The Importance of Proper Employee Compensation
When it comes to implementing EOS, there are three important questions to be asked: Is this going to help the company increase its profit? Is this going to help the company be successful? And is this going to make the workforce happy?
When asking these questions, it’s important to approach them from both a company’s point of view and an employee’s. There is not a one-size-fits-all answer for these questions, but there are a wide variety of ways to incentivize employees to perform better, which in turn betters the company. Everyone responds to compensation differently, but no matter the preferred method of compensation, everyone wants to be paid for the value they add.
Under the compensation umbrella, there are intrinsic and extrinsic rewards, and both are equally important. Intrinsic rewards include things like having a great boss that you feel motivated to work hard for, while extrinsic rewards are more monetary, tangible incentives. The balance between intrinsic and extrinsic compensation is an art form, and the companies that focus on both tend to be more successful.
“So if we talk about employee retention and you talk about attraction and best places to work, the companies that are able to balance those rewards, their workforce is the one that tends to be the most successful from a profitability standpoint and from a growth standpoint.” – Alex Freytag, (8:32)
Characteristics of Companies That Apply EOS
Companies that are able to balance these rewards typically share three general characteristics. The first is that they really care. They care about their customers, their vendors, and their products and services. And these values are shared frequently with the entire company.
Second, they have high expectations for their performance. However, these high-performance expectations don’t come exclusively from the top down—rather, there are departments and individuals throughout the organization that strive to be their best. There is a balance between setting high expectations and creating a culture of fear where employees are afraid to make mistakes. Successful companies are able to balance their standards with the pressure their employees feel to perform.
Lastly, these companies have fun. It’s more fun to be part of a winning team, and a winning team is successful because its members care about each other, which gives everyone their own sense of responsibility. Companies of excellence focus more on the ‘we’ than the ‘me.’ The company is going to thrive if everybody is focused on ‘we’ first because the interests of ‘we’ are improved tools, technology, equipment, capital investments, etc., which in turn positively impacts the ‘me.’
“The amount of pressure in an organization is directly correlated to performance, and so companies that don’t apply any pressure in the organization, no standards of performance, no expectation, no core values, no measurables, no scorecards, no 10-year target, and so forth, tend to have lower levels of performance than the companies that turn that dial up on those expectations…” – Alex Freytag, (11:47)
Transform Your Business Today!
For more conversations like this, check out other episodes of Where There’s a Will, There’s a Way, where Will Crist talks with entrepreneurs and business leaders about the life-changing effects of the EOS model. For more information on how you can transform your business, schedule a call with Will today!