Every small business owner knows that the more motivated your employees are, the better their overall performance will be. However, in today’s competitive job market, the expectations of employees regarding performance related incentives are higher than ever. So, how do you know if your current benefits and bonus plans are enough to inspire your staff members? Gene Marks and special guest Kathy Bromage discuss several strategies that small business owners can utilize to motivate their employees.

Executive Summary

1:59—Today’s Topic: How Have Traditional Motivational Techniques Changed in Small Business?

2:32—Due to the abundance of job choices right now, employees are more comfortable communicating their expectations and professional goals to their supervisors.

4:27—When it comes to performance reviews, you need to frame your critiques in a positive manner if you want their employees to reach their full potential. Reviews also need to look beyond the quantitative results of an employee’s performance and evaluate how these results were actually achieved.

8:50— Supervisors should also be open to feedback from their subordinates.

10:02—Although a bonus system can help motivate your employees to perform better, you as a supervisor need to be prepared to have conversations with your employees regarding any perceived differences between their bonus checks.

14:08—While team building activities and retreats can help build over all morale, the best way to motivate an employee is to provide them with interesting assignments that are important to the company.

17:07—Healthcare is a benefit that will deeply resonate with your employees. Flexibility is another highly motivating incentive.


Gene: Hi everybody, welcome to this episode of The Small Biz Ahead podcast. My name is Gene Marks, here with a very special guest, again actually, Kathy Bromage, Chief Marketing Officer, and Communication Officer here, at The Hartford.

We’re talking more about employees, but before we do, we’re going to take this quick break from our sponsor.

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QUESTION: What Can You Do To Keep Your Employees Motivated?

Gene: All right everybody, we’re back. This is Gene, here with Kathy. We’re talking about people. We talked in another podcast, about some of your thoughts, and advice on hiring people.

Kathy, for those of you guys that did not listen to that podcast, just a little bit, just again, a quick background, how long have you been at The Hartford, Kathy?

Kathy: Been at The Hartford for 15 years.

Gene: And before that?

Kathy: Oh my gosh.

Gene: A bunch of different places?

Kathy: I spent the first part of my career in finance, both in public accounting, and for major financial services companies. Then, I made a pivot to small business, pre-internet. Then, through the internet boom, then, I found my way to insurance, here at The Hartford.

Gene: That’s awesome, and you are an accountant? Are you still a CPA, or did you let that lapse?

Kathy: I let my continuing education lapse.

Gene: Wow, naughty, naughty.

Kathy: Yes.

Gene: Okay, I keep up on mine, because I worked so hard to get that. But, you are a financial background.

Kathy: I am.

Gene: Which is a unique perspective, because you are the chief marketing officer, at a Fortune 500 company. It’s not the kind of path one would expect.

In another podcast, we’re talking about metrics, so we will get into that, at that time. This time, we’re talking about people. We talked earlier, again, in an additional podcast, about hiring people. Now, I want to keep motivating people, so you said earlier, in this other podcast that, you supervise about 200 people, right?

Kathy: Mm-hmm.

Gene: That’s 200 people that directly report up to you, so how has that changed, over the past 15 years, for your existing employees? Are people more demanding, less demanding? Are you finding employees themselves to be different than they were 15 years ago?

Kathy: Yeah, I think people have always been somewhat demanding. I honestly think what’s changed is, this notion of the war on talent, and the fact that people have lots more choices today, than perhaps we had years ago.

Gene: Job choices, right.

Kathy: Job choices.

Gene: Right, right.

Kathy: I think there is a lot less stigma to changing jobs, than there might have been, back when I was in my early career. As a result, I think it puts a lot more pressure on who are you trying to hire, and what is that person looking to accomplish, and are we going to be able to meet that expectation?

Gene: Right, and do you find that more employees are making those demands, or asking you about those kinds of things?

Kathy: You know, I think the biggest place where I see the change is that, years ago, it was somewhat hierarchical, and you literally just did your job, and if you did a good job, somebody would tap you on the shoulder, and you would get the next opportunity.

I think, what has happened over the last many years is, folks are far more engaged, and involved in their career, and making clear their expectations around mobility, and advancement, and probably with time frames in mind that are quicker than may be appropriate, and that requires a fair amount of discussion as well.

