"Written by - Mark Ferris - Panalitix"

A departing Employee can leave a big dent, especially in an Accounting business. There are various ways to retain Employees including offering financial incentives, but how effective are these ‘bonus plans’? In this article, we look at alternative ways to strengthen a business while increasing Employee loyalty and productivity.

Businesses benefit by retaining key team members, especially in a tough hiring environment. 

Financial incentive programs like bonus plans or profit share arrangements are a common retention strategy. The assumption is that financial incentives increase Employee loyalty while improving productivity. 

But is this really the case? 

Or do owners end up ‘giving away’ profit WITHOUT any clear benefit? Sure, most Employees will claim they'd like to earn more… but does this REALLY drive their performance and loyalty? 

Having discussed this with experienced managers and team members, here are insights which may help you increase team loyalty and productivity.

1. Employees Playing to their Strengths are Likely to Stay Longer

A common challenge in Accounting businesses is that people are in the wrong roles. Accountants may be expected to sell, Senior Accountants may do administrative work, Receptionists may need to do marketing, etc. 

No employee will ALWAYS work in a way most suited to them… but start by acknowledging these core skill sets:

  • Finders: People who ENJOY interacting with Clients, finding new opportunities, communicating, marketing, selling, and building relationships.
  • Minders: People who ENJOY building processes and systems using available resources (people and technology) to get work done efficiently. These are ‘managerial’ skills.
  • Grinders: People who ENJOY completing the tasks allocated to them without distraction. They simply like to get the work done… and usually prefer to limit Client interaction.

When people are (mostly) in roles suited to their skills, we see increased productivity, happiness, and morale - and that leads to higher retention. Managers should acknowledge the existence of these core skill sets and continually build organizations which put people in the most appropriate roles. 

2. Career Paths

Related to the above, team members want to see a clear career trajectory. There are two questions to address here:

  • Question 1: Where does the Employee fit in the organization now? An organizational chart is essential… and it should evolve as business conditions change.
  • Question 2: Where might the Employee be in the future? For example, their career path may involve staying in the same role with more responsibility. It may mean changing roles after they have acquired certain skills. If the answer is vague, the Employee may well look at other employment options to gain more clarity.

A mistake we often see in Accounting businesses is promoting Employees away from their core skill sets. For example, an Accountant may work hard, build their skills, and become really effective at producing quality work (a “grinder”). Then they get promoted to a Client-facing role (a “finder”), where they are less comfortable… resulting in disappointment for the Employee, the manager (and probably the Clients).  

Career paths should be designed so people can grow BUT ALSO continue playing to their strengths. 

3. Learning, Growing, and Developing New Skills

Professional development can take many forms, for example using external or internal trainers, focusing on technical or ‘soft’ skills, aiming for certifications, learning individually or in groups, etc. The most effective learning programs:

  • Are continuous; learning never stops.
  • Develop skills that are relevant and valued.
  • Are customized to different kinds of learners.

In some cases, an Employer may fund long-term learning (like an MBA) while the Employee commits to employment for a fixed period. That ensures retention and a return on the Employer’s investment.

4. Doing a Job that Matters

In any walk of life, people want to contribute and make a difference, however small. They also want their contribution to be acknowledged. There are two ways to go about this:

  • Build acknowledgment for good work into your processes. For example, some firms ask team members to call out colleagues who have done a good job at internal meetings.
  • Get really clear on performance metrics and track them diligently. In this way, you can acknowledge Employees who have high productivity, and realization rates or have otherwise contributed to revenue and profit growth. 

Whatever the case, people should be rewarded only where their contribution is consistent with the goals of the business and the owners. Reward work that matters… not because you feel rewards are needed. 

Interact frequently with Employees, especially high performers, to keep them on track, hear their concerns, make plans, etc. The traditional approach of ‘annual performance reviews’ is out of date.

5. Working for an Employer which is Stable, Reputable, and Makes them Proud 

This will mean different things to different Employees. The basics include clarity on Vision and Mission, prestigious Clients, and reputable owners. A business which is well-run and makes a contribution in the community will also be attractive. 

Getting serious about these five points will build a stronger organization and probably increase productivity and loyalty. 

Does that mean Financial Incentive Plans have no place? 

No, they have a place provided they:

  • Incorporate metrics which directly impact important firm goals (like revenue and profit, for a growth-minded firm).
  • Incorporate metrics which the Employee can influence (like productivity, average hourly rates, Client retention, upselling existing Clients, compliance with internal processes, meeting attendance, investing to acquire knowledge, etc. for an Accountant, a ‘Grinder’).
  • Weight the metrics appropriately, since they are not all equally important.
  • Can easily be tracked. You don’t want to do huge, complex computations to calculate a bonus.
  • Are reviewed periodically because they may not be achieving the desired outcomes. Note, an Employee is more likely to seek other employment opportunities BEFORE revisiting an incentive arrangement which is not working for them.

How loyal are your Employees? What can you do to improve loyalty?