The use of non-monetary motivators in small business.

Howard, Jack L.

INTRODUCTION

Any business that has employees faces challenges keeping them motivated. Both large and small businesses attempt to use financial incentives to motivate employees to achieve the organization's objectives (DeCenzo & Robbins, 2007). One challenge that small businesses face is that they do not have the same ability to pay as large organizations (Milkovich & Newman, 2008). This creates a challenge for small businesses when it comes to attracting and retaining quality employees (Howard, 1998; Howard, 1999). Given this combination of challenges, small business owners need to consider a variety of options when attempting to motivate their workforces.

The present paper focuses on non-monetary motivators that small businesses can use to assist them in keeping their employees motivated. The first section of this paper focuses on how small business owners might treat employees. In this section, the importance of getting to know your employees, communication with employees, and fairness and respect towards employees will be addressed. The second section of the paper focuses on developing employees in a small business. The role of performance appraisal will be presented, along with involving your employees in the planning and running of the business. The next section of the paper will focus on rewarding employees in small business. Specifically, the use of non-monetary rewards such as recognition and other rewards that employees' value should not be overlooked. The fourth section of the paper will focus on work schedules. The main focus of this section will be on the benefits of flexible work schedules, and how small business can gain and retain valuable employees while using flexible work schedules. Finally, conclusions of the paper will be presented.

TREATMENT OF EMPLOYEES

It is important for any organization to treat its employees with respect, since it is employees that make the difference between success and failure for most organizations (Howard, 1998). While this might appear to be a simple issue, it is especially important that small business owners capitalize on treating their employees well in order to get the greatest benefit from the employees, as well as increase retention. Treating employees with respect, as well as greeting each employee everyday by saying "Good morning", can go a long way to establishing a reputation as a business owner who cares and takes an interest in his or her employees at a personal level, which may be different from what employees have experienced in larger organizations. This can lead to a tremendous value for small businesses. In order to develop this value, a small business owner needs to first get to know his or her employees. Three ways to treat employees well are to get to know your employees, communicate with your employees, and ensure that employees are treated fairly and with respect.

Get to know your employees.

An opportunity that small businesses have, which large organizations might not have, is that the small business owner can get to know each and every employee. Small business owners can gain a lot of respect by knowing each employee by name, as well as taking a personal interest in each employee. By listening to employees, small business owners not only gain the confidence of their employees, but they also learn what motivates these employees (Howard, 1998). Learning about the skills and abilities that the employees have can help the small business employ these individuals in areas that capitalize on their strengths. Small business owners need to remember that all employees are different from one another. As such, two employees might not value the same things. By getting to know what motivates your employees as individuals, as well as knowing what each employee can do for the small business, small business owners are in a better position to deliver a reward that the employees' value, as well as understanding how employees will respond to changes in the workplace and how these changes should be communicated (Harris & Arendt, 1998).

One way that small business owners can get to know their employees better is to have a meal with some of the employees on a monthly basis (Ortega, 2006). While a small business owner may not be able to do this with every employee every month, it does provide an opportunity for a small business owner to really get to know what his or her employees like and do not like about their work, as well as identify areas that can be improved for the business. This helps the small business succeed, as well as lets the small business owner better understand what his or her employees value. Furthermore, this can help a small business retain quality employees.

While communicating with every employee on a personal level everyday might not be feasible for all small business owners, at a minimum small business owners should meet with their employees on an annual basis to provide them feedback about their performance (DeCenzo & Robbins, 2007). During this meeting, small business owners can further identify which parts of the employees' jobs are important to them, as well as their career aspirations. Employees can learn which aspects of their performance are above the performance standards, which aspects meet the performance standards, and which areas need improvement (Pomeroy, 2004). Getting to know employees strengthens the relationship between the employee and the small business, as well as allows the small business owner the advantage of knowing how to handle each employee, whether the small business owner is handling rewards or informing employees of changes.

Communicate with employees, not at them.

When getting to know your employees, small business owners should consider taking that same type of communication pattern to the next level, communicating with employees on a regular basis, rather than communicating at employees (Howard, 1998). This includes listening to employees and their ideas. Employees help the small business succeed, and they might see ways in which work can be done more efficiently, since they are focused on a smaller part of the picture than the small business owner. By listening to employees, the small business might be improved, benefiting all in the small business. While it is not always feasible to speak with each employee directly on a regular basis, bulletin boards can be put up so notices and announcements can be posted. This type of activity opens up communication throughout the organization.

