Almost any business owner or boss is faced with one or all of these challenges:

• Their employees are unmotivated
• They keep losing top talent to higher paying positions
• They can’t attract top talent because they don’t have the payroll for it

The solution (and yet another way to not lose employees) is to put a performance based bonus plan in place. So how does it work? Your employees would receive a competitive base salary, let’s say $60,000. In addition, you would put in place a performance based bonus plan which would accomplish several things:

1. Reduce your fixed salary expense from the $70,000 (or higher) level that they are requesting if you offered them the standard compensation package.
2. Align your employees’ interest with the company’s to grow their specific department’s revenue and increase their productivity.
3. Increase responsiveness and client satisfaction levels as your employees would now have a vested interest in attracting referrals to the company.
4. Foster a cooperative working environment with other departments as your employees will look to cross sell their services (i.e. organic and paid optimization or paid optimization and analytics).

There are many ways to skin this cat. For example, you could institute a program that looks at target revenue with their bonus as a % of salary:
Current SEO Revenue: $500,000
Target SEO Revenue for 2008: $750,000

Their bonus program would work as follows:

• Less than 80% of Target Bonus: $0
• 80% of Target Bonus: 5% of salary
• 90% of Target Bonus: 10% of salary
• 100% of Target Bonus: 15% of salary
• 110% of Target Bonus: 20% of salary

You can create a performance based salary program in many different ways. You just have to keep the basic theory in place: set your profit target and then develop a scale of bonus based on the results achieved.

This is a post from Taylor Pratt's blog: Awesome SEO

Why You Should be Using A Performance Based Salary Program

Assuming you’re a pretty good Internet marketer, you’ve probably reached the dilemma where you find that there are so many opportunities to make money online, but not enough hours in a day to do it. In addition to all of the money you make online yourself, there are also about five jobs available for every Internet marketer out there. This makes salaries very competitive and turnover rates high. With all of this working against you (the business owner), what could you possibly do to keep your employees happy? The answer is to L.E.A.D.

Listen. One of my biggest pet peeves is when I’m trying to express a new idea, and it is instantly shut down. I don’t even get a chance to explain why I think it is such a great idea. Listening is critical to leadership and to retaining employees, because it makes them feel wanted. You need to show them that they are more than just a worker bee to you, and that their input and ideas for the direction of the business are just as important as the work they are doing for you. I’m not saying you have to implement every idea they have, I’m saying you should give them the respect they deserve by considering their suggestion.

Empower. Think of empowering as a promotion. You need to give your employees a reason to work as hard as they do, you need to motivate them. One of the best ways to motivate an employee is to reward them with more responsibility, and decision making ability. Perhaps the time has come for you to start building a team around them, or to give them the responsibility of full client management. It’s like stroking their ego, but in a respectful manner. It helps you because they are a great employee and might be able to do even better things for your company, and it helps keep them happy by showing them you have confidence in them.

Accept. Accept that your employees are not you. This one is particularly easy for some, but also very hard for others. It ranges from the way they learn, to the way they work. One of the reasons Google employees are so happy is because they have the freedom to work the way that is best for them. Google only cares that they get the job done, and they do a great job. If it means they need a flexible schedule, then they can have it. Accepting that your employees don’t learn the same way you do, and they don’t develop the same way you do, are most important. Don’t pressure them into thinking like you do, and to accomplish their goals in the same amount of time it takes you. The pressure you put on their shoulders can be overwhelming and send them crawling to the door. Its fine to nag them and to make sure they are on top of things, but you can’t expect them to read a book and a few blog posts and be at the same level as Rae Hoffman.

Develop. The best way to develop your employees’ skills is to challenge them. Accept that ridiculously challenging project. Yes, your employees may spend many more hours then you charged the client for deciphering the problem, but think of the knowledge they will gain. That could be the key to finding the latest SEO/Analytics trick that puts you ahead of your competition. If you bore your employees by taking on the same project over and over again, you won’t just lose their interest – but you’ll fall behind as an authority in the industry. I had a great conversation with Jason Green about this. He says that the industry is like the stock market in the 80’s: it is really easy to make money in it, but in 5-10 years the market will be saturated with competition. That means now is the time to set yourself apart from your competition. Now is the time to challenge your employees to develop the latest tool, latest hack, and latest theory to improve the traffic and conversion rates of your clients. Establish yourself as a leader and an authority and your employees will respect you as one.

The L.E.A.D. acronym is easier then it sounds, and you’re not always going to remember to follow it. The key to keeping any great employee is to listen to them. I can’t stress that enough. Just by paying attention to their morale and their attitude can tell you a lot about how happy they are. I’d also encourage you to reward them often. I’m not saying you have to hand out a big check every time they do something right, but you need to make them want the company to succeed. If you land a big client, go out to lunch and celebrate. There are numerous ways to keep your employees feeling wanted and happy, you just have to be willing to spend the time to do it.

This is a post from Taylor Pratt's blog: Awesome SEO

L.E.A.D. – Your Complete Guide to NOT Losing Employees