Venture Level - Entrepreneur

Many employers face the fact of high payroll. There are many ways you can scale back on payroll by cutting back on labor surplus, giving a larger workload to existing employees, or even laying off employees. These are ways that will sometimes cause more damage than good. So there is another option as far as scaling back on payroll –percentage wise.

If you are paying an employee $100,000, for example, and it comes time to give that person a raise, take a different approach, rather than just raising their paycheck by $X, incentivize their paycheck. Set par levels and requirements that the employee has to achieve to earn an X amount of dollars. If they go beyond have another X amount they can potentially earn. By having an incentive, their growth is basically in their hands. This will help control your payroll because you are setting minimums so if your bottom line goes up a certain percent; their bottom line goes up as well. Now if you implement this payroll style throughout your business, think of the bottom line. Instead of blowing a fixed payroll, you are only blowing payroll on a percent of the profits. It is a better way to get employees motivated for work and not have to check up on them as often as you would need to by committing a fixed salary.

The payroll model might not work for all businesses, but there are alterations that can be done to make it fit. If you are running a quick service restaurant, for example, you are probably not paying anyone over 5-figures annually, so you can incentivize on a smaller level. Give away bonuses for most burgers sold or hold smaller competitions between employees. This will give motivation to all the employees looking to earn a few extra dollars, while still helping you boost your bottom line.