Productivity-based incentives can get small business moving

E ntrepreneurs looking to get more out of their employee's may want to consider productivity-based incentives, writes Ken Sweet, executive director at GPS, a management consulting firm.

Economic instability has left employers in difficult situations when it comes to improving employee compensation. Sweet states that productivity-based incentives will spark employee activity and create initiative to drive more revenue. These incentives provide employee benefits on the back end while costing little to implement.

"Productivity-based excess profit incentives" can be designed for small businesses by qualified management consulting experts. These incentives are paid out only when profits rise as result of the increased productivity.

"There is no upfront cost if the incentives are designed correctly," added Sweet. Sweet's initiatives arrived at a time when the Bureau of Labor Statistics indicated that employee productivity surged at an annual rate of 2.3 percent during Q3 2010. During that period, output improved 3.7 percent, while employees increased their hours 1.4 percent.

That increased output is a welcome sign for the recovering economy. Given that 80-90 percent of the new jobs created over the last 15 years came from small businesses, according to the U.S. Small Business Administration, the incentives provide avenues for entrepreneurs to give back to their employees for their added workloads.