We are a small food manufacturer with about 180 directly-hired workers. Top management has requested our human resource (HR) department to study the possibility of giving pay increases to our workers who performed well during the pandemic. Many of our workers have continued to report for work despite the lack of public transport by using motorcycles or bicycles. Due to our workers’ dedication, our factory has managed to achieve our sales target despite COVID-19. We’d like to return the favor by giving material rewards to those who deserve it. Could you give me some idea how to make this happen? — Sun Flower.
First things first. I would like to commend your management for thinking of employee rewards even during the crisis while many organizations are closing, if not downsizing. It’s not every day we get to encounter management that is trying to save jobs and giving out reasonable rewards to dedicated, hard-working employees.
Mark Twain once said: “When I read the Bible, the parts that trouble me the most are not the ones I don’t understand, but the ones I do understand.” A similar misunderstanding could happen to you if you implement employee rewards without serious thinking of long-term implications for your organization. If you’re not careful, you may find yourself on the losing end.
The question on top of my mind is this: Are you sure you can maintain paying merit increases this year and in the years to come? If not, then read on.
You need to be careful not to commit to something no matter what your good intentions are. Of course, you want your workers to be dedicated and hard-working. Let’s explore some basic considerations for planning, designing, and implementing a merit pay increase:
One, establish a clearly-worded policy on performance appraisals. Without this, it would be difficult for your line supervisors and managers to evaluate the work of each and every employee. If you have a policy, ensure that it’s understood by all workers. If necessary, notify everyone of the policy in Taglish and make the process as objective as possible to prevent line executives from giving average ratings to avoid becoming unpopular with the workers.
Two, give merit pay to those with above-average ratings. In other words, recognize only those people who have exceeded management expectations. This means focusing only on the actual results of each individual worker rather than giving attention to the number of hours they spent in the workplace. If you would like to reward people who brave the hassles of daily commuting and the fear of infection, the best approach is to give them hazard pay, which you can always withdraw anytime or as soon as the pandemic is over.
Three, allot a reasonable budget for merit pay that matches inflation. Aside from the inflation rate, the best approach to determine the budget is to align your salary structure with your industry. If your business is too small and can’t compete on this score with the big guns of the industry, the other option is to meet the trends in your community or geographical location. If your factory is in an export processing zone, ensure that your employee reward structure aligns with the standards within such a location.
Last, emphasize that the merit pay increase is contingent on profitable results. This is an important stipulation when you issue a policy on employee rewards and recognition. Without this, employees may harbor false expectations. Avoid giving any firm commitments. If future circumstances do not allow you to fulfill your promises, you may end up with demotivated and unhappy workers. It could also land your management in legal trouble later on.
ACTUAL RESULTS, NOT HOURS
For some people managers, it’s not always easy to make a distinction between actual performance and perfect attendance. There are managers out there with low performance standards that put a premium on workers who report for work daily and on time, regardless of their performance. This is apparent in your context when your top management wants to recognize workers for finding ways to report for work in the absence of public transportation.
Let me emphasize this: A perfect attendance award is a lousy employee recognition program. It makes clock watchers believe they have done a good job. Of course, we all want deserving workers to be properly rewarded. It’s one basic approach to motivating people. However, let’s understand that a merit pay increase is totally different from hazard pay as I’ve explained above. Don’t confuse the two.
Whatever the gap is between your current policy and the realities on the ground — and that includes your top management’s inclination to reward people who are confronting the daily hassles of commuting — there’s much you can do to promote a merit-based system. rather than merely recognizing people who mechanically report daily.
This requires honest and open communication between management and their employees.