Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Pay

Money talks, but so do other forms of compensation Add to ...

She has run her own advertising agency for 12 years, and along the way Viive Tamm has developed a philosophy on how to keep her employees happy and engaged.

First: It's not all about money. "We believe that money is only one of the things that talks," she says.

Yes, Ms. Tamm makes sure that employees at Toronto-based Tamm Communications, the 25-person firm she owns with her husband Iain Rankin, are paid well for the work they do, somewhere in the middle of the pack among those in the industry. "Our philosophy is never to be the bottom payer but never to be the top, either. We like being somewhere in the middle.

"If you're the top payer, people have nowhere to go - and it's hard to maintain the pace. You don't ever want to be the bottom payer because it feels too much like a sweatshop."

But when it comes to benefits at Tamm Communications, they're considerable: Everyone gets at least four weeks of vacation (three weeks plus a week at Christmas), summer hours mean a long weekend every second week, and when you're on vacation "nobody bugs you," Ms. Tamm says. Long-term employees, those who have worked with the company for 10 years, get a paid eight-week sabbatical.

Employees are allowed five days a year for charity work, the couple's cabin on an island in Montreal is free for the asking, employees take part in a barbecue every Friday, and such perks as free tickets for events are given out on a lottery system.

"We do a lot to keep our employees happy," Ms. Tamm says. "I believe very strongly in not burning people out, keeping them creative."

She says she has taken to heart surveys she has seen where people talk about what makes them happy with respect to compensation, and money is always less important than respect. "So the culture of the workplace is most important, and everyone here knows that."

It is the conundrum for every small business: how to compensate and incentivize staff to do their best work and stay at the company. Finding and retaining staff remain huge issues for small businesses: Even in the depths of the recession, says Dan Kelly, senior vice-president of the Canadian Federation of Independent Business, 40 per cent of the federation's members were complaining of a labour shortage that was preventing them from bringing their products or services to market. Small firms, he says, know they have to become creative in how they compensate employees.

For sales staff, it usually means coming up with a base salary, commission structure and sales targets (although Ms. Tamm decries that many companies use caps on how much an employee can make in commissions; "the sky should be the limit," she says).



Other Human Resources stories:



With non-sales staff, it's trickier.

The first step is for small firms to stop behaving like large corporations with their "simplistic, one-size-fits-all thinking," says Kim Bechtel, whose Calgary-based consultant firm yourHRco helps small businesses with human-resource issues.

Mr. Bechtel set up his firm after years working as a human resources director for government and large firms. He says that small businesses often fail to heed one of their greatest strategic advantages - how well they know their employees.

Like Ms. Tamm, he says that money is important, but it's not everything.

An employer's first step is to set the salary, and doing so correctly is crucial to build trust, Mr. Bechtel says.

"What I say to small-business owners is that you need to have salaries that reflect for your employees or prospective employees that you've done some kind of homework about what it takes to live here, and what somebody with my skills and experience generally expects to earn living in this community."

From there, the employer should come up with a structure of bonuses or incentives rather than set regular salary increases. Salary hikes, he says, should be given when an employee adds long-term value to the firm - for example, if someone attains a qualification that means you can charge more for their services.

Otherwise, Mr. Bechtel says, small businesses should come up with an incentive or reward system that is determined by how well the employee is doing and how the company is faring.

Each employee should know exactly how a bonus or incentive is determined and paid out. "People should know the formula and should be able to gauge whether it's meeting its commitment," Mr. Bechtel says. Some companies, he said, are moving toward full transparency so that employees know what everyone makes - and the company itself opens all its books. "That's pretty radical, though. Most companies don't have that kind of culture."

For employees who aren't directly involved in sales, he says, the owner needs to set metrics on what they contribute to the company. Most employees who aren't in sales, for example, contribute to the costs of doing business, so bonuses can be linked to reducing those costs.

Mr. Bechtel cites the example of an optician client who set metrics around how long it takes to process a client - from the pre-assessment, to seeing the eye doctor to purchasing the needed glasses or contact lenses. When employees managed to shave five to 10 minutes off the process, one of the owner's objectives, they were rewarded with bonuses.

Like Ms. Tamm, Mr. Bechtel points out that compensation need not always be financial.

In the case of the optician, Mr. Bechtel advised him to sit down with his employees and talk about what their ideal compensation would be. Some, of course, wanted more money but they were happy to have that money tied to performance results. Many, however, were interested in more training, better opportunities or more time off.

Mr. Bechtel says that studies show that aligning an employee's work to what he or she likes to do or does best "can be a very compensating experience for them."

He cites the example of a large construction company he worked with that employed four estimators. Three of the estimators enjoyed going out to meet people to do estimates; the other just enjoyed doing the calculations and his estimates were considered the strongest. Rather than letting everyone do what he did best and enjoyed, the company insisted on having all four go out and deal with potential clients. It was the job description, after all.

Small businesses, Mr. Bechtel says, have the ability to be more flexible.

Often, the reason a particular employee works at a company can be surprising. "It can be, 'The only reason I work here is because you leave me alone,'" Mr. Bechtel says. "Terrific, then - I'm going to leave you alone."

"Know who your people are, know what their talents are, have an ongoing conversation with them about how engaged they feel in the work and how that engagement makes them feel about working for the company, and then tie some reinforcement to that. But it doesn't always have to be money off the bottom line."

The CFIB's Mr. Kelly says one way that small firms have started to reward long-term employees is by setting up employee-ownership plans. While the plans are usually drawn up to deal with succession issues, a surprising benefit has been to motivate employees to become more interested in all facets of the company.

Three years ago, Ms. Tamm set up such an employee share-ownership plan to deal with succession at her firm.

One surprising result: "Our business increased dramatically." Employees were grateful for the opportunity to increase their own personal wealth, she says - and responded by bringing in more business.

"It incentivizes people to work hard, to work smart, to bring in business," she says.

 

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories