5 Ways to Reward Your All-Star Employees

Article from Inc Magazine–Full article found at http://www.inc.com/jay-love/5-ways-to-boost-employee-recognition.html?utm_source=money-and-finance&utm_medium=email&utm_campaign=incid40486week07

There’s no such thing as too much employee recognition. Learn five ways to reward your team.

By Jay Love

I hope you’ll agree with me after reading this post that there is no such thing as too much employee recognition. In fact, I would imagine that the average employee at most companies is starving for recognition of any type. Heck, most of them rarely see any feedback at all except for the “dreaded annual review,” but that’s a subject deserving of its own blog post.

Over the course of leading numerous organizations I’ve had the privilege of being a part of, our teams used personality testing to supplement our training of staff. For every type of role, 85 percent or more of the people tested replied that they would be much happier and would work harder if they were recognized for their efforts. This seemed like a no-brainer to me since most of my teachers—at every level of my education—used this strategy wisely.

If you’re familiar with The Carrot Principle, you probably remember reading about how beneficial employee recognition can be to a company’s bottom line. The authors described a study of 200,000 employees that revealed that employee recognition not only increased efficiency, but paid off significantly for the companies that effectively implemented them.  In some cases, these companies’ return on equity and assets were as much as three times as higher than that of other companies.

So, why are so many leaders still neglecting this invaluable practice? I believe many do for various reasons. Here are a few that immediately come to mind:

  1. That is precisely how they have seen it done time and time again in previous organizations.
  2. Most leaders received so little recognition on a regular basis themselves that they have no idea how powerful it can be in growing and retaining staff.
  3. It takes extra effort.

If you’re among the leaders within your organization, you may be able to initiate some change at your workplace. Start by sharing this list of five ways to boost employee recognition. I hope you and your co-workers will like them as much as our staff here at Slingshot SEO does! Here goes…

5 ways to provide recognition for your team:

  1. Quarterly reviews. Mandate one-on-one feedback sessions between each supervisor and team member on a quarterly basis. To ensure these are effective, have each manager carve out one hour for each employee. (At Slingshot SEO, we review the status of each quarterly goal and career objective, as well as take the time to chat to know each other better. The goals and any progress are summarized in a simple feedback form.)
  2. Peer recognition. Each month, I solicit open nominations for Slingshot SEO’s Outstanding Team Member of the Month. Each employee with at least 60 seconds to spare can e-mail me with their recommendations. Although just two are publicly honored at each monthly meeting, many others are encouraged by this program: I always forward the e-mails of the remarkable kudos to all the nominees along with a few comments of my own.
  3. Team highlights. Insist on your department heads sharing stories from their departments and highlighting the achievements of team members at the monthly All-Company Meeting. Lively presentations that include photographs, videos and client comments make this one even better!
  4. Yearly awards ceremony. Hold an Annual Award Event for your organization. (We award a Rookie of the Year, Most Improved, Innovator of the Year and Employee of the Year, plus we invite our Customer of the Year and Partner of the Year to make the event memorable.)
  5. Spontaneous kudos. Insist that every supervisor works hard to catch a team member doing something right or special as they wander around or peruse communications. When they do, have them point it out in front of the person’s peers or via departmental e-mail. (The more often the better, but beware… large smiles might take over your office.)

Be bold and give one or all of these a try, then please let me know if any of these suggestions are making a difference at your organization.

4 Rewards That Are More Powerful Than Money

This post is from Inc. Magazine.  For the entire article go to: http://www.inc.com/jeff-haden/4-employee-rewards-that-are-more-powerful-than-money.html?utm_source=innovation&utm_medium=email&utm_campaign=incid40449week06&nav=su

They reinforce positive behaviors, boost motivation, and build employees’ self-esteem. Bonus: They won’t cost you anything.

By Jeff Haden

Formal employee recognition programs can be effective, but many formal programs only pay lip service to recognizing employee performance.

Real praise should reward effort and accomplishment, reinforce positive behaviors, build self-esteem and confidence, and boost motivation and enthusiasm.

