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Pay 'Em Big

"I'm the first to admit this whole salary thing is getting out of control. In the final analysis, it's still about the work."
  --- Jim Carrey

Paying an employee for a job well done doesn't seem like it should be so complicated. The guy or girl performs a task, does well on the task, and is rewarded for doing so. Unfortunately, we've made it complicated by basing salaries on what the going rate is or what the market dictates. Of course, it is good to know what the competition is paying in order to keep good employees, but it appears we've lost sight of why we are paying an employee.

I still believe that if the person doesn't work, they don't eat. In other words, we shouldn't be paying an employee who is not doing their job. Although this sounds obvious, there are countless companies keeping deadbeat employees on the books for fear of firing them. But on the other hand, there are a lot of great employees not getting paid what they should.

"The more they applaud, the bigger your salary will be."
  --- Anna Held

There are really three basic rules for small businesses when it comes to salaries. First, the business that attracts great talent should handsomely reward that talent. If an employee is top-notch, cream-of-the-crop, they should be paid very well. This keeps the employee from wanting and looking elsewhere and he or she tends to pay back the great reward with loyalty.

"I just believe that the way that young people's minds develop is fascinating. If you are doing something for a grade or salary or a reward, it doesn't have as much meaning as creating something for yourself and your own life."
  --- Steve Wozniak

Second, encourage innovation and creativity with regular additional rewards such as bonuses, merit pay, raises, and gifts. I know of a professor who tells his students on day one that they all have already received an "A" in the class. He does this so they relax and can now focus on learning as opposed to chasing the grade.

The holds true for salaries. Give it out first and then keep giving. Your team members won't have to work harder to get more money. They can now work smarter out of loyalty to propel the business forward.

"Appraisals are where you get together with your team leader and agree what an outstanding member of the team you are, how much your contribution has been valued, what massive potential you have and, in recognition of all this, would you mind having your salary halved."
  --- Theodore Roosevelt

Thirdly, don't schedule regular performance reviews. Instead, coach your employees daily, weekly, and monthly and as a team figure out what will make the business better. As you see a team member doing something extraordinary, reward them. Increase their salary a notch or two and reinforce what performance is expected. Regularly scheduled performance reviews like 90-day and annual ones allow too much time to go by without rewarding or correcting a course. Be generous with your salary increases and do it frequently.

"Sure, sometimes guys pass you up in salary, and maybe it's a lesser player, but it's all based on what a team has as far as value in that person."
  --- Brett Favre