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Compensation and Benefits: 7 Key Factors to Consider When Developing Employee Rewards Programs

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Compensation and Benefits: 7 Key Factors to Consider When Developing Employee Rewards Programs

The job market today is intensely competitive. Companies all over the world are competing to recruit and retain talented, hardworking individuals. Employees are the backbone to any business and therefore, it’s vitally important that any organization consistently bolsters employee motivation and job satisfaction to enhance overall productivity. 

Planning an effective employee rewards program is an essential strategy for nurturing a culture of recognition and appreciation in your company. If implemented strategically and methodologically, rewards programs contribute towards employee retention. This ensures that your company can maintain its momentum in working towards long-term goals. 

In this article, we will discuss seven factors you need to take into consideration when creating a program that will reward your employees.

Align Rewards with Objectives

It’s important for every company, no matter what the size or sector of operation, to adequately recognize hard work and loyalty. That said, recognition must align with company objectives in order to incentivize the achievement of overarching goals and priorities. If rewards have arbitrary metrics that don’t align with an employee’s contribution they become tokenistic and unproductive formalities. 

Matching rewards to shared goals is an excellent strategy for motivating employees to work towards meeting—and hopefully exceeding—targets. This moves the company one step closer to achieving larger goals. By utilizing the psychological power of rewards programs, you can align employees’ intrinsic motivation with company-wide priorities.

Create Meaningful Rewards

Ensuring that your company’s rewards program is actually meaningful to employees is one of the most important factors to consider when designing this initiative. If you don’t get this right, then your rewards program is likely to be ineffective. In fact, an ill-designed rewards program can actually demotivate employees, which may lead to long-term underperformance.

Naturally, every employee will have their own preferences when it comes to varying types of rewards. Some individuals prefer career-oriented incentives that afford them the opportunity to advance within the company. Others will prefer extrinsic rewards such as gifts, perks, or an increased salary. 

In order to determine which rewards employees value most, it’s important to conduct a thorough needs analysis. At the end of the day, rewards programs should bolster productivity. But they also exist as a channel for employee recognition. In order to show the people in your company that you do genuinely value their efforts, it’s important to ensure that your rewards are meaningful.  

Make Rewards Accessible to All

One of the most common shortcomings of rewards programs is that they only target individuals already operating near the top of the ladder. Your rewards program should offer equal opportunities for participation; regardless of title or pay grade. In fact, well-developed rewards programs should encourage a leveling-out of the playing field. 

This ensures that all employees are continuously incentivized to work hard. Additionally,  it eliminates the passivity that can sometimes take hold once an employee has achieved their personal goals and desired status within a company. 

While rewards should be accessible to all, unique rewards will be attached to distinct achievements for different departments and ‘levels’ within the company. Designing rewards for varying segments may be time consuming. However, it’s a crucial consideration in the development of any effective rewards program. 

Ensure Rewards are Visible

Many companies will design a comprehensive rewards program and fail to adequately market it to their employees. Ensuring that your rewards program is visible is a crucial component of company-wide motivation.  

Furthermore, while you should clearly display the structure of the rewards program, your company should also celebrate those actually achieving the promised rewards. This ensures that rewards feel realistic and tangible for all. 

There are several ways that you can make rewards more visible. You may opt to publicize reward-related news in a company-wide email or through the distribution of celebratory posters. Some companies choose to utilize their digital platforms or meetings to announce rewards. Whichever way you choose to go about it, make your rewards public to maintain company-wide motivation. 

Ongoing Reviews

Internal review processes ensure that rewards are granted when appropriate. If your review process is disorganized, then reward opportunities will likely go unnoticed. Furthermore, if reviews are infrequent, then it’s challenging to grant rewards timeously. 

When rewards get delayed, or worse, wholly unrecognized, the attractiveness of the program gets undermined. Unfortunately, this creates a sense of diminished achievement. This means that the program becomes less effective at encouraging motivation and productivity.

Take the time to strategically schedule frequent employee appraisals. This ensures that employees remain consistently motivated to work towards their targets. Ultimately, this contributes to a collective company momentum.  