Change in any organization is inevitable, and the same is true for small business. Ensuring that employees understand where the small business is going and how this will influence them in their job is critical to organizational success (Howard, 2006). The primary way to ensure that employees understand where the small business is going and the implications of the changes is through communication (Dyer, 1996; Nicholls-Nixon, 2005). While bulletin boards might be an appropriate communication channel for some types of notices and announcements, face-to-face communication when organizations are going through transitions and change help employees understand the changes, resulting in less resistance to the changes (Larkin & Larkin, 2005). As the quality of communication increases in the small business, employees become empowered, committed, and organizational goals are more likely achieved (Brunetto & Farr-Wharton, 2004).

One of the ways that improved communication can be achieved is to facilitate lively, informative staff meetings, where the employees are actively engaged. This involves the employees more than meetings where employees are directed what to do. The more you draw out of your employees, the better the small business will become, as these employees will become more committed to the business (Rosen, 2004). Additionally, hold regular forums for all employees where the employees are encouraged to open dialogue on work issues. At Johnsonville Sausage LLC, production employees hold meetings prior to each shift, discussing the state of operations, as well as addressing any problems that have arisen (Pomeroy, 2004). All employees are directly involved, and as a result, Johnsonville Sausage was on the 2004 list of Best Small and Medium Companies to Work for in America (Pomeroy, 2004). Employees ideas are addressed and employees believe that they are actively engaged in the running of the organization, resulting in turnover that is lower than the industry average.

A major benefit of communication for small business owners is that employees and small business owners alike develop trust in one another (Howard, 2006; Tzafrir & Dolan, 2004). As trust develops, conflict within organizations has been found to be reduced, as well as increased productivity and performance among employees (Ferres, Connel, & Travaglione, 2004; Perren, 1998; Sharif, Kalafatis, & Samouel, 2005). Trust has not only led to these positive organizational effects for small businesses, but trust has also been associated with an increase in profits, while avoiding the negative situations where a lack of trust has led to the inability of small business owners failing to delegate tasks, leading to burnout (Gomez & Rosen, 2001; Howard, 2001; Howard, 2006; Rosen, 2004).

Treat employees fairly and with respect.

One of the fastest ways to help gain the commitment of employees toward a small business is to treat employees fairly and with respect (Howard, 1998). Employees will be more likely to work harder, and will be less likely to leave the organization if they are respected and appreciated (Pomeroy, 2004). One way that small business owners can go about maintaining respect for their employees is to regularly look at what their employees are doing. This can be accomplished by shadowing their employees occasionally, seeing directly the challenges employees face and how they successfully address those challenges (Pomeroy, 2004). This will help small business owners identify the resources that the employees need, as well as remain familiar with the myriad of challenges that employees face. While one might think that a small business owner would be familiar with all of the aspects and challenges associated with his or her business, it is easy to become removed from the issues that face line employees, as the small business owner is the primary marketing strategist, financial officer, human resource manager, in addition to the operations manager and owner. Given all of these responsibilities and duties, it could be easy to forget all of the details faced by line employees. Shadowing workers occasionally helps the small business owner remember all of the challenges that he or she once faced himself or herself.

Respect and fairness are so important to employees that they represent two of the five themes that the Great Place to Work Institute Canada examined when selecting the 30 best places to work in 2006 (Wahl, 2006). The model used to evaluate organizations in Canada has been used by Fortune magazine when determining its Top 100 lists, and largely focuses on how employees are treated and cared for in organizations. Ultimately, if an organization is a great place to work, employees will be committed and productive, and the organization will succeed. Success is something that every small business hopes to achieve, and treating employees fairly and with respect can help achieve this success.

It is important to remember that getting to know your employees requires communication, and the more you communicate with your employees will help you to better know them. This further helps small business owners develop a workplace that employees view as one that is respectful and fair. If a small business owner can effectively develop a workplace atmosphere that includes these aspects, the business is more likely to succeed.

DEVELOP YOUR EMPLOYEES

Developing employees in a small business is a second area of importance to the success of the small business. While open communication helps encourage employees to develop their ideas, there are additional ways that small business owners should consider developing their employees. Developing employees can help them further understand how they can help the organization, and this can help the small business owner understand how they can help the employees improve their performance and achieve their personal goals (Harris & Arendt, 1998). Two ways that small business owners can develop employees is by conducting performance appraisals on every employee, as well as involving employees directly in the business.

The use of performance appraisals.

