Rallying Employees

Rallying Employees

Motivating employees does not simply depend on magic or personal leadership charisma. More often, a few simple practices can boost morale and enhance your team’s daily satisfaction.

At both the office and in everyday life, two main types of motivation encourage people to perform. Intrinsic motivation means doing a task for its own sake, out of interest, curiosity, enjoyment or for psychological reward. Extrinsic drivers are more tangible incentives, such as money, status, promotions, perks or flexible work arrangements. Both types of gratification can work powerfully, ideally in tandem.

Consider some examples in a workplace setting.

Intrinsic motivation

  • Work/life balance.
  • Opportunities for continued learning and development.
  • Deriving meaning and purpose from work that impacts the lives of customers and the community.
  • Recognition from peers and management.
  • Authority and responsibility to execute with self-sufficiency.
  • Trust.
  • Beating boredom through new challenges beyond one’s comfort zone.

Extrinsic motivation

  • Salaries, stock options and bonuses.
  • Clean, well-lit, comfortable workspaces.
  • Safe environment, especially post-COVID-19.
  • Vouchers, travel and extra vacation days.
  • On-site services like gyms, child care and dry cleaning.
  • Free food, including snacks, subsidized meals and parties.

Even where resources are limited, employers can establish a framework to show they care by providing a setting for their employees to flourish.

Managing graciously

A dollar in salary is still a dollar, but successful motivators know that it is not only the reward itself that matters. The presentation counts too. It may require extra effort and sensitivity, but you will achieve more impact by treating employees as individuals rather than by automatically lumping them together as teams or departments. In other words, try to engage with your direct reports one-on-one. You need to understand their personal concerns and elicit regular feedback, perhaps through surveys or face-to-face conversations. When you get that feedback, above all, don’t just file and forget it. Act on it as soon as possible to demonstrate that the questions are not an empty exercise, particularly if your employees have made an effort to respond.

When interacting with your team members, try to be authentic and transparent, even in straightforward situations like when sharing sales reports. There will inevitably be bad news at times, and unwelcome, unpopular tasks sometimes do arise. You will earn more respect by addressing them frankly without any sugarcoating. Clarity is key. It is helpful to start with small, measurable goals that provide a sense of accomplishment.

Employees are quick to perceive and judge unfairness, so be consistent in how you treat your staff and resist any urge to play favorites. The goal is to never demotivate. Once managerial trust and respect are eroded, they are nearly impossible to restore. If it is within your control, which will depend on individual company circumstances, there are benefits to promoting from within rather than seeking outside talent. Current employees will be keenly aware and follow the process.

A business, even a small one, is like an army. For motivation, soldiers look to their commanding officer. When you want to motivate your own troops, remember at all times to set an example. Whether you are showing the way with behaviors like punctuality or maintaining an appropriate appearance, co-workers will take note. When it comes to going the extra mile, like staying late or pitching in for a deadline, they will notice, and some are bound to remember.

Get It Right on the Pay Stub

Get It Right on the Pay Stub

Pay stubs can be referred to as pay or wage statements and may be considered the decoder ring of payroll. Pay statements summarize employees’ gross pay, taxes and deductions, and net pay. They can be in printed format or made available electronically.

Pay stubs help employees confirm what was withheld from their gross pay so they can understand how the final net pay amount was arrived at. Pay stubs are useful to employers as well, especially when they need to solve wage and hour disputes or tax discrepancies.

While no federal law requires pay stubs, most states do — you can view pay stubs as part of payroll compliance. For example, some states need employees to consent to receive electronic pay statements. State mandates can pose potential complications for businesses with employees in multiple states, as each state has its own set of rules.