Consider a Total Rewards Approach

As mentioned in point two, every employee has their own set of unique preferences when it comes to rewards. While the scale of achievement will inform the type of reward, it’s worth considering a more holistic and hybridized model. The total rewards strategy encompasses a range of rewards including career advancement opportunities, material benefits, and work-life balance initiatives. 

This approach prioritizes an employee’s sense of fulfillment. It aims to enhance a sense of purpose for every employee—regardless of their position within a company. Instead of awarding different types of rewards for different achievements, the total rewards approach essentially offers a diverse set of rewards as if they were one reward. 

As this approach is more resource intensive and requires a greater degree of internal capacity, it’s designed for companies comfortable having a rewards program that targets goals that are more long-term than most. 

Ensure Rewards are Measurable

At the end of the day, your company needs to be able to justify their rewards program and the way that it shows appreciation for employees. You need to validate the financial cost thereof in yearly expenditure reports while ensuring company-wide managerial buy-in to secure the longevity of the initiative.

You can conduct a comprehensive productivity analysis, or you may choose to adopt a more qualitative evaluation approach. This can be done by conducting employee interviews and surveys to understand the impact of the rewards program. 

Conclusion

When implemented correctly, rewards programs truly are an excellent mechanism for ensuring employee fulfillment and bolstering motivation and productivity. Companies that implement these types of programs enjoy better retention rates, greater productivity, and increased morale. In turn, this creates an excellent company culture and drives bottom lines upward. 

Developing an employee rewards program benefits everyone and any business that’s striving for longevity should implement one. 

e-Commerce: Last mile delivery india profit 8fig amazon logistics

The Key to eCommerce Success: Improving Gross Profit Margin through Effective Strategies

In the eCommerce sector, gross profit margins (GPM) vary depending on business verticals. While many of the larger sites like Amazon, eBay, and Zillow have GPMs of between 48 and 61%, most other eCommerce businesses’ GPM sits at around 20-50%. 

Regardless of what eCommerce vertical you fall under, your business’s GPM is one of the most essential metrics. It determines your venture’s financial health and profitability within the context of your industry. More specifically, knowing your gross profit margin allows you to evaluate how efficient your production and operational strategies are in comparison to and your leading competitors.

GPM is usually determined as a percentage of your eCommerce business’s net sales. It indicates how much money you’ve made after deducting your direct costs of operating the business, also commonly known as the cost of goods sold.

A financially viable company should have a gross profit margin that allows revenues to cover its costs of production. However, this is the base threshold that you should reach. Ideally, your GPM should leave you with profits at the end of the day to facilitate your venture’s growth and development. In this article, we’ll share the most effective strategies to use to improve your gross profit margin and achieve eCommerce success.

Calculating Gross Profit Margins

Your gross profit margin shows your company’s overall sales performance based on the efficiency of its service delivery and production processes. GPM is calculated by deducting your direct costs from your revenues, then dividing the resulting figure by your revenues and multiplying this figure by 100 to reach a percentage.

Use this formula to calculate your eCommerce business’s gross profit margin:

[(Revenues – cost of goods sold) / revenues] x 100 = GPM

Remember that your gross profit margin indicates how much profit your services or products bring in, per dollar or fiat currency unit, after subtracting the cost of goods sold. This means that it only takes into account the direct costs of sales, and not other operational expenses such as taxes, salaries, and rent and marketing expenses. 

Say, for instance, you pay $20 for a product at wholesale and sell it to your target customers for $40. This would give you a GPM of 50%, as half of the revenues earned were used to cover the direct cost of the product. Ultimately, GPM should be used as a metric to assess the performance and profitability of individual products and services.

Strategies to Improve Your Gross Profit Margin

1: Assess and Audit Your Current Strategies

The only true way to improve your profit margins is to enhance and streamline the processes that could be holding your business back. That means that the first step to boosting your profits is to know exactly how your current strategies work and what plans you can implement to improve them.

Take a close look at your business’s expenditure, product production processes, service delivery processes, acquisition, and retention methods. Also, look at any other critical processes that could be hindering your ability to generate revenues or driving excessively high production costs. 

Assess your expense reports to identify costs that can be reduced or mitigated. Spot gaps in your sales processes that could be leading to a loss of sales prospects and identify ways in which your marketing strategies can be improved to generate more leads and conversions. 