Gene: People here today, want feedback, a lot of feedback, and it’s funny, because you and I are from one generation, where you couldn’t … our parents ignored us, let alone our bosses. Now, this generation of workers here, have grown up in a place where they were getting lots of feedback as they were going, which is a good thing.

Tell me about performance reviews. What do you guys do? What works, what doesn’t? What advice do you have, about reviewing your employees?

Kathy: You know, performance reviews is like the topic of the day, whether-

Gene: And by the way, everybody’s terrible at them. I just want you to-

Kathy: I agree with that.

Gene: Right? Everyone, okay.

Kathy: You know, let’s just start with, you shouldn’t need a performance review, to get an understanding of how you’re performing. If you’re learning anything in a performance review, that you’re not already aware of, then shame on us.

Gene: Right.

Kathy: I just want to start with that.

But, the notion of a performance review, whether you’re doing a performance discussion once a month, or mid year, or at the end of the year is, really to help somebody deliver against their full potential.

It’s not necessarily about the dos and don’ts, it about, how can you be better, which requires that, you really spend time figuring out how to communicate that message, so that somebody hears the intent is about, helping you get better, not about pointing out your flaws.

How you write something, whether it’s expressed in a this is what you could do, and this is how it could help you, versus, this is what you’re not doing, just makes a big difference in the way feedback is received, and the-

Gene: It sounds like positive, rather than negative reinforcement, right?

Kathy: A positive tone.

Gene: Yeah.

Kathy: You know, the thing that I learned myself, and how I respond is, people think I gave you balanced feedback. Balanced feedback in my opinion is, 80% of the things you’re doing really well, keep doing that, and 20% of things that would actually make your performance stronger.

If you actually give somebody 50/50, they’re crying in the bathroom, that we all pay attention to what was said that was negative, as opposed to what was said that was positive, so just focus on one or two things, that you think would help somebody advance their career, to achieve their full potential.

Let’s not do the T account, where there’s as many pluses as you have minuses. That’s just not productive.

Gene: That’s an accounting reference everybody, for those that are keeping track.

Kathy: Sorry about that. Right.

Gene: You’re okay.

Kathy: So …

Gene: Fair enough. When it comes to performance reviews, different people have different opinions on them, so you think they should be done throughout the year, [inaudible] you think it should be a constant kind of feedback.

How about you? Who does your performance review?

Kathy: That’s a loaded question.

Gene: Yeah.

Kathy: So, my performance review is actually reviewed by our board of directors, because I’m an officer of the company.

Gene: Right.

Kathy: My boss, who is the CEO, is accountable for that performance review. As you would imagine, he asks for my assessment of my performance, and then, I think he takes that, and he emphasizes what he wants to emphasize, that he thinks is important, and he has his own views around what I could do from a development perspective.

But, I will tell you, I have no idea what I’m reading. I look at my compensation, and I get a sense for does he think I did a good job, or not, but we’re not having a conversation around a numerical rating. We’re not having a conversation around, am I exceeding, or achieving. We’re literally just having a conversation around my impact on the company, and how I can do better.

Gene: Right. Is your performance review … is it like a collaborative thing, like you do for the people that report in to you? I ask this because, if I’m a business owner, business owners do have their boards. We have boards of advisors as well.

First of all, is it a collaborative process? Do you get feedback from other people, besides just your boss, and is it completely metric-driven, or is there some non-quantitative parts to your review, as a leader in a company?

Kathy: As an organization, at The Hartford, we’ve embraced the philosophy that, it is just as important to talk about how you did something, as what you did.

Gene: Okay.

Kathy: From a performance discussion, and even from a compensation discussion, they’re equally weighted.

You can accomplish a lot, but if you’re leaving bodies in your wake, that’s not a good performance.

Gene: I see.

Kathy: We are very balanced in the what, and the how, and how we expect people to conduct themselves, to drive a positive culture. From a collaborative perspective, by definition, I am supporting our businesses, and what they are trying to accomplish, and I get feedback from them on a regular basis, as to whether they think the things that I am advancing are going to add value, or not. They help to shape my priorities.

Then, they are the judge of whether, or not, I delivered against the commitments that I made.

Gene: Got it.

Kathy: There are numerics associated with that.