Do your formal recognition programs accomplish all that?

I’m guessing no.

Here are four informal and powerful ways to praise your employees:

Ask for ideas. Don’t just ask, “Do you have any ideas for how we can help you do your job better?” (Certainly ask that, but sometimes go farther.) Build off skills or insights they possess to use them in other ways.

Say a warehouse employee is incredibly organized. Say, “I am always impressed by how organized you are. I wish there was a way to clone you.” Then ask if she has thoughts about how to streamline order processing, or ways to reduce the flow of paperwork, or how another department could more efficiently collect data.

Not only will you get great ideas, but you also recognize skill and ability in powerful way.

Ask for help. Asking another person for help is one of the sincerest ways to recognize their abilities and value. Ask employees for help and you show you respect their skills and you extend a measure of trust.

The key is to ask for help partly or totally unrelated to their function, and to make the assistance relatively personal to you. I once went to a meeting to talk about layoffs; by the time I got back to the plant word had already spread that cuts were coming. One of my employees said, “So, layoffs, huh?” I didn’t have to confirm it; he knew. I said, “I have no idea what to tell our employees. What would you say?”

He thought and said, “Just tell everyone you tried. Then talk about where we go from here.”

Simple? Sure, but powerful too. He later told me how much it meant to him that I had asked for his opinion and taken his advice.

Create informal leadership roles. Putting an employee in a short-term informal leadership role can make a major impact. Think how you would feel if you had a boss and she said, “We have a huge problem with a customer. If we don’t take care of it we may lose them. Can you grab a few people and handle it for me?”

Informal leadership roles show you trust an employee’s skills and judgment. The more important the task, the higher the implied praise and the greater the boost to their self esteem.

Team up. You and your employees are on unequal footing since you’re the boss. A great way to recognize an employee’s value—especially to you—is to take on a task together.

What you choose to do together doesn’t have to be outside work, of course. The key is to do something as relative equals, not as boss and employee. Unequal separates, while equal elevates.

Years ago my boss said, “I’m thinking of joining Toastmasters to improve my presentation skills. Would you be interested in joining with me? It might be good for both of us, since someday you’ll be making lots of presentations.” I was flattered he asked and flattered he saw me as someone who would someday be in a position to speak to groups of people.

Verbal praise is great, but at times implied praise can be even more powerful. Ask for help or ideas, put an employee in charge, drop hierarchical roles, and work together. Each is a powerful way to recognize the true value of your employees—and to show you trust them, which is the highest praise of all.

The Fremont Group provides Success Partners–former small business owners dedicated to the achievement of your goals.  Become a member and take advantage of your Annual Business Physical!

Your company is reflected in your meetings

So often you can find out everything you need to know about a company by attending one of their internal meetings held by the owner.  Is there a sense of urgency?  Is the meeting organized?  Does it start and end on time?  Are employees attentive?  Does the owner “sell” the employees?  The answers are always reflective of the way the company is run and the way your customers/clients perceive your company.  Change can begin with changing the tone of your meetings.  As a sage professional once said, “a meeting over 15 minutes long is a therapy session and you don’t have a license for that.”


The vast majority of business owners are quick to tell us that they want to “hold their employees accountable.”  “No one is accountable here.  They aren’t held accountable.  Yada yada yada”  However when you ask them what it means to hold them accountable invariably their responses tend towards wanting to punish them.  Accountability is a huge issue among employees—the reason being the owner himself doesn’t understand what it means.

The root of the word accountability is account—account as in your accounting and as in numbers.  Accountability therefore requires numbers—a measurement.  This measurement is generally omitted from the employee’s job description—if they have one at all.  So let’s begin with the job description.  A job description must convey to the employee the results that the employee must produce.  When a job description consists of only a list of tasks, you might have a training manual but you do not have an effective job description.  When an employee is given only a list of tasks you will always lose the argument—“Why isn’t this done?” “Because I did this this and this instead.” “But that’s not what I wanted you to do.” “But how was I supposed to know—i have all this other stuff to do.”  You lose.  Establish accountability in the job description by defining the result that was supposed to be produced rather than just things you want them to do.  Each job description must include the tasks you want performed AND the results that are supposed to be produced from each task.  Preferably they are also prioritized—what may be common sense to you may not be common sense to them—in the job description you codify common sense.

