The top 5 things you need to develop an effective incentive program
Incentive programs are a great way to motivate your employees. Rewarding your employees for exceptional achievement, positions your business as an employer of choice, encourages people to stay long term and creates a culture of healthy competition within your team.
However, an incentive program should be calibrated carefully, so it encourages a positive team culture and doesn’t needlessly cost you money. Our team of business experts have put together a few tips to get your incentive program running effectively.
1. Reward achievement above and beyond
An incentive scheme is designed to reward exceptional achievement within your business. This means it is given to employees who have gone above and beyond what is expected of them, not merely achieved the baseline standard. Your expectations for your employees should be clearly set out in your KPI strategy and their position description.
2. Keep it simple and deliver on promises
As with KPIs, the terms of an incentive scheme should be easy for both you and your employees to understand. As a business owner, you need to clearly and simply communicate the terms of the incentive scheme to your employees. Once the terms of the incentive scheme are set, set a period of time at which the reward will be given and determined. Make sure you comply with the terms and conditions of your promise.
If the incentive scheme is:
- 20 per cent bonus of every sale achieved, greater than their baseline target
- Payment made 30 days after the end of the financial year
Make sure that you deliver exactly as per your promise or you will lose your employees’ trust.
Simplicity is also important, if an employee can’t wrap their head around what they’re aiming for, then they just won’t try.
3. Make sure it’s self-funding
Let’s take the above example, this is an effective incentive program because it’s self-funding – the money to fund the reward is coming in from additional revenue that is more than the budgeted expectation. The value of an incentive scheme being self-funding is that your business is using the additional funds generated by the employee to fund the reward.
4. Individual wins and team wins
It’s important to create incentive schemes that also reward the entire team, in addition to ones that reward only individual team members. After all, what’s the point of being made the MVP, if your team doesn’t win the game?
This is about inspiring a positive team culture within your business. Creating a culture where team success is acknowledged can mean employees will work cooperatively. A rising tide lifts all boats, so encouraging achievement at the team level means that people will help each other to hit those targets.
5. Review and revise
As with all aspects of your business strategy, you should regularly evaluate the efficacy of your incentive schemes. They should be challenging, but not impossible. If, at the end of an incentive period, none of your employees have achieved the level required for the reward (or even come close), examine why. Alternatively, if the required level was easily met, analyse the results and adjust accordingly.
It’s imperative to check in on your employees’ progress regularly and consistently. If you’re running a longer incentive scheme, it’s advisable to regularly report on progress, to ensure employees are encouraged to continue their good work.
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