What’s on a pay stub

Pay stubs should have these basic elements:

  • Amount per pay period.
  • Year-to-date pay.
  • Basic identifying information: name and address of the employer, name and address of the employee, and the employee’s Social Security number.
  • Pay period and total hours worked.
  • Gross wages, or the total amount earned for the pay period before taxes. If an employee worked 15 hours at $20 per hour, gross wages are $300. Pay stubs should note hours worked, what the pay rate is and any additional earnings or accrued time off.
  • Tax deductions, including federal tax withholding, state tax withholding, unemployment taxes, Social Security tax and Medicare withholding.
  • Employee benefits deductions often include health insurance, health savings accounts, life insurance payments and retirement contributions.
  • Voluntary deductions, which include the amount an employee chooses to withhold monthly and may include a regular charitable contribution.
  • Involuntary deductions such as wage garnishments, past taxes owed and court-ordered child support payments.
  • Net pay, the amount of money employees take home after all deductions are made.

Pay stubs offer employees transparency in how they’re getting paid, noting gross income, deductions and net income. Workers get year-to-date information and can verify that compensation is accurate. Lenders often ask to see pay statements as proof of income or employment before approving a loan. Pay stubs help prevent pay-related conflicts.

If you miscalculate, the withholding amounts for taxes may include errors that may cost you penalties. Pay statements that are inaccurate or improperly delivered can confuse employees and increase the risk of legal liability. It’s in your best interest to:

  • Know all state and local requirements.
  • Include the necessary information.
  • Make pay stubs easy to access.

Many companies opt to work with a payroll service provider, which will typically include pay stub delivery as part of their service and can assist with state and local pay statement requirements. It’s generally a good practice to save pay statements for at least one year so you can verify the accuracy of your annual Form W-2, Wage and Tax Statement for employees to prepare their individual tax returns.

Pay statements contain personal information that can be subject to identity theft. Retain them in a safe place and securely dispose of them. If employees report losing a stub, advise them to monitor their credit reports and alert their bank and credit reporting agencies so they can flag any suspicious activity. If a copy of a lost pay statement is needed, employees may request another from your payroll department.

How To Put Together a Compensation Plan

How To Put Together a Compensation Plan

A compensation plan is designed to attract and retain employees. Build your compensation plan to ensure pay equity while balancing the needs of your small business and delivering value to customers.

Pay competitively relative to companies similar to yours in size and industry in your region. Compensation can tie in directly to regional compensation data, how employees are performing in their roles and where they are relative to the next level above them.

Set a philosophy on where you want your overall compensation to fall compared with the ranges in your market. By setting ranges, you assess your employees within a framework based on market data, so you can be transparent with them. Your criteria can mix technical skills with the soft skills you consider important across your organization, and that will aid in conversations about growth and how employees can get promoted to the next level. Workers are more likely to stay in a role where they anticipate salary growth and the development path to get there. This creates more predictability for the finance team.

Consider all the moving parts

A basic compensation package consists of salary or wages. A more comprehensive compensation package includes additional benefits: bonuses, perks, commission, health insurance and retirement plans. For employees, a sense of belonging imbues job satisfaction, engagement and effort. The right compensation strengthens self-direction, interconnectedness and success.

Compensation plans offer fair and competitive payments that align with the company budget and promote business success. Structure a competitive compensation program with direct and indirect components.

Direct compensation refers to the financial payments — salaries, bonuses and equity — in exchange for time worked or results obtained. Salary is the bedrock of your company’s compensation plan. When calculating wages, consider the following important factors:

  • Geography.
  • Job responsibilities.
  • Cost of living.
  • External market data.

When calculating bonuses used to reward team members for high performance, consider these three questions:

  • Who’s eligible for a bonus?
  • Which targets should they hit to earn a bonus?
  • What should the payment structure look like?

Equity compensation offers a stake or partial ownership in the company to encourage high performance. Team members get the message that when the company succeeds, everyone succeeds.

Look at the big picture

Holistic, people-driven strategies work to improve company culture by attracting and retaining talent. Competitive salaries help, but they are rarely enough anymore. Today’s indirect compensation elements include:

  • Medical insurance.
  • Dental and vision coverage.
  • Retirement benefits.
  • Wellness benefits like gym memberships.
  • Educational incentives.
  • Mental health services like therapy or counseling.
  • Volunteer opportunities.
  • Flexible spending accounts.
  • Hybrid working arrangements.
  • Paid time off.
  • Disability insurance.
  • Paid holidays.
  • Child care initiatives.
  • Relocation stipends or housing options.
  • Reimbursement for work-from-home costs.
  • Commuter benefits.