When the result is defined it must be measureable and it must be understood.  A result that is missing either lacks the agreement between the parties as to what result is expected and whether or not it has been produced.  So even if your employee (or yourself) are afraid of “accounting” the “accounting” has to be put back into “accountability.’

The second issue that must be overcome is the natural tendency towards NIMBY—not in my back yard.  Accountability sounds good for others but what about the owner?  You cannot hold people accountable until you hold yourself accountable.  In a broad sense the owner is accountable for owner is accountable for three things—the gross profit percentage; the overhead percentage and driving sales above break even and to the desired level.  If you aren’t doing your job it is hard to expect that of others.  You can delegate responsibilities within those categories but you cannot delegate the accountability for the result.  The buck stops here.

The third issue that must be addressed in developing accountability is the issue of incentives.  Accountability and incentives are a ying and yang.  You cannot have one without the other.  The days of management by intimidation are over.  Defining results for accountability purposes also creates results upon which to create incentives.  The result identified in your job description is the amount of results that you are already paying for—you have an “agreement” (though the job description) with your employees that they will deliver to you x results and in exchange you will deliver to them y compensation.  If they deliver less than x results you hold them accountable; if they deliver more than x results you have a reward in the form of incentives (and therefore encouragement to produce beyond their prescribed result).

So when you as an owner are frustrated that employees are not being held accountable; blame yourself for not doing the groundwork that creates a system of incentives and accountability that would do so.


Focus is the alignment of the value center of ownership with the company’s management, employees, vendors and customers.

The owner just can’t figure out why his employees lack “common sense.” Management is excited—they have created a process of measuring and monitoring an activity yet even after it is implemented, the bottom line of the company drops. Employees are frustrated because they have to face customers who have been treated poorly. These all can be symptoms of a disease we at The Fremont Group call “alignment disorder.”

When your tires are out of alignment it costs you money and endangers your life. Your tires wear unevenly and have to be replaced prematurely. Your control of the car while breaking is compromised putting you and your family in danger. Worst of all, when you really accelerate your steering wheel shakes and you con lose control causing a major accident. The same thing happens when the interests of your employees are not aligned with the interests of the company. When it is in an employee’s best personal interest to take an action that is not in the best interests of the company you have an alignment disorder.

Alignment disorder is when an employee can make more money by working slower and accumulating overtime pay rather than getting the job done efficiently or when it is more important not being blamed for a problem than fixing it. A sales person lying to a customer to get a sale; employees leaving at 5:00 with a project a half-hour from finishing; or the raise given to the one who complains the loudest are all examples of alignment disorder. Bringing a company into alignment first requires that you clearly identify what the company is trying to accomplish. Alignment disorder is often a symptom of an owner who has not clearly communicated to his or her employees what is really important—or a company that says one thing but practices another. Of course once this mission is clearly stated and communicated, systems, procedures and controls must also be introduced which incentify the positive behavior and punish behavior not in conformance with the corporate objective.

What truly is important to you and your company? Money is obvious. If we don’t make a minimum, mandatory profit any other altruistic ideals you might have cannot be achieved. Although it is possible to forget that we need to earn a profit, our work at The Fremont Group rarely encounters this omission. (Possibly because companies that ignore profit are not in business long enough to become our clients!) It is much more common for us to encounter companies that have lost their “value center.”

