Four ways to boost staff motivation & productivity

Posted on 24 May 2016 by The Manufacturer

With staff retention an increasingly important issue for manufacturers, Ed Hussey – director of HR services at accountancy firm, Menzies LLP – compares several incentive schemes which help boost loyalty, productivity and motivation.

A recent EEF skills report has confirmed that the UK manufacturing sector is in the midst of a staffing crisis.

Crucially, more than a third of vacant industry roles are now considered ‘hard to fill’ and 67% of employers cite a lack of technical skills among applicants as a main driver behind their recruitment difficulties.

Ed Hussey, director - HR services, Menzies LLP.
Ed Hussey, director – HR services, Menzies LLP.

As the pace of technological change within the sector increases, and with the flow of graduates with STEM training in short supply, talented employees are a valuable commodity.

In order to promote business growth and retain a competitive edge, staff retention must be a priority for businesses.

Selecting a remuneration package that promotes staff motivation, loyalty and productivity is essential, below are some of the most pertinent options that business leaders should consider when constructing their firm’s offering.

Share incentive schemes

The most efficient workforces are often those that have been provided with comprehensive training, to ensure they have a strong skill set and are up to date with the latest developments in production techniques, leadership and technology.

However, for training expenditure to represent a good investment, keeping staff with the company on a long-term basis is key – often the more skilled an employee is, the more sought after they will be by competitors.

One such way to promote long-term staff retention is through the introduction of share incentive schemes, such as the EMI (Enterprise Management Incentive) share option scheme.

This initiative allows businesses to reward staff in a tax efficient manner, by allowing them to purchase shares in the company at some point in the future. Not only is the eventual sale of these shares taxable at 10%, but the status of being a shareholder within the business promotes a sense of pride and ownership likely to encourage longevity.

The downside of the EMI share scheme however, is that the options or shares themselves do not hold a tangible value until they are sold, and individuals often have to wait for years to see this financial gain realised. So this solution may be best incorporated with other, more short term measures.

Executive bonus schemes

It may prove sensible to share the financial success of the business with key employees on an annual or quarterly basis, many of whom are likely to hold knowledge and experience that is essential to the firm’s ongoing success.

In order to implement a bonus scheme effectively, clear and objective KPIs must be agreed upon and the associated rewards clearly communicated with staff.

Business leaders must be sure to balance the performance of individuals with the performance of the business as a whole, to ensure that they do not pay out more in bonuses than the business has made in profit.

In addition, promoting the right culture is essential, and managers must be sure not to encourage the wrong behaviours, but to emphasise the importance of team cohesion and group success rather than rewarding individual performance in isolation.

Lifestyle perks

Often the simplest employee benefits are the most sought after. Aside from the usual cycle to work schemes and childcare vouchers, offering staff flexible working patterns can prove to be a huge carrot and significantly increase length of service, especially for those with families.

These types of benefits may be extremely difficult or awkward to negotiate elsewhere and are a great tool in promoting loyalty.

While flexible shift patterns may not be suitable for all manufacturing roles, especially those on the production line, this can be interchanged with the ability to buy and sell holiday days, as well as company-wide late starts or early finishes as a reward for increased productivity.

Employee ownership schemes

The average business life-cycle is shortening, and many entrepreneurial manufacturers are thinking about their exit strategy at an earlier stage.

To retain key members of the leadership team and to cement their commitment to growing the business before its eventual sale, it may be possible to agree upon a management buy-out (MBO) or the adoption of an employee ownership model once the business owner is ready to leave.

This will act to encourage employees to engage with the long-term goals of the organisation and protect the business’ working culture.

In addition, the promise of greater control or partial ownership is likely to increase staff retention, productivity and motivation, as well as paving the way for a smooth exit for the current owner.