Compensation packages that adequately reward employees for their hard work can drive business profit. An effective compensation plan illustrates company integrity and transparency, assists in attracting and retaining top talent, boosts employee motivation and loyalty, and reduces turnover and hiring expenses.

Base your program on external market analysis and internal company data. Benchmark with similar organizations to create an appealing payment package.

Take the long view

By outlining your company’s underlying approach to compensation, you place the program in context, promoting alignment with your company’s objectives and values. A good compensation plan includes a pay-for-performance strategy, for example, that helps retain employees.

Explain the program to employees, communicating the components to demonstrate integrity and nurture trust. When your team understands your compensation philosophy, it can feel confident investing effort in the work.

A clear employment contract — aligned with state and federal laws — shows respect for employee-employer relations and helps prevent disagreements and legal misconduct. Pay is personal — it’s how employees measure their worth to their employers and fund and build their lives. When you get compensation right, it positively impacts your workers and lets them better focus on the work.

Spot Your Rising Stars

Spot Your Rising Stars

Once the team is in place, it is generally up to the managers to continue to monitor members’ development. They seek to identify those individuals likely to contribute most to the company. Especially in a smaller startup, it is helpful to recognize exceptional competency while the operation is still in its early stages. With an eye on the future, management can lay the groundwork for optimal performance later.

Different characteristics drive success

Your star employees may exhibit diverse qualities and traits, depending on the company, the business or even the department. In some cases, doers who deliver results may be the key to the firm’s success; in other businesses or industries, creativity and innovation set the firm apart. The first challenge is to realize the components vital for a company’s success.

You first need to define talent in a business context. Many organizations benefit from a combination of skill sets. Maybe 80% of the workforce is made up of dependable, productive performers, with the other 20% providing that extra spark of brilliance. A company needs more than a collection of elite superstars. Therefore, HR focuses on the variety of roles and which people can match those needs. For example, a sales business requires employees with an ability to persuade and cultivate relationships, while hospitality employees need to solve operational problems quickly and attend to details rigorously.

It is also important to distinguish between today’s performance and tomorrow’s potential. Every employee does not come fully fledged, and a company must clarify the connection between current and prospective performance in its field. A truly effective manager will observe behaviors and project to envisage how an employee might develop.

The ultimate goals are broader than immediate promotions. The whole organization benefits when it can retain its long-term A team by steadily progressing the team into more senior roles. Incorporating available talent into the long-term plan can galvanize engagement and leadership across the ranks.

Pinpoint potential

After you have decided how you will measure potential, you will need to monitor progress among those identified as high-potential individuals. Many companies simply rely on the instincts of management and look to ad hoc observations for predicting the paths their most dynamic workers are destined to follow.

There are also some tools available to help quantify a range of elusive personality traits. The High Potential Trait Indicator, created in 2006 by Adrian Furnham and Ian McRae, predicates its model on theoretically optimal characteristics for a given job. The model scores appropriate levels for:

  • Conscientiousness.
  • Flexibility.
  • Curiosity.
  • Openness to risk.
  • Ambiguity.
  • Acceptance.
  • Competitiveness.

On the cultural side, there may be fewer official tests, but managers should also watch for signs of common values among their workforce. Members who share the organization’s mission and values will be more receptive to camaraderie and more likely to remain loyal. A strong employee value proposition acts as a recruiting magnet too. If you provide promotion opportunities for a variety of positions, you may pick up clues as to who in the group is keen to keep moving ahead within the ranks.

Star material

How does an innately talented team member behave, and what features distinguish them from their colleagues? You will probably recognize the signs of a self-starter who:

  • Is comfortable taking initiative and does not need micromanagement.
  • Is team oriented.
  • Is cooperative and collaborative with others.
  • Has a strong work ethic.
  • Is trusted by peers.
  • Has high personal standards for performance.
  • Has a proactive drive toward continuous improvement.
  • Demonstrates expertise, competency and craftsmanship.
  • Thinks creatively, bringing fresh perspectives to challenges.
  • Exudes positive energy.
  • Is adaptable and flexible — they can accept being wrong and value feedback.
  • Thrives under pressure.
  • Has superior decision-making ability, sorting through complexity and ambiguity, making patterns and drawing connections.
  • Asks insightful questions.

