With CXA, employees can convert unutilised insurance dollars into “benefit dollars” that can be used to redeem other discounted health, insurance, and wellness services from CXA’s online marketplace, or other company-approved flexible benefits. Additionally, CXA partners with an ecosystem of insurers and a number of high-quality wellness vendors including fitness studios, medical practitioners, health screening organisations and disease prevention associations.
Talent today have plenty of options – similar to how you are learning to adopt a customer-first approach in your sales and marketing efforts; the same employee-first mindset should be adopted when it comes to attracting and retaining the best talent for your company.
Legal documents for rewarding staff
What other perks do you offer in your company that your employees absolutely love?
Tell us in the comments below!