There is only one reason for your business to exist—to make your life better. We preach this as the “First Commandment.” The obligation of your business is to make the life of the owner better. The things that are making your life better should be identified and built upon; the things that are making your life worse should be identified and eliminated. If however you do not clearly identify your “value center” as making your life better, you will miss a significant portion of this axiom. Everyone has a value center beyond just earning the maximum profit possible. If we did not we would make all “cost-benefit” decisions resulting in acting upon anything that would save the company a nickel regardless of the human consequences. Joe would be fired after he got old or hurt because he could be replaced cheaper. Agreements would be breached if it would save money. Customers would be provided cheaper goods if we could “get away with it.” Few owners (and none of our clients) would totally agree with this approach. There is a “higher agenda” for almost all of us. The litmus test of your value center is easily determined. Take a sheet of paper, as much time as it takes and write out your epitah—how do you want you and your company to be remembered after you are gone? Profit will be included but list at least five additional values that you want you and your company to be remembered for. When you finish you have defined the value center of your company. This now must be transmitted to your organization.

The transmittal of your value center to your organization is required to create alignment and focus. When your employees clearly understand your value center and are incentified to act in accordance with it they suddenly acquire “common sense.” This transmittal is an on-going process. It starts with the hiring process, continues in specific training, is reflected in your incentive plan and most of all is observed by all in the actions of the owner. Just as the parent who tries to teach his children not to lie as they call in sick to work to go skiing, the example of the owner is more important than the rhetoric. When the value center is defined the owner must be sure that they are identifying values that they are prepared to live by themselves.

During the 1990’s many consulting firms made money by convincing businesses that they needed to write a “mission statement.” Had it been done effectively much of the company’s value center would already have been identified. As Steven Covey wrote in The Seven Habits of Successful People (and many others have paraphrased) it is important to “start at the finish.” Most mission statements are either “forward-looking” or current attempts to define the mission of the business. We have already defined that the reason that every business exists is to make the life of the owner better but what is the purpose of the business? What are the things other than money that really will make the life of the owner better by fulfilling their true objectives? This is the value center.

It was also common for companies to create mission statements by committee. Bring in your management team, have them work with a consultant for a day (or more) and come out of the room with a well-written mission statement. Put this mission statement on the wall in the lobby and go about your business. This approach is an abdication of the leadership function of the owner. The troops look to the general for leadership. They expect the general to have a plan—a clear vision of what is going to be done. Then they expect to be informed as to what their role is in this plan. They don’t want to hear the general be “wishy-washy” about the plan and ask them what they want the plan to be. The common element of all leaders is they have a plan; they clearly communicate their vision or plan to their subordinates; and they act decisively upon that plan.[1] It is therefore the leadership responsibility to clearly define the purpose of the company. This is not a group activity—this is a look into the heart of the leader. If the owner does not do so, the company can never have the focus required to be successful without relying upon luck. Time spent by an owner identifying their value center is akin to time spent planning a project—every hour spent in planning saves two on the job.

A clearly defined value center creates in an organization a new definition of “success.” Most of us are not trying to be just the company who makes the most money; most of us have some values that must be complied with in making that money. As an owner we must accept a new definition of success that complies with these values. The attainment of this newly defined success brings about real fulfillment. To be accomplished we must train our people in its meaning and we must at all times demonstrate to the organization the priority of these statements through our daily actions.

In order to transmit your values to employees you not only need to live these values but you must also train your employees in them and incentify them to act upon them. If it is in their financial interest to make a sale using methods outside of your value center you have a structural issue. If they simply don’t understand how they should prioritize competing interests you have a training issue. The mere demonstration that you are willing to invest in training employees regarding these values makes a huge impact upon the organization. It is easy to say “do what is right” but when the company “puts money where their mouth is” the impact is undeniable. That impact brings your employees into alignment with your value center. It creates a focus within the organization. It puts everyone “on the same page.” It makes you more money and it brings about a fulfillment that transcends your bank account. It makes you successful.

[1] We need look no further than the Katrina disaster in New Orleans to see an example of poor leadership. There was no plan, there was no communication of the plan and no decisive action. A strong leader would have immediately appointed a single individual to act in accordance with the values that had been instilled in them decisively pulling together all of the available assets of this country. There would have been second guessing but a strong leader accepts second guessing. Six months later instead of trying to explain and avoid blame lives and a city would have been saved.