2: Raise Your Prices

Increasing prices may not be a suitable approach for every eCommerce business, but in some cases, it can certainly help to boost gross profit margins. Before you adjust your prices, thoroughly assess your competitors and their pricing structures. 

Find out what they offer, and then offer your own customers something better suited to their needs, be it a niche product or service or an exclusive boutique offering. This approach will allow you to raise your prices while still offering your target audience value that aligns with your pricing.

3: Reduce Your Operating Expenses

Expenses have a direct impact on your GPM, and if you can reduce them, you can improve your profit margin. There are many effective ways to slash your costs, including:

  • Restructuring your staff force and reducing unnecessary staffing where possible
  • Paying invoices on time or early to take advantage of vendor discounts
  • Removing subscriptions or services that are not used regularly from your budget
  • Investigating the possibility of part or full remote work for your teams to reduce office rental and equipment costs
  • Identifying new vendors that can provide more cost-effective products, services or materials compared to your current suppliers. 

You can also use automation tools to reduce your operational expenses without sacrificing efficiency or productivity. Automating processes like billing and invoice processing, accounting, marketing, customer relationship management, and inventory management can free up your team members’ time and resources, allowing them to focus on creative pursuits and expansion plans while AI takes care of repetitive and time-consuming tasks.

4: Update Your Brand’s Identity

If your customers are willing to pay more for your products or services, your profit margins will increase automatically. However, you’ll need to shape your brand’s identity and reputation in a way that compels your prospects to spend more money.

The best way to do this is to position your brand as a premium option within your industry or vertical. You can achieve this by adding extra functions and features to your products that your competitors do not provide, by implementing a prestige pricing system, or by aesthetically redesigning your brand to exude a more high-end identity.

5: Adjust Your Sales Mix

Are there certain products or services in your inventory that perform better than others when it comes to sales? Identify those that provide you with the highest gross profit margins and focus your efforts and resources on marketing them to your target audience. 

Adjusting your business focus may be the key to finding the ideal combination of products and services that maximizes your eCommerce business’s profitability.

The Takeaway

Your gross profit margin will vary widely depending on the nature of your industry, your vertical, and the target audience you are appealing to. With that said, improving your GPM will always result in a stronger business at the end of the day. 

Use the effective strategies listed in this article to refine your approach and give your profit margins the boost they deserve.

 

financial

Managing Money: How to Reduce Financial Strain on Your Business

According to a study conducted by US Bank, as many as  82% of businesses fail because of cash flow issues. This recent study highlights just how important cash flow is, and how few businesses get managing money right.

Trying to balance books amidst a pandemic and subsequent global economic recession is far from easy, and can cause significant stress for big and small business owners alike. But it doesn’t have to be that way. 

Businesses struggle to regulate cash flow due to a variety of reasons. From supply chain issues to late payments, there is an endless string of financial problems that can arise across industries. 

However, it is the way in which businesses are approaching money matters that typically causes the most strain. Poor financial management practices are the number one reason why businesses fail, which is why we’re going to focus on how to correct them. 

Why Is Money Management Such A Common Problem? 

JP Morgan Chase & Co surveyed over 600,00 small businesses and found that the average business only has 27 cash buffer days. This means that if your business doesn’t start shifting its approach to sustainable cash flow management, it could head towards financial disaster in less than a month. 

Fortunately, there are some simple, actionable habits every business owner can adopt to regulate cash flow and alleviate some of the stress that inevitably comes with running a business. 

  • Chart out your cash flow 

Navigating the choppy waters of business cash flow is one of the toughest parts of running a business. But that also makes it one of the most crucial. Fortunately, for the entrepreneurs of today, there are many accounting software platforms available to assist with this. 

A digital cash flowchart can help you create easily comprehensive data spreadsheets that showcase your two main priorities: outflows (accounts payable) and inflows (sales of goods or services). 

  • Employ financial forecasting tools 

Another useful digital resource you can draw from to support financial management is a forecasting tool. Being able to track incoming and outgoing expense patterns in order to predict future outcomes can be a game changer for the way you approach business money management. 

  • Stay closely on top of company debt 

Debt is a fact of life for many people and businesses across the globe. But it’s not the accumulation of debt that is the real problem. It’s paying it back in a timely and sensible fashion. 

