Seasonality, Productivity and Staff Rewards

It’s officially the start of autumn.  Auckland nights are still warm and humid, but change is in the air.

Many businesses are seasonal, including Q2 Ltd – we have the busy tax season from April to August.  Retailers typically go crazy at Christmas, Easter creates peaks for different types of businesses. Businesses also have extremely busy periods when a project or product launches.

Human beings also have “seasons” – periods of high productivity, particularly when there is intense time pressure.  These intense periods are often followed by periods of lessened productivity when we have “time for a cup of tea” as David Lange would have said.

When staff have been working extremely hard and/or long hours it is natural to want to reward them for their hard work.  This is when management start thinking about pay increases, bonus pays, performance pay systems, staff share schemes, and other staff rewards and benefits.

However, an increase in salary/hourly rate, additional perks and benefits, or a poorly designed performance pay system can result in an employee becoming permanently overpaid once work pressure and productivity returns to normal.  Added benefits become an ongoing expectation, rather than a reward for special effort.

Some suggested approaches include:

  1. A one-off taxable bonus payment to recognise the extra effort
  2. Some time off, especially if the employee has been working additional hours
  3. A special gift (subject to FBT), which often means more to the employee than monetary rewards
  4. Recognition and sincere thanks, especially in front of co-workers and/or customers
  5. A combination of the above.

Rewarding staff is tricky – you need to be fair, but not all staff value the same things.  Rewarding selected individuals can cause friction within a team when it has predominantly been a team effort.  You also need to consider the long term effect on business profitability.

Humans are naturally “episodic producers” – appropriately rewarding periods of high productivity needs careful thought and finesse.

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