Its research has found that the vast majority (91%) of small business owners believe extra incentives (in addition to basic pay) help to retain staff and improve performance, but a fifth offer no incentives to their staff.

Of those that do offer an incentive, more than half (56%) provide flexible work hours, while cash bonuses are used by a third.

A third of those who do offer something extra spend less than a ;£1,000 a year on it. Dave Robertson, chief executive of Bibby, believes this may not be enough.

Pitching the pay and benefits package right is particularly crucial for small- and medium-sized businesses, who are unlikely to have the resources to offer an all-singing-all-dancing remuneration package. The importance of careful planning and research into employee packages cannot be under-estimated. However, it is clear from our research that determining salary and benefits packages is more a stab-in-the-dark for today’s entrepreneurs rather than a carefully thought-out, planned process.

Consider the following issues when thinking about an incentives package:

1. Do remember that staff incentives will only work if the targets set are right and relate to specific achievements.
2. Do ensure that any targets you set staff are SMART ones, i.e. Specific, Measurable, Achievable, Realistic and Time-limited.
3. Do be fair and be seen to be transparent about pay and benefits to all staff.
4. Do be realistic about your circumstances and only pay and incentivise staff what you can afford.
5. Do ensure that any staff incentive package is clear, logical and structured in such a way that employees feel their pay and benefits are reasonable in comparison to that of others.
6. Do think carefully about which employees should take part in an incentive scheme – it may be that you just want to motivate sales staff whose work directly contributes to the bottom line or all employees in order to keep motivation levels high.
7. Do keep your employees aware of the company’s performance – this will ensure that staff understand the part they play in the business and feel valued.
8. Don’t forget to review pay and benefits on a regular basis to ensure that the incentives you offer are on a par with the industry standard and that you don’t lose valued employees to the competition.
9. Do remember that money is not the ‘be all and end all’ to employees, there are many alternative benefits that are powerful motivators including, flexible hours, offering extra unpaid leave, training courses or even dress-down days.
10. Don’t be afraid to ask people what their needs are and what motivates them; an unhappy employee might not always be won over by a pay rise or cash bonus, no matter how big.

Keeping stressed employees ‘in love’ with their job

Today’s employers should be more concerned with keeping stressed employees ‘in love’ with their job, according to new research.

The poll of 2,278 employees, conducted by YouGov for workplace information and advice business Croner, reveals that non-financial factors such as poor relationships with colleagues, heavy workload and long hours are equally or more stressful to employees than dissatisfaction with pay and benefits.

Croner experts believe that a ‘job for life’ is becoming a thing of the past and employers who don’t address work/life balance issues risk losing stressed staff to businesses that not only offer attractive salaries, but also ‘lifestyle’ benefits, such as flexible working.

Industry figures confirm that labour turnover is on the increase. The CIPD’s annual Recruitment, Retention and Turnover Survey calculated UK labour turnover in 2005 to be 18.3 per cent, compared with 15.7 per cent in 2004.

Richard Smith, employment services director at Croner, says: ‘Only 14 per cent of people we polled said they never get stressed at work, and of those who do, only 12 per cent selected pay and benefits as the most stressful workplace factor.

Accordingly, Croner recommends that employers who are looking to improve recruitment and retention should consider non-financial benefits, such as:

– Offering flexible working schemes
– Implementing corporate social responsibility initiatives
– Promoting diversity and equality
– Encouraging work/life balance
– Effective talent management
– Investing in employees’ personal and professional development

Smith adds: ‘While salary is a key consideration for most employees, many are looking for a company that fits with their lifestyle, for example an organisation that offers childcare vouchers and flexible working may appeal more to those with family. This is a great option for smaller companies who may not have the resources to offer complex reward schemes.’