Rewarding high performing employees creates a positive incentive system, while the absence of appropriately structured incentive systems create a disincentive for low performers. The reward system must be closely tied to performance and must be designed to reward behaviors that the company wants to promote.

So, how exactly does an employee design an appropriate compensation system? The answer of course depends on the type of work involved, the type of people employed and the size of the company. Small companies may be cash strapped, and as a result, bonuses might not be an appropriate compensation option.

Fortunately, companies have a myriad of tools at their disposal to use in motivating and compensating their employees. Some of the tools that I particularly like are:

Stock options: Stock & stock options closely tie the performance of the company to the performance of the employees. Employees that feel closely tied to the company and its future act in ways that maintain the integrity and future of the company. Stock options give employees the opportunity to fully participate in the future growth and share in the future benefits of the company's performance.

Bonuses: Bonuses are a flexible compensation tools, they can be directly tied to performance of the individual or the entire team or company. Bonuses are flexible tools since they can be offered in good times and rescinded in austere times. Bonuses are typically structured in such a way as to compensate high performers a lot more than medium to low performers.

Increasing responsibility or opportunities for growth: Employers that closely tie responsibilities to their ability and career aspirations tend to retain top talent. A lot of employees seek opportunities that allow them to increase their knowledge and at the same time demonstrate what they can contribute. Companies will not always be able to continually create these opportunities for all employees, but they should continue to identify each individual employees skills, abilities and career aspirations. Employees that are engaged tend to perform well and remain loyal to the company.

Praise & public acknowledgment: Simply praising people in a timely manner for good work goes a long way. Praise, positively reinforces good behavior and praise does not cost anything to the company. Public acknowledgement not only motivates the employee who receives the acknowledgement, but also reinforces for the entire staff the types of behavior

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