One way to develop employees is by conducting performance appraisals for all of the employees in a small business. While many managers in all types of business do not like to use formal performance evaluation techniques, viewing the use of time to do so as time better spent working on other issues, performance appraisals are an excellent tool that can be used to develop employees (Latham & Wexley, 1994). Certainly, employees need to know if they are not performing their tasks correctly or to standard. If they are not informed of mistakes, how would they be able to take corrective action? As such, even if formalized performance appraisals are not conducted in organizations, informal feedback can address areas of poor performance as needed. The Calvert Group takes this approach, focusing performance appraisal from an informal perspective (Barrier, 1998).

While the informal performance appraisal approach might be preferable and appropriate for some small businesses, there are advantages to implementing a formalized process that might outweigh the time commitment to administering such a system. First, by implementing a formalized system, employees are ensured that they will receive feedback on their performance on a regular basis. This is important because most employees want to know how they are doing, but with the day-to-day activities at work, there can be times where employees do not receive an assessment of their performance in an informal setting. During the performance appraisal interview or review session, an employee can meet with the small business owner and discuss the areas of successful performance, as well as areas that need to be improved. This keeps employees informed of their performance, as well as giving them the opportunity to solve performance problems. It is important during this session that communication is two-way, meaning that employees are given a chance to speak to the issues of their performance. At Northeast Delta Dental, the session is viewed as one where not only are employees provided with feedback, but employee's ideas on how to improve performance are not only listened to, but encouraged (Pomeroy, 2004). Employee's ideas are often times implemented because they were viewed as effective ways to improve not only their performance, but how the business could be run. Ultimately, this develops employees to a point where they begin to proactively understand how they are performing, and can take action to improve performance on their own.

Unfortunately, there are situations when conducting performance appraisals when there might be more negative information to discuss about an employee's performance than positive information. It is important to note that when a small business owner provides feedback about performance that the feedback is focused on the performance, not the employee himself or herself (Howard, 1998). It is important to hear the employee's perspective, but to remain focused on the performance standards, and keep the situation from degenerating into a situation where the employee feels that he or she is being picked on. Opening up communication, and providing ways to improve can assist in helping the employee see how they can take the feedback and use it to their advantage.

Involve employees in the business.

Unless a small business is a one-person operation where the small business owner has no employees, it is important to understand that employees will have a tremendous effect on the success of the business. Given this, it is important to develop employees so that they can take over operations and activities as necessary, as small business owners should desire to have a situation where they own the business and not a situation where the business owns them. Involving employees in the business helps employees to understand the business as a whole, and not just the job that they are performing. At Johnsonville Sausage LLC, employees are indoctrinated into a culture of involvement from the time they begin working for the company (Pomeroy, 2004). All employees go through initial training where they are trained not only on their jobs, but about how the organization runs, teamwork, and how the finances of the organization are managed, to include their influence on employees. The goal is to create a situation where all employees understand that they influence the organization as a whole, and that Johnsonville wants employees to be involved, offering the organization ways to improve. Because of this approach, when teams do not meet monthly production goals, they voluntarily meet to determine as a team how to improve their performance so that goals are met (Pomeroy, 2004). These meetings are not required, but employees have developed a commitment to high performance because they have been involved in all aspects of the business from the beginning of their employment. Their involvement has helped them develop as employees, gaining an understanding the effects of their operations on the organization as a whole.

Another way to develop employees is to take them to meet with customers. This allows the employees to understand how what they are doing is influencing customers, and what the customers may further want in the product. In addition to meeting with customers, employees learn from each other when they meet as a group working on a common problem or project. When working on research projects associated with counterterrorism and criminal justice, employees at Mitretek Systems find that they learn a lot from each other when they meet to share information and ideas (Pomeroy, 2004). By sharing ideas at meetings, employees learn from the perspectives and experiences of each other. There are team leaders present for these meetings, but employees are involved to a point where team leaders are viewed as partners, and not bosses, allowing for the further development of the employees.

At the biotechnology firm of Genecor International, the organization develops employees by placing them in jobs that are different than what they have been educated or trained for (Pomeroy, 2004). The organization does this for a variety of reasons. One reason is that it further develops the employee, making them more valuable to the organization by being able to contribute in a wider variety of ways. The second reason is that it helps the work group to see things from a different perspective, developing the other employees in the work group.

By involving employees in small business through these various techniques, the employees develop an understanding of what the business is about and where the business is going. This can particularly assist a small business owner in developing a shared business logic among the employees, so that employees can step in when the business owner might not be present (Nicholls-Nixon, 2005). This is a common situation for small businesses when formalized plans and procedures have not been formalized. By developing employees through a variety of techniques, such as those outlined, small business owners are creating valuable employees, as well as keeping employees actively engaged in the business.

