In every market, and in every economy, workplace environment and employee morale are vital factors to business success. Too often, small business owners focus exclusively on sales and marketing, overlooking the very people that fill those positions. Research has shown that increased workforce motivation contributes to increased productivity and innovation, creative problem solving, reduced turnover and decreased absenteeism. With such crucial elements at stake, you literally cannot afford to skip the following simple steps to building employee morale.

Two Types of Motivation Intrinsic motivation flourishes in an environment where employees feel like they are a part of something larger than themselves. Driving your small business to higher levels of performance and profits requires two types of motivation: intrinsic and extrinsic. Intrinsic motivation is what comes from within, the interest in a task, and the satisfaction that comes from doing a job well. Extrinsic motivation comes from outside oneself, essentially from rewards. Although different people are motivated in different ways, there are a variety of ways to increase both types of motivation in your business.

Igniting the Passion of Intrinsic Motivation Fostering morale also comes from ensuring that employees have the expertise and tools they need for competence. After you’ve poured time and dollars into starting your business, it can be difficult to understand how your employees may not share your level of motivation. It might be unrealistic to expect them to express the same loyalty to the company, as they don’t have the same level of investment and dreams, but it is completely possible to build their passion for the job and team.

The Right Environment

• Show a dedication to your mission statement.
• Make sure all members of your team believe in your product and have had a chance to use it firsthand.
• Keep an eye open for rightness of fit of employee to job.
• As you hire and promote, place people where they their passions lie.

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As a small business, one of your distinct advantages over your larger counterparts is your ability to maintain successful internal communication. You can keep track of how your employees are doing on a more personal level, and you can receive personalized feedback from them in return. But day-to-day familiarity shouldn’t take the place of regularly scheduled performance reviews to document skills, goals and company expectations. Evaluations are excellent times to open the door for structured discussions of individuals, their place in the business and how they can improve.

Be Prepared Before you start scheduling your first reviews, it's a good idea to review original job descriptions for each employee. Once you’re refreshed on the particular functions of the job, you can concentrate on the specific individuals in each position. As you mentally prepare, keep these main areas in mind: accuracy, timeliness, productivity, leadership, technical abilities, communication and adaptability.

General Tips for Successful Reviews

• Strive for consistency and fairness.
  Use the same, standard form and process for everyone in the company, including management.
  
  
• Seek input from other others when appropriate.
  Ask other employees about an individual, or customers and clients. Done tactfully, this will also show clients/customers that you care about improving performance.
  
  
• Allow plenty of time to prepare evaluations.
  Don’t leave reviews until the last minute, and don’t do them at the end of a frustrating day. Give every employee the benefit of the doubt by offering them a complete and balanced review.
  
  
• Conduct formal reviews at least once a year.
  If you find that your annual review meetings run over an hour and a half, consider it the signal to do them more often.
  
  
• Informal reviews should be done throughout the year.
  Communicate to employees when they are performing well or poorly. Keep notes of project successes or angry letters.
  
  

Salary Reviews and Performance Reviews It’s a good idea to conduct salary and performance reviews separately. Even if only spaced apart by three months, pulling them apart will help your employees remain focused on their performance evaluation rather than allow them to get distracted by the money issue. Also, tying performance and salary reviews together gives the impression that performance and salary are directly connected, whereas other factors—such as profits and budgets—are inevitably part of the equation.

Confronting Less Than Ideal Performance If one of your employees comes up short of expectations, the most important thing you can do is be honest and direct. Don’t beat around the bush and don’t be vague or general. Likewise, don’t be rude or demeaning. Instead, be clear and specific. Give examples of the areas you’re concerned about, in a way that paints a picture that the employee can relate to and understand. Keep notes throughout the review process, and don’t write anything you wouldn’t say. This is a time for honesty and open dialogue.

Self Evaluations If you’re the only one filling out the review fields, you’re missing out on a valuable source of feedback—from the employees themselves. First, encourage employees to evaluate their own performance over the course of the year. Invite them to list their strengths as well as what they think they can improve on. Self-evaluations are a great opportunity to make sure that you and the employee are on the same page in terms of expectations and goals. Second, consider having your employees give an anonymous review of management. Of course, this won’t be feasible for all small businesses, but at the very least, make it clear during review time that you want feedback on how you’re doing as well.

Employees may not initially see the importance of annual reviews. Prepare for their reactions by explaining how valuable evaluations can be to both the individual and the company in advance. With honesty and structure, these discussions can be the best springboard for a closer-knit team and higher employee satisfaction.

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If you have more than two employees, you simply can’t afford not to have a company handbook. Often called “Policy and Procedures Manuals,” handbooks are statements of business’ policies and can be the most important communication tools between you and your employees. The handbook provides an explanation of what you expect of your employees—as well as what they can expect from you. It also can protect you in legal disputes, as courts have considered an employee handbook to be a contractual obligation.

Although policies will pertain to companies differently, depending on size, number of employees and benefits offered, most handbooks should include the following sections:

Company Overview Introduce your company—and motivate employees—with a few paragraphs about its history, growth, goals, ethics and management philosophy.

Legal Statements Include Equal Employment Opportunity Policy Statement, Non-Discrimination and Anti-Harassment Policy, Americans With Disabilities Act Policy Statement, Conflict of Interest and Outside Employment Statement, any work confidentiality issues.

Compensation And Evaluation Discuss performance management and compensation programs, performance evaluation schedule, payment of salary, overtime pay and employee referral programs.

Time Off Policies This section includes policies for vacations, sick time, personal time, bereavement, jury duty, leave under The Family And Medical Leave Act (FMLA), parental leave and leave of absence without pay.

Benefit Information Include information on health insurance, dental insurance, flexible spending accounts, group life insurance, long-term disability, retirement plan, 401(k) plan, and workers' compensation benefits.

Job-Related Issues This section should include information regarding attendance and punctuality, drug and alcohol abuse, appearance and dress code, intolerance of violence in the workplace, responses to accidents and emergencies, internal complaint channels, e-mail and Internet policies, use of company equipment and computer systems, reference checks, smoking policy, and tuition reimbursement programs.

Leaving The Company Make it clear early in employment the expectations and procedures in resignations, dismissals, including immediate dismissals and those other than immediate termination, post-resignation/termination procedures.

General Writing Tips The purpose of your employee handbook is to communicate your company's policies to your employees. It doesn’t need to be fancy—a simple computer printout will be sufficient. It does, however, need to be clear and straightforward. The fact is that many lawsuits come about because companies don't have documented policies, and, without them, may open themselves up to charges of discrimination. Your handbook should rectify this and eliminate possibility for confusion or misunderstandings.

Know the Laws
You can save on legal fees by writing your company handbook yourself, but it’s essential that you have an attorney give it a final review to make sure you get it right. Before writing, make sure you are familiar with the laws and regulations, and don’t be afraid to consult with a lawyer on any topics that you don't understand. This will ensure that your wording is accurate and appropriate. It will also ensure that your policies are in accordance with federal, state and local laws.

Keep It Understandable
Likewise, your handbook should contain enough detail to avoid confusion, but not overwhelm. If you hand out other documents (for example, your insurance plan’s guide), it’s unnecessary to repeat the information. Add a note of where they can find the pertinent documentation.

Have Employees Acknowledge Receipt
Protect yourself and have your employees sign for the handbook when you hand it out. Create a brief document that shows that he or she received it and understands its contents. Once everyone’s on the same page, and guidelines are set that apply to all employees, you’ll enjoy a more organized and efficient workplace.