Most companies rely on loans to set up a business and start generating profit. If you belong to one of those companies, keeping a close eye on interest rates is essential for avoiding financial ruin. It is particularly important to monitor variable rate loans, which can fluctuate over time. 

Review your debt situation on a regular basis. Assess repayment costs, find out if your interest rates have changed, and determine whether your circumstances have changed enough to increase or decrease your debt funding. And always, always, always read the fine print.

  • Regularly review expenditures and ROI 

Monitoring expense and ROI reports is a reliable way to prevent excessive spending and adjust your financial strategy as needed. Quality accounting software should provide you with the ability to create reports based on balance sheets, cash flow statements, accounts payable/receivable, and depreciation.

It’s also important to monitor payroll, even if you outsource some of your work. For any growing company (regardless of size), this aspect of money management can be more complex than estimated. 

  • Build good business credit for loans 

As your business grows over time, you may make the decision to take out a loan. Contrary to what you might think, loans are a smart way to keep your business afloat, while better, more lucrative systems are put into place. But to qualify for business loans, you need to ensure your tax is in order, and that you have a solid business plan and good credit. 

Lenders look for clean tax records and proof that your business can repay the loan or that it has the assets to stand surety. With poor credit, receiving approval for business loans is also nearly impossible. So how do you build good credit? You pay off your debts fast, and you don’t take out loans with interest rates you can’t afford. 

  • Assess and adjust your price margins 

There are numerous factors that influence what your price margins should be: location, visibility, industry, and desirability, to name a few. And to make things even more complex, consumer behavior is constantly changing, so you need to keep a sharp eye on whether your prices match up to market sentiments. 

  • Create an efficient billing strategy 

A report from 2022 found that late and unpaid payments affect a whopping 87% of businesses. Receiving money that’s owed to you after the agreed-upon billing date is not just inconvenient, it can also seriously jeopardize your business’ state of financial affairs. 

Therefore, it’s imperative that you organize your billing strategy in a way that makes it extremely difficult for late payments to occur. You can incentivize clients to pay promptly by offering small discounts for punctuality, providing diverse payment channel options, or penalizing lateness with a fee. 

  • Make financial management a top priority 

Money management should not be an afterthought for your business. It should be at the center of every decision you make. Without a consistent cash flow and a strong grip on financial affairs, your business will be too vulnerable to bankruptcy and failure.

Make a concerted effort to not only monitor but continue to improve your cash flow strategy. Think ahead, stay focused on your financial goals, and be on the lookout for ways to increase efficiency. 

The Takeaway 

If running a successful business was easy, everyone would be doing it. But in the highly competitive capitalistic society that we live in today, there is much more to money management than what meets the eye. Learning how to lift the financial strain on your business is key to helping it thrive in future. 

By closely monitoring your cash flow status, regularly assessing things like ROI, billing processes, and profit margins, and cultivating healthy money management habits, your business will bounce back from financial strain stronger than before. 

trucking

The Logic of Logistics for the New Normal: How the Trucking Industry Is Changing Amid Covid-19

Like all businesses and sectors, the trucking industry has been forced to respond rapidly to the COVID-19 pandemic. The past year has demonstrated the importance of essential services preparing in advance for unforeseen catastrophes, and the need to be creative and flexible in industry operations.

Well, after the coronavirus has been brought under control, lasting changes will linger. Some of them will be positive, and others still will permanently improve the trucking industry’s status quo.

Beneficial Changes for the Sector

There are three key areas where trucking fleets’ daily operations could be positively affected by the pandemic.

1. The proliferation of contactless tech

Paperless and contactless technology has boomed during the spread of COVID-19. The highly contagious nature of the virus has forced industries, including the trucking sector, to implement new technologies to keep customers, clients, and drivers safe.

Experts predict that we will see significantly more paperless and contactless operations in the future. In terms of sales, virtual meetings will become the new norm, while electronic bills of lading are being normalized on truck drivers’ sides.

Contactless technologies are quicker, more efficient, and often more reliable to use, which could also save effort and costs during truck drivers’ orientation processes. The age of automation holds the potential to streamline trucking and delivery while minimizing the human margin of error involved.