REWARDING EMPLOYEES

Rewarding employees is critical for any business organization. In today's business world, employees demand adequate rewards, and if they are not rewarded to the level which they believe they deserve, they might leave the organization for better alternatives. This is a challenge for all organizations, but can be a greater challenge for small businesses. Small businesses may not have the ability to pay employees that large businesses have (Milkovich & Newman, 2008). There are a variety of reasons for this, such as a lack of revenue, the lack of market share, or the reinvesting of profits into the business. Additionally, it has been noted that small businesses have faced challenges associated with being able to pay salaries to employees at an appropriate or competitive level (Howard, 2006). All of these factors are issues that small business owners need to consider addressing. However, there are rewards that small business owners can offer that employees will value. Small business owners should not overlook the influence that non-monetary rewards can have on employees. The benefits of each of these types of rewards will be discussed in the next several paragraphs of this paper.

The use of non-monetary rewards.

While most organizations focus on the use of monetary rewards, non-monetary rewards may not only be less expensive, thus more viable, for small business owners, they might be just as effective as monetary rewards. When one considers that most employees of any business spend as much or more of their waking hours at work than with the people they choose to live with, work is a big part of any employee's life. Given this, the work environment may be a critical part of the decision to remain with an employer, in addition to the monetary rewards. Going to work at a place where everyone gets along and people feel that they are appreciated is important to many employees, especially when workers are putting in long hours. Some nontraditional rewards that Analytical Graphics, Inc. offers its employees are breakfasts, lunches, dinners and snacks, that the employees and their families can have (Rubis, 2004). Other companies offer free cab rides home after certain times, to ensure that employees are taken care of (Oldfield & O'Donovan, 2001). These companies offer these rewards or perks because employees put in so many hours to ensure that the company is successful. While they do not cost a lot, relative to permanent increases in wages, they do mean a lot to the employees.

An often times overlooked reward that small business owners can give to employees is recognition. Recognition can take many forms, from recognizing the years of service that employees have given the company to recognizing performance for a job well-done. Some employees may want to ensure that their efforts are being acknowledged, and letting these employees know that they are doing a good job and are appreciated can go a long way to keeping them satisfied and motivated (Anonymous, 1999). Additionally, by recognizing employees, the organization can benefit by either reducing turnover levels or keeping them low, especially if a reward is tied to the recommendation, such as a gift certificate to a local restaurant or spa or additional paid time off (Caggiano, 1997; Mintzer, 2006).

Employees are not only critical to organizations that manufacture goods, employees are also critical for ensuring that customers are taken care of, and that their needs are met. Using rewards to recognize the extra work that employees do has been found to keep morale of the workforce high (Wallsten, 1998). Giving employees certificates and choices in gifts lets employees know that others are seeing the important work that they are doing, as well as giving employees a chance to get something that they might not go out and get for themselves. These rewards can range from movie tickets to books. Small business owners have an advantage over managers in large organizations when rewarding employees this way; their knowledge of the employee, and what they employee is interested in. If a small business owner knows that an employee has a specific interest, the reward can be something related to that interest. For example, an employee might be interested in fishing. If this is the case, a gift certificate to a company that produces fishing equipment, a sporting goods store that carries fishing equipment, or tickets to a fishing and tackle expo at a local civic center might be a reward that is not only something that the employee will use, but that the employee values.

The examples given represent a small number of the endless possible ways that small business owners can reward employees with non-monetary rewards. Small business owners must not overlook the effectiveness of non-monetary rewards, as they are valued by employees and may be inexpensive, which may be attractive from a small business owner's perspective. If small business owners consider using bonuses and non-monetary rewards, they need to reward and acknowledge employees immediately following performance if they want the employee to make the connection between their performance and the reward (Gale, 2002).

WORK SCHEDULES

For many years now, the U.S. work force has felt the pressures associated with working many hours, the effects of these work schedules on the ability to take care of personal needs (Howard, 1998). Most of the needs that employees have require attention during the same hours of work, creating situations where employees might have to make difficult decisions about whether to go to work or to take care of their own health, for example. A benefit that does not cost a small business owner from a financial standpoint is to offer flexible work schedules. That does not mean that this benefit is without challenges, but it is a benefit that might enable small business owners to attract and retain quality employees in some instances.

Flexible schedules represent a benefit that can be simple to offer, if managed appropriately. If a worker has an issue to address during normal business hours, such as a doctor's appointment or meeting with a teacher of a child, the employee could be allowed to take the time off as necessary, working later during a given day or making the time up sometime during the pay period. By doing this, the employee can take care of their issues, not lose income, and the employer gets the productivity that he or she needs, without incurring the costs associated with having to pay overtime to an employee. This is a benefit that can be used as needed, when employees have issues that they need to address.

