Designing an Incentive Programme for your Employees.

Between employers and employees, monthly salary payment is a legal obligation. In Unionised environments, a default of two months in the payment of salaries can lead to Union agitations.

Incentives are not so. Incentives are not legal obligations from employers to employees. Incentives are additional rewards that employers give their employees to show some measure of appreciation for their excellent performance. It is also a source of motivation for employees who have gone the extra mile to contribute to the success of the Organisation.

As good as the idea of incentive program is, it is a very sensitive one. It must be carefully designed and implemented such that the result will not be negative. Some of the negative results that may arise from a not-well-designed and implemented incentive program are, first, employees might start looking for ways to cut corners to be able to receive incentives, for example, signing for extra hours which they did not work. Second, employees who do not qualify for the incentive package might resent those who get the incentive.

To design a very effective incentive program, several factors must be considered.

First is that the real motive for establishing the incentive program must be well laid out and it must be in line with the Organisation`s strategic objectives. This will ensure that the cost of the incentive program is covered and it is understood as money-well-spent.

Second is that the criteria for qualifying for the incentive must be well spelt out. A rule of thumb is that the Key Performance Indicators (KPI) are agreed upon between the Human Resource Management and the employees at the commencement of the program, or maybe at the beginning of the year. KPIs are certain parameters that are established as benchmarks against which the performance of an individual employee is measured. The KPIs must be simple to understand and straight forward to evaluate. The KPIs must be stated and documented such that both employee and employer can easily refer to it. KPIs must also be established for work teams. The point at which a performance is judged to be exceptional must be well known. For example, it could be an increase of 25% in sales or a 40% decrease in downtime in manufacturing. Any performance above these set limits will qualify for an incentive.

Third is that the incentive package must be value-adding to the recipient. For example, the Organisation can decide to sponsor an excellent salesman on a two weeks vacation or offer to give educational scholarships to children of high performers. This way, the Management is seen to be interested in the employees’ overall well-being. It also brings a “feel-good” factor into the incentive program and this is necessary for the emotions of the employees.

Fourth and lastly, the award of these incentives must be done openly. It should not be a secret affair. Seeing high-performing employees openly rewarded will serve as a motivation for other employees and make the recipients to see themselves as role-models, thereby, keeping up their motivation.

As business owners and managers, we can invest in employee incentive programmes and get multiple returns in increased productivity. This sure translates into a more impressive bottomline for the Organisation. Remember, one of the primary reasons for being in business is to make profit. Treat your staff well and watch your business perform better than before.