How to Pay Your Staff


1 minute read

Continuing the discussion on paying staff in the growing agency, let me share some thoughts on how to structure a compensation plan.

John Fear of Premier Business Consulting says, “Whenever I am asked what the ‘right’ way to compensate staff is, I always respond with the same question, ‘What is the intended outcome of the plan you want to institute?’” In other words, What are you trying to accomplish? A second component, according to John, is what will motivate the intended recipient?

If you start with your business goals in mind and think about pay from the point of view of the employee, structuring a pay plan will become pretty simple. 

For example, if you are structuring a plan for a customer service representative and you have determined that this is primarily a service position, with account rounding and referral development as a secondary goal, then you are looking for a person who is probably primarily interested in security. This person is going to want to be paid a salary as the bulk (or all) of their compensation. How much always depends on experience and market demand.

However, if you want this individual to round accounts and seek referrals, you have a decision to make. Do you expect this activity as a required part of the job and expect that no additional compensation will be provided for it? That is OK, but you need to set minimum performance goals for this, measure them, and use meeting (or exceeding) them as one of the criteria for raises or even continued employment. 

Or, if you want to provide additional motivation, you may decide to pay a “bonus” for certain activities. Just be sure of a couple of things: 1) make the bonus reasonable in that it doesn’t blow your “sales” payroll budget (as opposed to service) and 2) that the compensation is tied to a measurable result and 3) that the compensation is paid regularly over a short interval so that the recipient definitely ties the money to the activity. 

In my next post I’ll give you some thoughts on compensation for sales activities…