The spread of contactless technology has not only improved safety and sanitation, it has enhanced the general efficiency of the trucking industry too. It’s drastically lowered the number of times drivers need to walk from their trucks to security booms and warehouses. At first glance, this may not seem significant, but those small-time savings can accumulate quickly, and translate into vast improvements in operational time frames.

The pandemic has created more opportunities for innovation. This is especially true with the way that the trucking industry uses its most powerful resource: its dedicated drivers and staff teams. Employees’ well-being is being taken into account on a level never seen in the sector, and as it turns out, this has been exceptionally good for business as well.

2. The re-imagination of the traditional office

The traditional office structure has been turned upside down by the COVID-19 crisis, regardless of the industry in question. Many trucking companies have instructed most, if not all, of their office staff members to work from home. It has required only upper management members to remain in the office, either on an as-needed or consistent basis.

This re-imagination of the classic office set-up has created an unexpected perk. Those employees who started working from home quickly became accustomed to operating in low-stress environments and become more effective workers as a result.

Remote work could allow companies to scale down their offices, saving money that could instead expand their trucking fleets. Commercial real estate is in a major state of flux as working from home steadily cements itself as the ‘new normal’.

People may also be required to spend less time on the road traveling, even once it’s been deemed safe to do so. A combination of in-person meetings and virtual operations will help to balance trucking companies’ cost savings while reducing work-related travel costs for the sector’s employees during financially challenging times.

3. The development of new ways to onboard truck drivers

COVID-19 has forced companies to change the ways they classically onboarded truck drivers. This external pressure has made the process more efficient, which will benefit businesses long after the pandemic is over.

Some companies are moving parts of their driver orientation processes online—especially the paperwork. Others adopted fully virtual orientation practices, which also proved to be successful. It’s expected that many more will use electronic document signatures and orientation videos in the near future to maintain social distancing and streamline their onboarding systems.

It’s been noted that some drivers are better suited to virtual orientations than others. A solution to this issue could be to develop a hybrid model that offers an in-person orientation, with certain parts of the process completed online. Ultimately, it’s essential to strike a fine balance to preserve a company’s onboarding efficiency while prioritizing safety at every step of the way.

Additional Unanticipated Changes

There are several other facets of the trucking industry that could be permanently altered because of the effects of the virus. Certain sectors may struggle as the pandemic strangles national economies. Smaller businesses and owner-operators may be particularly at risk of closure or financial difficulties.

On the other hand, other sectors may thrive because of the crisis. The grocery supply industry is a great example of a sector that is booming as consumers’ demand for staple items rises.

Truck drivers may be able to look forward to a decrease in traffic too, and as congestion is a serious, costly issue, this is a major advantage. Millions of people have turned to working from home (or become unemployed) in 2020, and traffic congestion is noticeably diminished. This trend could persist even after businesses reopen, as many employees will continue to work from their living rooms after the pandemic has blown over.

The Bottom Line

The COVID-19 pandemic has undoubtedly created disruptions for the trucking industry. Companies around the world have had to grapple with supply chain interruptions, changing consumer demands, infections in their workforces, and the challenges that come with switching to remote work technologies.

With all that said, there is a silver lining on the horizon. Many of the adaptations the trucking sector has been forced to adopt will prove beneficial for business, in both the long and short term.

Companies can use remote and contactless technologies to improve their operations, prioritize safety and sanitation, and potentially boost their profit margins. Truck drivers will be less pressed for time as a result, and office workforces may become progressively more productive as it encourages them to work from home.

small business

5 Solutions to Small Business Money Troubles

Virtually every small business, no matter its focus or industry, can fall prey to financial issues from time to time. Widespread crises like pandemics can instantly amplify these effects and have left many SMEs in the lurch in 2020.

Over and above the effects of challenging times, entrepreneurship is fraught with difficulties itself. Both experienced and novice business owners face significant challenges, and their nature can vary widely. Arranging funding for start-ups, maintaining cash flow, and dealing with strapped budgets are all part of an entrepreneur’s day to day operational obstacles.

If your small business is facing concerning fiscal challenges, you’ll need to approach them delicately and deliberately with the right mindset. Experts recommend tackling such challenges as they arise, rather than leaving them to snowball into much larger problems later down the line.