Operations Manual

Systems and structure works. People live in chaos. Their personal lives are a mess. We want to provide for them a place where there is a predictable system. Where they know what is expected of them. Where for 8 hours a day they have structure. Young children will play the same videotape over and over again to fill the psychological need for predictability. When tied to a system of development or promotion for employees you significantly reduce turnover. But you must be willing to constantly work on your system and you must be disciplined enough to consistently enforce it. If you cannot respect your system then you cannot expect your employees to respect it.

In order to have an effective “system” of operations it must be documented. Each function must be documented so that consistency is achieved. The importance of the documentation becomes evident when there is turnover. The new person must have something that they can pick up and say, “this is how I do my job.” This is critical if the business is going to become systems dependent rather than people dependent. Every football team has a playbook yet the owner doesn’t.

The Operations Manual describes how the company would work if it were 1000 miles away and you could never visit. It describes how each job is done and what each person has to do so that their boss has a comfort level of knowing that the job has been done. Remember that it is a constant work-in-progress.


Everyone has one-hundred sixty-eight hours in a week—how come some people find the time for family, some people find the time to attend workshops, and some people find the time to run more than one business yet others work excessive hours, don’t get out and seem to just live with results that never change?

In “Minding My Own Business,” author Dirk Dieters examines with the attendee the six responsibilities of a small business owner and applies those principles to the attendee’s business. Like other authors and experts, Dieters does not list as one of those responsibilities the requirement that the owner invest all of their efforts and time in the performance of the technical tasks in the business. Your responsibility as an owner is not to do other people’s jobs but rather to lead the company. The business climate is difficult and there is only one guarantee—that the rate of change will accelerate. You have a responsibility to keep your company ahead of that curve. Are you investing the time required in this responsibility? The Fremont Group focuses you by teaching you that there is only one reason for your business to exist—to make your life better. When was the last time you made the effort to look at your business? How is your business making your life better? How is your business making your life worse? As a business owner decisions are actually very simple—we build upon the things that are making your life better and rid ourselves of the things that are making your life worse. To make you a better business owner, The Fremont Group presents the acclaimed “Minding My Own Business”™ workshops. These are customized sessions for business owners only. Attendees universally agree that they leave with not only a better understanding of their business but also with specific actions that will make an immediate difference in their company. Yet the Fremont Group salespersons often hear the objection, “I don’t have the time.”

Irrational decisions are most often the product of either fear or denial. Fear causes poor decisions; poor decisions lead to poor results. We can be afraid of many things—we can be afraid of being wrong. What if the workshop does not provide me with anything that builds upon the positives or rids us of a negative? We can be afraid of repeating a previous mistake. What will people (employees, family, etc.) think if it turns out to be another expensive venture that doesn’t really help? We can be afraid of being weak and at risk of being “talked into things.” People are already questioning my decision-making—what if this is a mistake? And we can be afraid of showing weakness. I am not going to admit that I might benefit from outside help. Companies go where the owner leads it. If it is led by fear it probably will never go where you want it to.

Some may classify denial as a form of fear, however I think that it deserves a classification of its’ own. It is a natural human trait to postpone difficult actions as long as possible. We hope that if we ignore a problem that it will go away. This is the equivalent of being hooked on drugs—we call it “hopium.” Unfortunately it sometimes works—and this just hooks us more. Hopium can paralyze. Just “hoping” that things will change can create a death spiral in a business. Rarely is the confrontation as painful as the problem itself. Things happen when we make them happen. Change takes place when issues are addressed, confronted and solved in a systematic method. If we wait and “hope” for change, we are allowing hopium to control our fate. Denial doesn’t solve problems and your employees know it. They expect to receive training and respect the fact that you seek continuous training in your job of leadership.

We all have the time—it is an allocation issue. Would attendance at the workshop help you build upon the things that are making your life better? Would it help you rid yourself of things that are making your life worse? If the answer is yes to either then choosing not to attend is not a rational decision. Allocating time to anything other than these two objectives is not going to move either your business or your life forward. So why make an irrational decision? In less than three hours you can do something that can make a difference—what else are you really going to do that could change your business and your life? Oh, I forgot—you don’t have the time.

