Workplace Incentive Schemes

The carrot and stick may have worked for donkeys, but today’s workplace incentive schemes need to be more innovative.

The majority of the global workforces are motivated by financial reward.  Remuneration rates generally deliver a fair day’s pay for a fair day’s labour.  But how do employers get a higher level of performance from staff?

Incentive schemes are organised programs of reward and recognition that are designed to motivate.  A well designed and implemented program can dramatically increase an organisation’s performance in terms of both quality and quantity.

US researchers Stolovitch, Clark and Condly have found that successful incentive programs do result in an increase in the value people assign to their work goals.  Employees rewarded for exceeding their goals, value their work, increase their self-confidence and show greater loyalty to their employer. (H.D. Stolovitch, R.E. Clark & S.J. Condly 2002-2003, Incentives, Motivation & Workplace Performance: Research & Best Practice).

Whilst improvements in performance can be achieved in a number of weeks, more significant gains are made over the longer term.  Goals should be challenging, but they must be achievable.  Staff must have the necessary skills in order to participate.  An Australian call centre recently found their sales incentive scheme was not achieving the desired results because their customer service staff did not have any sales training!

Incentive schemes must be closely monitored and managed fairly and equitably.  Communication needs to be constant and all elements of the program made very clear (duration, goals, measurement and nature of reward).  Make it clear whether goals will be measured individually or on a team basis.  Also, never shift the goal posts after a program has been rolled out.

Commitment to the achievement of stated goals must be demonstrated by management.  Similarly, the sentiment of ‘reward’ must be embraced.  It is not just about the value of the reward but the glow of recognition for a job well done.   Reward and recognition should be made whole-heartedly and not begrudgingly. 

Design will be specific to the individual characteristics of each workplace.  Do we need an increase in our sales ratio?  Do we require greater output or a cost reduction drive?  Rewards may range from gift vouchers, company shares, holidays, additional vacation leave, or the commodity that speaks everyone’s language – money. 

Fundamentally, the reward must be perceived by the recipient to be of value and worth their extra effort.

Successful incentive schemes have flow-on bonuses for an organisation.  As attrition rates and absenteeism reduce, there are further boosts to productivity. Recruitment and training costs are lower as talented employees are more easily retained due to higher levels of motivation and satisfaction. 

Successful programs can help ‘raise the bar’ and heighten the level of performance all employees expect of themselves.

Close examination of businesses labelled ‘employers of choice’ will most likely reveal the operation of successful reward and recognition programs.  These employers inspire their workforce to achieve excellence.  They have the ability to attract quality candidates with ease due to their reputation for investing in and rewarding their people. 

Adequate human and financial resources need to be allocated for an incentive scheme to succeed.  Extensive research and planning should be undertaken by HR and senior management, possibly in consultation with specialist program designers.  Workplace incentive programs are becoming more common, achieving greater accuracy and creating highly competitive businesses.  Managers who ignore the potential power of incentives do so at their peril.