An alternative to handling flexible schedules for employees using informal systems is to implement a formal work schedule system that can accommodate employees who have needs to address outside of work. One option is a compressed work week, where employees work four days per week, working 10 hours per day, rather than the traditional eight hour day where an employee works five days per week. This allows employees to have an extra day off during the week where they can address personal issues during the typical hours that doctors are open and teachers might be available for meeting with parents. An added benefit is that in metropolitan areas, by working longer days, workers can commute to and from work during off-peak commute hours, resulting in shorter commute times. This is a result that Kaufer Miller Communications found when they offered the benefit to their employees in the Seattle area (Caggiano, 1997).

A second formal option for small business owners is to establish a formal flex-time schedule, where employees consistently work hours that vary in terms of when they begin or end the work day. For example, employees might have to be at work for a given two to four hour period, such as 10 a.m. to 2 p.m., but they can come in early or leave late, just as long as they put in the hours at work which they are required to work. This could allow a worker to begin work at 6 a.m., resulting in a situation where they can leave work at 2 p.m. This provides a number of benefits to employees. First, it allows employees to commute at times when there might be less traffic. Second, it allows employees the flexibility to attend to personal needs, such as taking college classes, without too much disruption to the business. Finally, some employers such as Campus Creations in Urbana, Illinois, prefer this option, because it generates a consistent schedule for the employer that he or she can count on, while helping to retain quality employees by working with them (Klimos, 1995).

A third option is to create job opportunities that are either permanent part-time employment opportunities. Traditionally, these would be employment opportunities that would allow an employee to work a set number of hours or days per week. Quill Corporation in Lincolnshire, Illinois has had success with employing professionals who want a work-family balance in a permanent part-time basis (Rowland, 1993). As part of the decision on how people want to spend their time, there is a segment of the workforce that wants to maintain some level of connection to their profession while raising a family, but still have the opportunity to spend quality time with their family. If a small business can develop a program that allows the business to succeed with part-time employees, it is possible to attract and retain quality employees on a part-time basis. A variation of this option has been used successfully by small businesses in England, where RAMSAC, an Information Technology consulting firm, has employees who are on nine month contracts, having the summer months off with their families (Merrick, 2002). The key to these options is dependent upon the creativity of the small business owner, in terms of what they want to offer, as well as how they want to manage and monitor the work in order to ensure that it is a successful arrangement.

A fourth option that can be considered by small business owners is the option of allowing employees to work at home (Caggiano, 1997; Mintzer, 2006). This option, like the others presented, will not work for all positions in any organization, but if it is a viable option, it could be beneficial to the employee, resulting in benefits to the small business in terms of productivity and retention. This allows employees to tend to the type of personal needs previously mentioned, as well as allowing employees to remain productive for the small business in situations where children are ill.

When children are ill, neither school nor daycare will allow the children to attend. As a result, a parent typically must remain at home with the children while they are ill. In a traditional work situation, this would result in an employee missing a day of work, as well as the business potentially falling behind schedule. If the job has the flexibility to be performed from an employee's home, both of the situations presented can effectively be avoided.

Flexible work schedules, while not feasible for all small businesses or all jobs in any one business in particular, can be beneficial to a small business owner if they are in a position to offer them. The options available to a small business owner are seemingly endless, limited only by the creativity of the small business owner. A small business owner needs to think through what they want to achieve, and determine if the options presented will effectively meet their needs.

CONCLUSION

Small business owners have numerous challenges when operating a small business. In many cases, small business owners might not be able to offer the same types of benefits as large businesses, as well as the same level of wages. While this might represent one disadvantage that small businesses face, it also provides opportunities for small business owners. By utilizing non-monetary motivators, small business owners can offer employees things that large companies are not in a position to offer. Specifically, small business owners are in a position to know each and every one of their employees. By getting to know his or her employees, a small business owner can ensure that when they recognize and reward their employees for outstanding performance that they are rewarded with something that the employee values. These non-monetary rewards might be more effective than other options, as the employee might develop a loyalty and commitment to the organization. Also, working with employees to meet their developmental needs, as well as working with them on their schedules, can establish a situation where the small business owner wins while the employee wins, and this might represent a set of options that employees might not be able to find in large companies. Ultimately, these options help small businesses succeed, and are up to the small business owner to determine whether or not they are feasible in the situation that they face.

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Jack L. Howard, Illinois State University