Dirk Dieters is the owner of The Fremont Group, a small-business management coaching firm in Aurora, Colorado. Mr. Dieters has an undergraduate degree in Business Education from Michigan State University and his law degree from Detroit College of Law. He has worked in management consulting since 1995.clip_image002 The Mission Statement of The Fremont Group clearly states his objectives: “The job of The Fremont Group is to make the lives of our clients better through a knowledgeable, trustworthy, truthful, empathetic, forward-looking and focused relationship.”

Mr. Dieters played baseball at Michigan State; coached baseball at Oakland University in Rochester, Michigan; has owned his own small businesses; and at various times has held real estate and series seven licenses. He is married with five children and is the author of the book “Minding My Own Business” published in 2005. He also hosts “Minding My Own Business” Workshops designed for small-business owners nation-wide. He has published articles for the Institute of Management Consultants. Visit their web site at www.the-fremont-group.com.

© The Fremont Group 2007


Delegation is a learned technique. In order to effectively delegate a task there are a number of steps that must be taken. Stephen Covey refers to the delegation process as, “Creating Win-Win Stewardship Agreements”[1] First the task must be clearly defined—specify the desired results. It is vital that the desired results are results, not methods. Often times the task looks different in the eyes of the two parties. In order to accomplish a meeting of the minds you must define the task in terms of results. The result is what is critical and is what must be clearly defined. The definition must include measurement—how will be determine if the results have been achieved? The person must not only understand how the result is being measured, they must also understand and agree as to how the result is being measured. Once the desired result is agreed upon, the parties then agree upon how the result should be achieved—the steps that must be taken and guidelines must be set. Within those guidelines is the level of authority that the person has. There are six levels of authority—(1) wait until told; (2) ask; (3) Recommend; (4) Act and report immediately; (5) Act and report periodically; and (6) Act on own.[2] This defines the level of authority that has been delegated. These levels change as you gain or lose trust in the person.

The third, fourth and fifth steps identified by Covey are to identify the available resources (human, technical, financial, etc., define accountability (essential to the integrity of the delegation), and to determine the consequences—what happens if the result is or is not achieved both to the individual and the organization. Lastly, the parties must agree upon a feedback system. The person must be providing enough feedback to provide you with a comfort level of knowing that they are on track to achieve the result. The feedback can be formal (such as a report) or it may be informal (such as sticking his head in your office twice a day to let you know where he stands) but regardless it must be complied with. It is the feedback element that is most commonly ignored.

Effective delegation relieves the owner’s obligations and develops employees. “A leader is not appointed because he knows everything and can make every decision. He is appointed to bring together the knowledge that is available and then create the prerequisites for the work to be done. He creates the systems that enable him to delegate responsibility for day-to-day operations.”[3]

[1] First Things First, Stephen Covey, Simon & Schuster 1994. If you are to read one of Covey’s books, 7 Habits of Highly Successful People, is the book to read. In First Things First, Covey covers some of the same ground but gets much more technical in his analysis.

[2] Ibid.

[3] Moments of Truth, Jan Carlzon, HarperPerennial 1989

Management Techniques (Part II)

This is a follow-up to the Management Techniques post. We will walk through the five criteria.

1. Employees must understand what results are expected of them.

This is not as simple as it seems and it is the foundation that most business owners miss in trying to manage. Imagine a baseball manager having a meeting with his key player—but without statistics. “You’re not hitting well enough.” “Yes I am.” “You don’t get enough hits.” “I got two yesterday.” “You should have more home runs.” “I hit one last week.” “This has to change—we will meet again next week.” And how is that discussion going to go next week? This might sound like a common meeting of owner and employee. If you have ever told an employee that they are not doing a good job and they argue with you—you have violated this first principle. How different that conversation would be if you had statistics: “You’re being paid to hit .300 and you’re only hitting .200—what’s the problem?” “I got two yesterday.” “No, you aren’t listening—you are being paid to hit .300 but you’re only hitting .200, what’s the problem?” Silence. “You are being paid to hit 30 home runs a year buy you are on pace for only 10, what’s the problem?” “I hit one last week.” “You aren’t listening. Do you need different working conditions or more training? We’ll be glad to do whatever it takes, but what we really should be focusing on is your bonus—if you hit .333 you get another million dollars, I’ll be manager of the year, the team will win more games and the company will make more money. So what do we have to do to get you to .333? I know we can’t do it in one week but next week when we talk you need to be at .250 or we will have to bring in another player and pay them out of your salary—we don’t what that do we?”

