What is Better Than Increasing Minimum Wage?

Published on February 02, 2014

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There has been a lot of press recently about the wages of fast food and retail employees.  While this is a very real issue, Money, however,  is not the number one issue among employees.  Survey after survey indicates that recognition is the number one need of most workforces.

Most fast food and retail franchises cannot afford to pay high wages and earn a good profit.  Since paying higher wages isn’t a viable alternative in many franchises, there is another solution.  There are three solutions:  employee recognition, employee recognition and employee recognition.

Most employers fail to execute employee recognition effectively.  So let’s talk about how to do it right.  First of all, to achieve effective recognition, the entire management team must be actively involved.  Far too often the owner selects the employee for recognition in a vacuum.  Not good.  Your front line supervisors know far more about employees contributions than an owner usually does.  Use their input!

One of the most common recognition awards small businesses make is called “Employee of the month”.  Avoid making this mistake.  You see, it really means that the rest of the employees are losers.  That will create more animosity than good.  Don’t go there.

So let’s talk about what employee recognition is before we go any further.  Employee recognition is comprised of two key elements:

  • A reward
  • Being openly recognized to peer group

The short answer is that you do both.  One of the most common mistakes owners make is giving recognition to an employee for doing a good job.  Don’t make this mistake!  Why do I say that?  Owners want their employees to do a good job, right?  The answer is yes, but doing a good job is a requirement, not something you reward and recognize employees for.  You recognize and reward people for doing more than just a “good job”.  You recognize and reward them for going the extra mile.  For doing more than what is expected or required.  If you recognize and reward them for only doing a good job, you are creating a low ceiling of performance for your workforce.  If you do that, you will never reach the potential of your franchise!

I recommend that you give out awards as they are earned, that is, when employees do something way over and above requirements.  Some months you may not have any awards.  Some months you may have multiple awards.  The point is, don’t let the recognition program dictate your award schedule.  Let the performance and behavior of your employees determine when you give out recognition awards.  Instead of selecting one person a month, periodically giving out many smaller awards is more effective.  E.G.

  • Dinner for two
  • Ticket to a sporting event (Nascar?)
  • Grocery certificate
  • Prepaid gasoline card

Most of all, don’t recognize people in the “back room”.  Recognize people in front of their peers:

  • On a job site
  • At meetings
  • On the factory floor

Public recognition is “powerful”.  The feeling of being recognize in front of your peers is more rewarding than the financial reward itself.  Don’t miss the opportunity to use it.

Does employee recognition completely erase the need for higher wages?  Not when people can’t make ends meet.  How much you can pay your people depends upon your business model, the value of your products and services, your management skills, your market and your competition.  Effective employee recognition will, however, significantly reduce your employee turnover. Significantly reduced employee turnover will greatly improve the performance of your workforce, reduce your stress level and employee replacement time and effort as well has have a positive impact on your bottom line. It is a program well worth your time in doing well.

Written by FranchiseGrade.com Team


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