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Do you pay too much to poorly performing employees and not enough to the good ones?

by , 25 February 2014
Your employees are one of your most expensive overheads.
However, the more you pay your employees, the more profit they will make your company.
On the other hand, the cost of personnel and social contributions are increasing continuously.
Read on for three tips on how to achieve more flexibility in terms of wages and salaries.

It's important for you to find out:
• Which parts of salaries are exempt from taxes
• Which incentives could be more effective than money
• How to respond to excessive salary demands
• How to get out of a remuneration agreement that is unfavourable for you
• How to change to performance-oriented rewards
• How pay employees who do not work in the sales department, profit-related wages
• How to explain to all employees that income and career advancement are not related to age and length of service

3 Tips on how to achieve more flexibility in terms of wages and salaries

1. Clearly state in writing that no increase or bonus is guaranteed – it is dependent on the profitability of the company and the employees' performance.
2. When you give an increase to your employees, often a large percentage of it will go to taxes.
For this reason, you should change to tax-free or tax preferenced remunerations like increased pension, motor vehicle or cellphone allowances.
3. When one of your employees has successfully finished a long and difficult projects, he will probably ask you for an increase.

Rather offer a once-off bonus. If you offer her a straight R5 000, this might prove more attractive to her. A salary increase of R300 will work out to be more expensive than the R5 000 after 11/2 years. And the employee will start negotiations from a higher level next time.


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It's not only the monthly salary that counts

Employees aren't only motivated by money. Recognition is equally important. A competition offering rewards can also add to motivation.

Depending on what objectives you want to achieve, there are four types of incentives:
1. Money has the advantage in that the amounts can be graded – and everybody can use it.
2. Status rewards (certificates, trophies, etc.) stimulate self-esteem and prestige.
3. A prize can be selected individually to always remind the winner of his excellent performance.
4. Free trips provide a pleasant experience, but they could also be expensive.

Tips, tools and strategies to develop and manage your employees

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