How to Treat Model Employees

Sometimes an instant reward means more than a raise

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It's hard to post just about business these days, when it feels like the events surrounding the new presidency and the threat of depression are so more important—if you're interested in my thoughts on that, you can click here—but I just had something happen in the office that reminded me of something I've learned, in 25 years of being an employer, about managing people and teamwork.

A good thing happened today. One of our customers reviewed our company on the website Yelp, spontaneously, and said very nice things about the company and its product, and particularly our customer service. (If you're curious, that review is here.) The review mentions one particular person on the team who did a great job helping.

And here's where I pass on what I've learned. When you have something like that happen in your company, give a specific individual award or bonus quickly, right then. Don't wait.

In our case, when something like this happens we ask that employee to take herself and somebody else out to a nice dinner and bring the receipt back to us for reimbursement.

Sure, it also goes into her record for reviews and things like that; we have more than 40 people, so we do try to maintain a relatively professional employee record and review system. But what really works—I've seen research on this, but I can't find the right citation right now—is to reward somebody with something specific right then and there.

I love the take-someone-out-to-dinner option because it's easy and most people like it. I think I've seen that things like that, nice things that people like to get, are better than just plain money. If it's not the meal for two, then a gift certificate—our local shopping center has gift certificates, good in any of about 100 stores, so that makes it better—or something else that can't just go straight back to the household budget.

Our product development department knows that programmers love tech gadgets, like iPhones or MacBook Airs or iPods or things like that. They're deductible as expenses, too. (The meal isn't fully deductible, although it should be.) For people who work with computers (and most of us do), giving computer equipment as a bonus has double benefit for the company. Sometimes it's as simple as buying a new computer or computer gadget that's for work, in the office, owned by the company, but is still a nice addition to work life.

The biggest surprise in this area is that I've seen research indicating that a quick tangible reward actually has a better reward effect on most people than a small raise, especially if the raise happens a few months later.

So, when somebody has a success in the company, build your team by rewarding them quickly, and with something tangible that's fun to get.

Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and a cofounder of Borland International. He teaches about starting a business at the University of Oregon. He is author of books and software, including Business Plan Pro, published by Palo Alto Software, and The Plan-As-You-Go Business Plan, published by Entrepreneur Press. Berry has a Stanford M.B.A. and degrees with honors from the University of Oregon and the University of Notre Dame. He blogs at Planning Startup Stories and Up and Running.

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small business

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