Here are solutions to 5 of the most common money troubles facing small businesses today.

Issues with Capital

Banks are becoming increasingly strict and discerning in terms of which small businesses they are willing to risk financing. This has unfortunately left many business owners in a tricky position, forcing them to drastically reduce their capital budgets.

Thankfully, there are many ways to secure financing for small businesses that don’t involve conventional bank loans. You could turn to friends or family members for assistance or perhaps go into business with a like-minded partner who can offer the capital you need to stay operational.

Many entrepreneurs view self-fueled growth models as the least risky and most effective way to operate small businesses. Instead of trying to secure funding to establish your company overnight, focus on your primary customers and offer value-added services to them. Your business will probably grow automatically thanks to word of mouth. However, if you do still require outside funding, it’s recommended that you speak to an attorney to avoid any potential future complications.

Restricted Cash Flow

Most small businesses cannot stay afloat without a certain amount of cash flow. You can perform tasks timeously, send out invoices, and only receive money after a month—if at all. In the interim, you will be left to address all of your business-related costs like salary payments, infrastructural costs, and personal expenses.

The solution in this case is to meticulously plan and budget your operations to maintain cash flow however you can. An effective way of boosting cash flow is requesting down-payments when you receive orders from clients. This money will allow you to address your expenses and keep money aside for unforeseen costs.

You could also request faster invoice settlement terms, as this will buy you extra time if clients are not prompt payers. Additionally, you could approach your vendors and request that they invoice you after 45, 60, or even 90 days. This is a somewhat unconventional approach, but if you’re in good standing with your vendors, it could help you to loosen your cash flow and keep your small business in the clear.

Tight Marketing Budgets

Even if your business has sufficient cash flow, you may have a tight budget for promoting your products and services.

To remedy this, remember that every entrepreneur deals with budget issues from time to time. You can reduce the frequency of this phenomenon by optimizing your marketing efforts. Spend your advertising cash where it will maximize your ROI and use the remainder for other infrastructural costs and marketing experiments. Don’t take risks with your marketing, rather play it safe and simple as you won’t always recoup your costs.

Worryingly Low-Profit Margins

If you’ve noticed a sudden dip in your once-strong profit margins, you’re not alone. Many small businesses are facing similar issues in 2020—especially those who don’t operate exclusively online.

To begin addressing this problem, you should create a weekly or monthly forecast of your cash flow based on your current financial results. Your forecast should include detailed cash flow estimates, such as invoices paid by clients, and financial outflows like vendor payments, salaries, and rental costs.

In this specific scenario, it’s helpful to bear a worst-case scenario in mind. Develop a pessimistic forecast and assess it against your cash flow. If you’re still generating an income, you should be in the clear. If not, however, you will need to find ways to boost cash inflow and reduce outflow until your profit margins have stabilized.

Debt and Loan Defaults

Defaulting on loans can be devastating for your business and your own financial standing. If you borrowed money before the pandemic struck, you might be struggling to repay it now. The last thing you probably want to do is discuss those debt-related issues with others—but that’s precisely what you need to do.

If you fear that you may default on a loan, immediately contact your lender. Approach them with the facts and figures relevant to your situation, and if possible, calculate how much of your loan you can repay, and where you need leeway. They will often be willing to negotiate reduced rates and lower interest-only payments to assist you temporarily.

Alternatively, if you don’t contact your lenders in good time, you may face the bank demanding immediate repayment in full. If you cannot pay, they can repossess your collateral and sell it off to repay the loan. Rest assured that most lenders will appreciate your honesty about your financial situation. It allows both parties to explore more options for solutions and to find a flexible fix that works for all involved.

The Bottom Line

If your small business is facing financial issues, you’re not alone. A huge percentage of SMEs tackle fiscal fiascos from time to time, and not all of them survive.

Your best approach if you are facing monetary concerns is to be proactive and to tackle problems head-on. Don’t wait until they have spiraled out of control or until a bank representative shows up at your door. There are many ways to ensure that your business operates smoothly and continues to generate a profit, even during difficult times.

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Nina Sharpe is a content champion for various outlets, covering various business topics from finance for startups to small business accounting tips.