There is another key quality that sometimes trumps all these capabilities: In the end, you want someone on your team who stays cool and collected under fire. Emotional intelligence is the gift of self-awareness — the sensitivity to read situations and react appropriately.

New Independent Contractor Rules: Do They Affect Your Employees?

New Independent Contractor Rules: Do They Affect Your Employees?

The Department of Labor’s final rule for employee or independent contractor classification under the Fair Labor Standards Act rescinds the 2021 Independent Contractor Rule, replacing it with guidance on analysis that’s more consistent with the FLSA as interpreted by longstanding judicial precedent, and was scheduled to take effect March 11, 2024.

The final rule reduces the risk of misclassification while providing greater consistency for businesses and gig workers, specifically:

  • The designation of control and opportunity for profit or loss are given greater weight.
  • Considering workers’ investments and initiative only as part of the opportunity for profit or loss.
  • Prohibiting consideration of whether work performed is central or important to your business.

A step toward greater clarification

The 2021 IC Rule narrowed the economic reality test: Is a worker economically dependent on the employer for work? This had a confusing and disruptive effect, departing from decades of case law and describing and applying the multifactor economic reality test as a totality-of-circumstances test.

Analysis of the final rule may be applied to workers in any industry and will be accessible in the Code of Federal Regulations. It doesn’t adopt an ABC test, permitting an independent contractor relationship only if all three factors in a three-factor test are satisfied. Instead, the multifactor economic reality test that courts use to determine whether a worker is an employee or an independent contractor is used, relying on the totality of the circumstances where no one factor is determinative.

The final rule revises only the DOL’s interpretation under the FLSA and has no effect on federal, state or local laws with different standards of classification. The IRS and National Labor Relations Act have different statutory language and judicial precedent governing the distinction between employees and independent contractors. The laws are interpreted and enforced by different federal agencies. The rule has no effect on state wage and hour laws that use the ABC test — California’s and New Jersey’s, for instance. The FLSA doesn’t preempt federal, state and local laws that apply.

In brief, according to new federal guidance, businesses should meet whichever standard provides workers with the greatest protection.

The key aspects

The final rule affirms that a worker is not an independent contractor if economically dependent on an employer for work, applying six factors:

  • Opportunity for profit or loss depending on managerial skill.
  • Investments by the worker and the potential employer.
  • Degree of permanence of the work relationship.
  • Nature and degree of control.
  • Extent of the work performed as integral to the potential employer’s business.
  • Skill and initiative.

Workers cannot voluntarily waive employee status, choosing to be classified as independent contractors. They cannot waive FLSA-protected rights like minimum wage or overtime pay. The Supreme Court has explained that waiving their FLSA rights would harm other employees, undermining the goal of eliminating unfair methods of competition in commerce.

Among the similarities to the 2021 rule: advice on definitions and on identifying economic dependence as the ultimate inquiry of the analysis, providing a nonexhaustive list of factors to assess economic dependence with no single factor being determinative. Both clarify that economic dependence doesn’t focus on the amount of income the worker earns or whether the worker has other sources of income.

Differences between the new rule and the 2021 rule:

  • Returns to a totality-of-the-circumstances economic reality test, where no single factor or group of factors is assigned any predetermined weight.
  • Provides additional analysis of the control factor, including how scheduling, supervising, price-setting and working for others are considered when analyzing the nature and degree of control over a worker.
  • Returns to the DOL’s consideration of whether the work is integral to the employer’s business rather than exclusively part of an integrated unit of production.
  • Omits a provision from the 2021 rule that minimized the relevance of an employer’s reserved but unexercised rights to control a worker.

Note that this is just a summary of a complex series of provisions. One thing certainly hasn’t changed between the new rules and the old: the need for companies to obtain qualified professional advice to make sure they are in compliance.