How to Create a Great Employee Incentive Program
Every organization can be improved, even the top companies in any industry. The overall goal of employee incentive programs should be to help employees grow to higher levels of performance and excellence. By carefully selecting the goals, the rewards and the right program structure, an excellent incentive program will help to inspire, encourage, motivate, cheer on, congratulate, celebrate and reward employees, as they culture habits of success, grow in confidence, and rise to higher levels of excellence.
Design your incentive program by thinking of your employees as belonging to one of three groups
The combination of knowledge, skills, attitude and natural abilities creates a wonderful mix of individuals in each organization. The performance of each person
in any specific position can vary due to these and other factors. An outstanding incentive program can help address these areas by applying a blend of factors to help individuals rise to new levels of performance. Here's a suggested macro view of your team to consider when designing your program, which divides your team into three categories:
- Your Top 5-10% Typically, your highest performers are highly-motivated and highly competent. Outstanding incentive programs will reward and recognize these employees as models of outstanding performance so that your middle 80-90% want to emulate them. As your most valuable employees, you will also want to help these top performers to reach even higher levels of success and culture real job satisfaction and company loyalty with these people.
- Your Middle 80-90% The middle performers in your company commonly offer the greatest opportunity for improving overall performance. An outstanding employee incentive program helps to build motivation and skills that will help propel an employee to new and higher levels of performance. Outstanding programs are designed to significantly bring into focus what's important, and to keep that focus there in a way that is fun, positive and highly motivating. By quickly rewarding each higher level of performance, great incentive programs help your employees to culture new habits for higher and higher levels of performance.
- Your Bottom 5-10% Some of your lowest performers may simply be lacking the focus, skills, training or motivation to perform at a higher level. An outstanding incentive program will create an extra impetus for these people to move into a higher gear. The presence of the incentive program may reveal those employees who are not currently well-suited to their positions.
Avoid the common incentive traps
By taking care when designing your program, you can help avoid the common pitfalls that hurt incentive program success. Try to avoid these traps:
- The contest trap This is a scheme that pours your budget into a few prizes for the top performers and leaves the rest of your team without a reward. Sometimes it's hard to resist creating a first-second-third prize scenario; after all, it's so easy to budget. But the results can leave employees who poured their heart into increasing their performance feeling unappreciated. Better than a contest, offer the same rewards to everyone who meets a certain goal, or a variable number of reward points based on performance. This type of program levels the playing field and treats all employees like winners, and invites everyone to perform well and be rewarded.
- The one-gift-fits-all trap Here's another trap that's easy to fall into. A manager or management team decides on a great reward to offer employees for a certain goal. This is so appealing because it's so easy; no muss, no fuss. The only problem is that not everyone has the same tastes. It may seem "obvious" to management that everyone will want a video camera or a dinner at a certain restaurant or a vacation at a certain destination. But you immediately discount anyone who isn't motivated by the chosen reward. A better solution is to give reward points which participants can use for small gifts or large gifts, for merchandise or travel. You can highlight certain selections from the reward collection as examples of what they might earn, but leave it up to each participant to select the gift he or she might like best.
- The money trap Someone may come up with a brilliant idea: why not just give money? It's easy, it's simple, and no one has to decide anything. After all, everyone loves money, right? If it were that simple, the incentive industry wouldn't exist. And personal gift giving at holidays would be so simple—all handled by electronic bank transfers between friends and relatives. Simple, easy, and no more shopping. The only problem is that people are typically more motivated by a specific item that appeals to them than by the amount of money that pays for that item. And people get more excited and motivated about specific items that they see in a reward collection than by the money it takes to buy that item. You might tell people that if they work real hard for three months and accomplish a special goal, you'll give them an extra $2 a day. Or you can tell them that if they accomplish a certain goal in 90 days they'll get enough points to get their choice of a digital camera, a DVD player or one of 100 other great rewards. Which one do you think will work better?
- The gift certificate trap This is just another version of the money trap. (Please see above).
Design a great incentive program
We suggest that you design your program with these principles in mind:
- Keep it simple Avoid complicated schemes and long lists of goals. Select one goal, (or very few very important goals) and put your focus there. Over time, you can update the goals, or exchange some goals for other goals.
- Use reward points Instead of rewarding with specific gifts, award points that your employees can redeem for their choice of awards. Use an excellent incentive company to manage the gift collection and shipping for you.
- Design a program that everyone can win Avoid giving awards to only the top performer or a few top performers—or similar schemes. Design a program that everyone can win if everyone performs. This doesn't mean that you should set easier goals; it means that you should invite everyone to perform at an excellent level, and then reward that performance.
- Focus on the positive Make the program fun, by emphasizing the positive, cheering people on and celebrating success. Use the success of individuals in the program as an excuse to have meetings and events at which you can review the goals, applaud individual successes, and help others learn how they can rise in excellence.
10 Steps for creating your employee incentive program
Chances are that you already have at least partially completed some of the steps below. We'll be happy to help you finish the process:
- Select Your Goals Your goals may be to increase productivity, increase sales, improve customer service or a wide variety of goals (see "Set Your Targets High" in Employee Incentives). You may choose to have several goals, and are likely to have different goals for different groups of people.
- Decide how you will measure the achievement of your goals You may use a variety of metrics, such as customer satisfaction ratings, levels of production, lost-time accidents, etc.
- Decide your award budget for the achievement of each goal For example, $XXX per unit of production over XXX.
- Decide what you will reward You will want to offer merchandise, and possibly travel, or even customized items. Outstanding programs commonly avoid cash or cash equivalents such as gift cards so that the rewards become specific goals that each person selects, such as a video camera or a cruise package.
- Determine how you will promote the program Decide how you will get people excited about the program and how you'll keep the enthusiasm going.
- Secure budget approval You can make this easier on yourself by creating a list of different results and charting your costs and benefits at each level of success. If you can show that it's a win-win at various levels of performance, it will be easier to secure approval.
- Finalize Details Decide who's eligible to participate, how participants will select their rewards, the program rules.
- Choose a start date
- Kick off the program in a big way! Get people excited about the program at a kickoff meeting or special announcement, use emails, posters newsletters, etc.
- Keep the excitement alive! Get people more and more excited by announcing the successes of your top achievers. Let people know what's possible by sharing the success stories of their counterparts. Although your biggest promotion should be at the beginning of the program, it's important to keep promoting the program. This is where program managers often neglect their program because they get busy with other things. By pre-scheduling your program promotion, you can keep the program running at full speed with the least amount of effort. Use the success of your best performers to inspire others. Keep it fun, upbeat and positive, and enjoy the success!
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You may have questions about setting up your program. We're here to help whenever you need assistance.
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