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Keys to an Effective Performance Incentive Program

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When it comes to increasing the return on your investment in your company, most business owners think of getting increased value through investments in new computer systems, or more sophisticated warehousing equipment, or a larger facility. Yet, in today’s business climate, it is the company’s employees more than anything else that represent the single biggest investment that a business owner will make.

That’s why effective performance incentive programs are so important. Properly designed performance incentive programs not only help to ensure that you achieve your business objectives, but they can actually help employees develop or enhance job skills, thereby improving employee performance and productivity. And, more productive employees become even more committed to achieving company goals, leading to repeat success and reducing staff turnover.

While the variety and complexity of a performance incentive program will vary from company to company, here are a few ingredients that are critical to the success of all such programs, regardless of your business:

Has High Visibility Among Employees: An effectively-designed performance incentive program will capture the imagination of employees. But managers must also ensure that they create a continual “buzz” to keep the program objectives foremost in the minds of employees. Regular progress reports and updates, as well as interim celebrations, are critical to keep people focused and motivated.

Provides A Variety Of Incentives: Not all employees have the same responsibilities, and not everyone is motivated in the same way. Successful performance incentive programs include opportunities for all employees to win, regardless of the type of work that they perform. And including different types of rewards (a choice of either cash or a day off, for example) ensures that there’s something for everyone in achieving the goal.

Delivers Rewards In A Timely Fashion: The greatest satisfaction in achieving a goal occurs when the goal is realized, not two weeks after. And timely acknowledgment more directly connects the achievement itself with the reward, providing additional incentive to win another time. Make sure that your performance incentive program provides for prompt recognition of achievement.

Changes Frequently To Maintain Interest: Don’t make the mistake of repeating successful programs over and over again. They’ll quickly loose their effectiveness. Instead, experiment with incentive programs that include different goals and/or provide different rewards. People will respond to the new challenge more quickly, and you’ll develop a catalog of incentives that can drive performance more effectively.

Includes Employee Involvement: Incentive programs developed by top managers without the involvement of employees are doomed to fail. They’ll miss the mark in identifying either the performance targets or the type of incentive that will produce the desired result. The people doing the job are often best positioned to know what the goals should be, and will certainly know the kind of incentives that will motivate them.

Reflects Business Goals And Company Values: Remember that performance incentives are the best way to reinforce the goals and objectives you have for your business, as well as to remind people of the company’s overriding values. Get the greatest value from your performance incentive program by ensuring that it rewards performance consistent with that vision.

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