Gene: Do you believe in subordinates giving you performance reviews? You just said you were getting feedback from the businesses that you supervise. Is that something that a business owner should consider?

Kathy: You know, I’m probably okay at this. I will oftentimes, when I’m giving my own discussion with my direct reports on their performance, ask them if there is something I can do, to be more effective for them.

Sometimes, I get the deer in the headlights look, like oh my God, am I really going to tell her?

Gene: People don’t want to be honest, yeah. People don’t want to be honest.

Kathy: But, I will say this, this is how I get my feedback. In every team I’ve ever had, there’s always somebody on the team, who will be totally honest with me, so that, if I’ve been on main stage, and I have said something, and somebody misunderstood, they come back around, and tell me.

Gene: Right.

Kathy: Or maybe, I really intended to say what I said.

Gene: Right.

Kathy: They’ll tell me what the reaction was, or there is somebody who will say, “You gave direction, and it wasn’t clear, and here’s the result.” Because, a lot of people just aren’t comfortable giving their boss feedback. But, if you can find somebody on your team, who will be straight with you, that is a gift that should be cultivated. That’s generally how I get my feedback.

Gene: Great.

All right, let me turn to bonuses. Do you guys give bonuses?

Kathy: Mm-hmm (affirmative)-

Gene: What are your thoughts on bonuses? Do they work?

Kathy: It depends. What I would say is that, if you use a bonus as a mechanism for demonstrating differentiation, they work.

Gene: Okay.

Kathy: If you just spread it like peanut butter, not so much. It just becomes part of your overall compensation.

Gene: People expect … Yeah.

Kathy: But, if you got … depending upon the circumstances, sometimes companies do better some years, than others, and that affects how much bonus is available to pay out. But generally, if you are differentiating on your bonus payout, you are having a conversation, in particular, for the people maybe whose bonuses weren’t as strong, as to why that was.

It forces you, in my opinion, to have the conversation that you may not be having, because not everybody’s good with constructive feedback.

For the people that are really putting it out there, and really driving positive change, it’s a tangible sign of the impact that they’re having on the company, and why shouldn’t they share in its success?

Gene: How are your bonuses done? Some people, there’s always a debate in a business between, should we do it like more of a profit share, or just as a percentage of sales, or just a discretionary kind of thing? What methodology do you guys use?

Kathy: I’m going to totally oversimplify, because we’re a big company-

Gene: Probably complicated.

Kathy: … of HR professionals.

Gene: Right.

Kathy: But, our bonus pool is directly tied to the company’s performance, both short-term, and long-term. The way our compensation systems are designed, there is a short-term bonus, and then, there is a long-term incentive. That’s put in place, to make sure that we don’t make decisions that are good for the short-term, that are not so good for the long-term.

Then, our awards in many respects, are determined based upon how we did, relative to our plan, and how we did relative to the competition. It’s fine to meet your plan, but if in meeting your plan, you are falling behind the leaders in your industry, that’s not a positive outcome.

There’s a pretty complex design, that takes in outside, and inside-

Gene: Say it just takes its overall profitability of a company … So again, if you’re running a business, that means you have to be prepared to share those numbers, if you’re going to have a bonus based on that. You have a plan, which means, that’s a budget, it’s a plan, which again, if you’re running a business, you have to devote the time and effort into doing a budget, and seeing how you’re doing.

That’s interesting that you actually compare against your competition, which would be inapplicable to most businesses. How do we get …? The only thing that I could think of, that would be anywhere near that is, to benchmark it against maybe some publicly held companies in your industry, if you’re running a smaller company, to see if you are making those objectives.

Kathy: You know, and again, this probably applies more in a retail setting, but you know, some sort of voice of the customer, so some way … There are controversial things out there, like Yelp and all, or TripAdvisor, but there are mechanisms in place, that give you a rating, relative to that competition.

Gene: Right.

Kathy: Which is, some sense for feedback on how you’re performing.

We talked earlier, about how influential your customers are, and the experience that’s delivered.

Gene: Right.

Kathy: From a competitive perspective, you could think about repeat customers, and things like that as a proxy for how well you’re doing, when you’re not a large company like The Hartford, with access to publicly available financial data.

