How to create and manage an effective incentive program for your organization
Remember those reward pizza parties that you had in school or college? Sure, you could eat pizza any other time too, but that special satisfaction when it came as a reward for winning a competition or being the team with the least demerits or most awards, made it taste just so good.
It is human nature to respond to incentives, monetary or otherwise.
Often, we want or strive for something when there is an external motivator or reward associated with it. Like punishment, though, the price/quantum has to be right. The assumption is that one aims to avoid a negative consequence at all costs, and that any positive incentive will garner a response. However, if the consequence for wrongdoing is too little then one tends to ignore the fine/punitive action, and it doesn’t serve the purpose as a deterrent.
The same holds good for rewards – pitch the incentive too low and it is likely to be ignored. The effort needed to meet the set goal has to match the incentive; should it outweigh the prize it might not elicit the necessary result. This is one of the main reasons why some programs don’t make an impact even when clubbed with incentives.
According to a LinkedIn survey, 96% of talent professionals say employee experience is gaining greater importance. The right incentives, which are real, valued, and fair, can go a long way in strengthening such experience.
How can you ensure that the incentive programs you create for the organization will be effective?
- Design your incentive program to be long-term and performance based. Have measurable, goal-oriented, transparent incentives. Reward-based on KPIs being met.
- Ensure the program is accessible and applicable to all employees. Establish rules and ethical practices so that everyone involved approaches the program, appropriately.
- Allow for multiple smaller rewards rather than one or two big ones. Employees will lose interest should the goals be too hard or rewards too infrequent, and they will remain motivated longer when there is the chance of getting an incentive on a regular basis. This also ensures more employees are covered and rewarded under the incentive structure.
- Publicize the program and spread the word amongst all employees, across various levels within the organization.
- Have a regular schedule for the incentive program and stick to it so employees know when and what to expect.
- Be fair and equitable when handing out the rewards. This will increase employees’ faith in the reward system.
- Remember to get the management and leadership on board with the plan. You need their support to spread the word and to hand out the rewards earned. Employees expect recognition to come from their managers.
- Periodically, ask employees what appeals to them. Hear and make changes based on employee feedback, as, without their buy-in, no incentive program can run for long. As this case study from Great Place to Work shows, such a practice can significantly improve employee dedication and alignment with company goals.
A successful incentive program needs to be flexible and dynamic, and not be a policy that’s cast in stone. In the next part of this post, we will cover what not to do to ensure your incentive program is effective.