by Terry Bragg

Want to be a bad boss or sales manager? The formula is simple: fold your arms, sit back and mutter, "I don't have to tell them they're doing a good job because they're just doing what I pay them to do."

Using this approach, you will not only be a bad boss, but despised. Treat people like they are pieces of meat or commodities and they will quickly detest working for you.

The formula for being a good boss or sales manager is equally simple. Look for the good in your employees and give plenty of honest, sincere appreciation.

Bob Nelson, author of "1001 Ways to Reward Employees," says the No. 1 desired form of reward by employees is verbal appreciation or praise by their immediate boss. The No. 2 desired form of reward is written appreciation or praise by their immediate boss. Nelson also cites a survey that shows  about 58 percent of employees believe their immediate boss does not appreciate the work they do.

Rewarding people is not rocket science. Michael LeBoeuf, author of "The Greatest Management Principle in the World," says people do what you reward them for. If you want to change people's behavior and get them to improve their performance, you must influence their perception of how you reward them for their behavior and performance.

Folks, we are not dealing with rocket science or brain surgery here. Appreciation is the closest thing to a universal motivator.  Appreciation usually works better than the fancy programs we think should work better.

When discussing motivating employees in my management seminars, I often poll the group to see how many people receive too much appreciation where they work. Rarely does a single hand go up. When someone does raise their hand, they are usually sitting next to their boss and feel obligated to raise their hand.

Psychologist William James said people crave appreciation. No one truly believes they get too much appreciation. Consequently, appreciation is a powerful motivator.

Although an informal reward, praise is effective in building relationships and sustaining high morale. Peer appreciation and praise is also powerful for building and sustaining high-performing sales teams.

Unfortunately, formal reward systems are trickier and less predictable. Formal reward systems often work for only short times, and what works in one place may not work in another.

What about money?
Monetary rewards are important. Psychologists tell us, though, that money is a short-term motivator at best. Over time, the psychology of entitlement takes over and money quickly loses its effectiveness as a motivator.

Money is important. You must pay a competitive salary or the salary issue will disgruntle your sales staff. People do their jobs
for money, but money rarely spurs people to peak performance for a long time.

If you doubt this principle, consider professional sports where athletes complain about their multimillion dollar salaries. No matter how much they make, after a while, athletes want more. You cannot win the money game.

Six principles for effective reward systems
Although any reward and incentive program should begin with honest, sincere appreciation, some basic principles will help you create more effective formal reward systems.

1) Rewards must support organizational goals.  You must reward the behavior you want repeated. First, identify the type of behavior that will help your organization achieve its goals. Next, decide how you can best reward that behavior. Encourage behavior that helps your organization succeed.

2) Rewards must be fair. Fairness is in the eye of the beholder.  Fairness is subjective, and perception is reality. Usually, people perceive a reward to be fair if they believe everyone has an equal chance of qualifying for the reward. They think a reward is unfair if only a few can obtain the reward.

The 80/20 rule applies in sales. Eighty percent of your sales will
probably come from 20 percent of your sales force. You must reward those top performers. To motivate the rest of your staff, they must perceive the rewards as something they could achieve if they put in the necessary work. The reward will not motivate people who believe that someone else has an unfair advantage in getting the reward.

For example, the reward will not work if most people believe that only those who are lucky enough to have the best accounts have a chance to get the reward.

3) Rewards must promote cooperation. Rewards should encourage people to work together. Although competition can spur people to great achievement, it can also destroy teamwork because of envy, jealousy and resentment. Competition often creates winners and losers. Cooperation allows everyone to win.

The way to make rewards that are "win-win" is to reward everyone who achieves a certain level of productivity. A "win-lose" approach rewards only the first person to achieve that level of productivity.  Some people sabotage the work of other people or teams to win the reward in a competitive environment.

Don't limit rewards to select groups, and don't forget supporting players. If your salesperson wins for closing the sale but the lead generator is unrewarded, you may be creating an uncooperative environment. Reward everyone who contributes to the achievement of your organizational goals.

4) Rewards must have a positive impact on performance. The impact of a reward is often difficult to predict. Use short-term trials to test reward programs to make sure they have a positive impact on performance. If the program works, extend it. If it doesn't work, drop it and try something else.

Bonus tip: Treat formal reward programs as short-term. Most programs lose their effectiveness quickly. They wear out fast.  Design your reward program with an end date. If you discover a real winner, you can always renew the program for another short period. Have a predetermined ending date so you don't get stuck with a loser program.

5) Rewards must be effective in good times and bad times.  Some organizations know how to party hard when times are good. When times are bad, though, they act like the black widow
spider that eats its mate after the fun is over. Look to reward top performers when times are tough.

We value rewards differently in good and bad times. For example, in a bull market, employees highly value stock options because the stock usually increases in value. In a bear market, the same reward is less effective because the stock options lose their value.

6) Rewards must focus performance on serving the customer.  The purpose of business is to get and keep customers. You will not stay in business if your sales staff is happy and well-rewarded but they neglect your customers. Have you ever waited at a cash register to pay for your merchandise while the store staff stood off to the side talking and laughing together?  They had a good time, and you probably found another place to shop.

Stay eternally focused on your customer. Reward behavior that serves your customer.

Free stuff: For a free report on "41 Low or No-Cost Ways to Reward and Recognize Your Employees," fax your letterhead with your name, e-mail address and the words "41 REWARDS" to (801) 288-9303, or email your request to terry@terrybragg.com.

This article originally appeared in the November/December 2000 issue of Progressive Distributor. Copyright 2000.

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