How to Develop a Winning Incentive Program

Employee incentive programs can range from super successful to downright disastrous, depending on how they are developed and implemented. With the right incentive program—done the right way—employees can become extremely motivated, which can really enhance the company’s bottom line. With the wrong incentive program—or even the right incentive plan done the wrong way—resentment, in-fighting and turnover can occur, eclipsing any benefits the incentives were intended to have. So how do you make sure your incentive program is successful? Here are some guidelines that should help:

Avoid Group Incentives

The best way to create disharmony among your staff is to offer a group incentive program. For example, if you create sales teams and base their monetary bonuses on how much they earn as a group, you're just asking for trouble. There will always be someone in the group who gets accused of not contributing their fair share, and at least one other member who claims they’ve worked the hardest, and therefore deserve a bigger piece of the pie. 

It is essential that the bonus received is within the employee’s control, especially when it comes to something as vital as personal income. Putting an employee’s livelihood in the hands of others is a sure way to cause hostility, while crushing morale and stagnating productivity. So stick with individual bonus plans if you want any real chance of having a positive motivational effect on your staff.

Keep it Simple

Some employers get so caught up in making their incentive plans special or innovative, they end up going overboard. The result is that no one really understands what they need to do to earn their rewards. A simple, clear and targeted incentive program seems to be the most effective. There is really no sense reinventing the wheel if you don’t have to. For example, offering a monetary bonus for bringing in a specified amount of net sales is about as simple as it gets. 

There is a reason these type of incentive programs are the most popular: they work. It may be more fun to create a big game with a colorful board that shows the different types of stickers employees can earn and the prizes they can cash them in for. But generally, these types of approaches tend to be more confusing than effective.

Don’t Rely Solely on Money for Incentives

Just because your incentive program should be simple does not mean you have to limit it to a straightforward monetary bonus system. There are numerous ways to incentivize employees that don’t require a cash reward. Everything from hanging a picture of the employee of the month on the wall to hosting celebration parties for a job well done can have positive effects on morale that increase production. 

The key to making these smaller, non-monetary rewards successful is not to overdo them. If every time an employee brings in a new client, you host a pizza party, pretty soon, it will start to feel more like an obligation than a reward. Employees need to feel appreciated, but too much appreciation can lose its value over time.

Match the Desired Behavior to the Reward

When deciding what type of incentive program to implement, you need to consider what exactly it is you want to motivate your employees to do. Is your goal to get them to work harder, or work smarter? Are you trying to increase the quantity of sales, or the quality? Whatever your goals are, your incentives need to be in alignment with them. 

If you're trying to land bigger, better clients, as opposed to just “more” clients, then offering bonuses for every new client attained is going to backfire. The bonus or reward you offer needs to be based on something relevant to your goal. For example, if you run a financial planning firm, you could offer employees a bonus for every new client they sign who has a net worth of at least X amount of dollars. Just bringing in any client off the street will not earn the reward. That way your specific goal can be achieved, and at the same time, your employees will be left with zero doubt as to what you mean by “a quality client.” 

Make Sure the Incentives are Worthy

You may think a $50 reward or a trip to Branson, Missouri is motivating enough. Your employees might think otherwise. You have to understand what your employees value if your incentive program is going to succeed. Some employees are not even particularly motivated by money; they are more motivated by praise or promotions or added responsibility. Others would balk at getting nothing but kudos for their successes. Basing your rewards on what you would like is not usually the best idea. You need to ask your employees what motivates them and design your motivational programs accordingly.

Creating an incentive program that does more harm than good is clearly not the outcome you want. But you can’t just leave it up to chance if you want your plan to be successful. By following the guidelines presented here, your employees are much more likely to achieve the behaviors you desire; and that’s great news for you, and your bottom line.