Gene: That’s actually great advice. You know, I’m thinking of one client in particular, that pays commissions and bonuses based on, you have a benchmark of what were our sales to these top customers last year? Then, anything 3% more, or 5% more, we’re going to share in that. So that’s-

Kathy: It’s like, everybody knows the best path to growth is, to retain the customers you have.

Gene: Right, right, and grow them.

Kathy: And make those customers referral sources.

Gene: Got it. Got it, got it.

You and I come from a generation of … we were talking before this, about writing letters.

Kathy: Yeah.

Gene: And watching The Flintstones, and having a whole different world of employee and managers. The average age of the US business owner is, about 52 years old, okay?

Kathy: Mm-hmm.

Gene: And in fact, almost 60% of business owners today, this is just the studies that came out recently, are baby boomers. Those are people born 1946, to 1964. These are the people that are running the majority of business.

Most of the people that generation, our generation, we’re not touchy feely people. We’re just like, come to work, do your job, here’s your pay cheque, that’s all we want.

Kathy: You want positive feedback? Right.

Gene: Yeah, exactly. Nowadays, a lot of companies are having new types of ways to keep their employees happy and productive, team building exercises, retreats that they go away … What are your thoughts on that? Do you do those kinds of things? Do you enjoy doing those kinds of things, as an executive? Do you find that they are productive, and worthwhile?

Kathy: I think any time you can spend time with the people you work with, in a non-business setting, just to get to know each other, is positive.

Gene: Okay.

Kathy: I just think, once you know somebody as a human being, and once you actually have a relationship with that person, you’re more likely to assume positive intent in the workplace, so I do think that’s a positive.

But, my own sort of thing is, that’s all good, but I think what really is going to motivate folks is, they feel like they’re working on interesting things, and that the things they’re working on are actually important.

This notion of, I want to learn new skills, I want to meet new people, I want to expand my network, best way to fulfill those expectations is, to make sure that, you’re giving people access to work that is interesting to them, and important to the company.

Gene: Great. Other thoughts, a couple other quick questions for you … open office environments, what do you think of them, as a team-building thing, or as a motivational thing for employees? You like them, or you don’t?

Kathy: You know, I think we’ve proven here, at The Hartford, they’re very effective.

Gene: Good.

Kathy: It’s easy for me though, I sit in an office. I think you have to adjust to the noise factor, but I like the fact that, I can stand up, and I can see somebody. I like the fact that, I can see if Hannah is at her cube, and I can just walk over. I like the democratization of it, because maybe it takes away from what grade, or what tier are you? Because, we’re all the same, and we’re all contributing.

I do find though, if people want to have a private conversation, you need to have an awful lot of common areas, so that people have a place to go, to have that conversation, so they’re not disruptive.

You do see a lot of people with headphones on, trying to screen out the noise, but I think that, it is a path toward eliminating some of the status stuff that has crept into corporate culture.

Gene: That’s great.

Final question, in all the years you’ve been in business, and all the stuff that … You’ve supervised a lot of people. Is there one benefit … say resources are limited, I can’t provide all the benefits that The Hartford provides, so if I were to have, just be really great at one benefit to keep my people happy and motivated, to attract new people, health insurance, retirement, paid time, is there anything in particular that you think is a resonating benefit for keeping people happy? If you were going to prioritize that-

Kathy: I believe healthcare costs are really, really important, and the reason for that is, it’s really expensive. When you’re first starting out, you don’t have a lot of discretionary income, and medical costs are a big part of what goes out every month, from your pay check. I think the ability to have attractive medical benefits, really, really important.

After that, I do think it’s flexibility.

Gene: Great, so, first priority if you’re running a business, and you’re choosing benefits, you should really be focusing on healthcare.

Kathy: Mm-hmm (affirmative)-

Gene: And you’re right about flexibility, where you can. Some people can provide that, and others can’t.

Kathy: That’s right.

Gene: Kathy Bromage, thank you.

Kathy: Thank you.

Gene: That was a great conversation, great information about motivating and keeping your employees going, and some of your thoughts on these benefits. Good stuff.

Kathy: Great.

Gene: This has been The Small Biz Ahead podcast. My name is Gene Marks, and we look forward to you joining us on our next podcast.

Kathy: Good, thank you very much.

Gene: Take care.

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