So the first rule is to establish results for each position. Where do the results come from? If you add up all of the results of all of the employees you have what it takes to accomplish your financial plan for the company—your budget. You hold people accountable for the results that are required to meet your budget; you create incentives for results that exceed your budget and produce additional profit.

Conveying those results to the employee is the critical part. It is not enough to have the standards, they are worthless unless they are conveyed to the employee in a manner that they understand. This is where effective job descriptions come in. Employers who create job descriptions that are merely a list of tasks will fail. The list of tasks is the training manual. Real job descriptions communicate to the employee the results that you are paying them to produce. And they must understand that their base pay is contingent upon the production of those results.

Examine your organization in that context—does each employee understand that their pay is contingent upon the production of defined results?

2. Employees must understand how those results are measured.

You can’t manage it if you can’t measure it. In fact, you can’t manage people. People do whatever they want to do. What you can manage is results. And you can create an environment where people are not comfortable not producing their results and therefore they actually want to do what you want them to do. You will be unsuccessful if the measurement of an employee’s results are not: (1) done in a way that is simple enough for them to understand; and (2) done frequently enough for those results to become the focus of their day. In fact, the ideal system has the employees themselves calculating their results on a regular basis. This means that the employee must have enough information to be able to calculate their results.

3. Employees must know if their results have met the minimum level of expected performance.

An effective system causes employees to calculate their results and compare them to the standards established for their position and pay grade. This ties into a system of employee reviews. There is a collateral advantage to this. As an owner the most critical information that you need is the ‘bad news.” Good news is nice—but what is critical is that you know immediately if something is going wrong. If the employee knows that they are being held accountable for a result and sees that that result is not going to be achieved, they will let you know immediately so that they can negotiate a change in the required result. At this point you have a critical juncture. You can either treat the news as an excuse or a reason. The difference between an excuse and a reason is the excuse isn’t true. If an excuse is offered you must choose to either replace or retrain the employee. If a reason is offered you must change the standard and change your plan (budget) to accommodate the new reality. Your success is determined by the excuses that you are willing to accept.

4. The frequency that employees must report those results and be held accountable must be determined by their level of authority.

Many owners fail to distinguish between the levels of authority that they grant to an employee. The lowest level of authority it the authority to do nothing—watch. The next level of authority is the authority to recommend. The third level is the authority to act and report immediately. The fourth level is the authority to act and report periodically. The highest level of authority is the authority to act independently. Not recognizing this hierarchy is a laziness driven fault that dooms many employees to failure. It is tempting on the owner’s part to “just hire good people” and trust them to do good work. This is absolutely wrong. Every employee must progress through these stages before they can reach the top—and many never will. It is also a fluid scale. Employees can move up and down this scale regularly. Ideally their base compensation is also tied to their level of authority. You are setting up an employee for failure if you just “toss them in the water and see if they swim” and even worse you are inflicting the cost of turnover and failed results upon your business. If left undirected the employee chooses their own level of authority—do you really want the results of your business left to the chance choices of new employees?

5. There must be immediate feedback for unacceptable results with a meeting where the manager asks two questions—“Why did we fail? And what are we going to change tomorrow?”

Those two questions are the key to management. If an employee knows the results that they are required to produce; they know (and possibly even participate in the calculation of) the measurement of those results; they know if their results have met the established expectations for their position; and they are reporting those results on a regular basis there are only two relevant questions to ask—why did we fail and what are you going to do about it to change it tomorrow?

The implementation of these five principles is the cornerstone of an effective organizational structure.