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What is the Best Incentive ?

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Incentive schemes have been much criticised in recent years, and it is quite true that some schemes have been singularly unsuccessful. Their failure, however, has often been the result of inadequate planning, rushed introduction, or not thinking through such a scheme properly. These points should not be used to generally condemn other more successful applications.

Whether any particular incentive scheme achieves long term success depends initially on the thoroughness with which the current working situation is reviewed, hence the need to re-look at some key Action Points, and question why you need an incentive scheme.

1. Increase in earnings for employees?

2. Increase in output?

3. Improvement in quality?

4. Better mobility of labour?

5. More efficient methods of working?

6. Improvement in safety?

7. Higher housekeeping standards?

8. Reduction in absenteeism?

9. Reduction in labour turnover?

10.Reduction in overtime working?

Any of these points or a combination, will determine how you introduce and communicate such a scheme. The following questions will act as an "aide memoire".

11. Does the work necessitate skilled, semi-skilled or unskilled labour?

12. Can individual skill be fully applied when manipulating machines etc. or is the employee’s quantity and quality of output regulated to a large extent by factors outside his/her control?

13. Does the level of output remain steady throughout the year or is it subject to seasonal variations?

14. Is production organized on a process flow line, batch or jobbing basis?

15. Have your current production methods been recently reviewed for maximum efficiency?

16. Is any new machinery or plant, to be introduced in the near future, likely to upset the standard upon which an incentive scheme might be based?

17. Have you sufficient qualified staff to introduce an incentive scheme, or alternatively, have you one qualified employee who is capable of training other staff in work study techniques?

18. Once the scheme is introduced, will you have the necessary number of staff to be able to keep it under constant review, and to introduce modifications where necessary?

19. Will the present staff in the wages department be able to cope with bonus calculations etc. without additional help?

20. Are other parts of the organization such as Production Control, Maintenance, Distribution etc. geared to cope with the increased flow of materials and output that are likely to result?

21. Are your present channels of communication, both formal and informal, capable of coping with the dissemination of detailed information to all employees, on the workings of any proposed incentive plan?

22. Have you the necessary facilities, away from the production area, for any operative training or re-training that might be required?

23. Have you agreed the principle of using work measurement with the trade unions and employee representatives?

24. Will you be undertaking the training of any employee representatives in work study techniques?

25. Are the mechanics of your scheme simple enough to enable all employees to fully understand how their pay is calculated?

26. What standards will you use to evaluate performance to ensure that a proper balance is maintained between:

a. Increased output

b. Maintaining quality

c. Efficient use of equipment or materials?

27. How will you relate payment to performance? e.g. in direct proportion to output?

28. On what length of time will you base payment? e.g. hour, shift, week?

29. Will you gear the scheme to the individual, working group, department or factory?

30. Will you apply the scheme in some way to direct as well as indirect personnel? If not, how will the problem of increased or decreased differentials be solved?

31. Will official disputes concerning the operation of the incentive plan be handled through the normal negotiating and disputes machinery?

32. What will be the principles governing payment for ‘waiting time’ or unmeasured work?

33. Will any scheme you introduce be on a gradual basis or do you intend to apply it to all appropriate sections at the one time?

34. How will you calculate holiday pay for pieceworkers?

It’s notoriously difficult to put together an incentive scheme that motivates all of its targets, and that continues to do so over an extended period. You may be looking to get the most from your staff by increasing motivation, improving morale and encouraging efficiency.

Incentive awards are a way of rewarding employees and others with cash, goods or holidays rather than increases in pay. There are Two Basic Types Of Incentive Scheme, Financial and Non-Financial

Schemes can vary from national promotions to a prize raffle held by a small firm. Rewards of goods or holidays will usually involve the use of a voucher.

Awards may be linked to sales performance, good timekeeping, safety or production records, or may involve participation in a lottery or prize draw.

There should be increasing consistency in the ways that reward, recognition and incentives are offered to customers, staff and distributors. Participants should always have the power of choice, enabling them to self-target and work towards things that are exciting or important to them.

Incentives that are always won by a small group of high performers, breed more resentment than motivation, while the high performers themselves soon become bored with the repetition of holidays, and activities that are open to them.

The aim of an incentive scheme is to improve the performance of your business, whether it is your employees, customer's or supply chain.

As a result the most successful incentive schemes tend to be those matched to the individual's requirements, but which still appeal to the company as a whole.

You will find that with a little extra thought, allied to a willingness to be creative, can make a quantum difference to the effectiveness of an incentive programme

Guest post written by Stuart Ngai, Director of Technology Solutions, VERAX

Having worked in software development in the engineering and financial sectors through several technology eras, one thing strikes me the most is how often top notch IT professionals just get burned out by the fast pace of technology advances. As an educator, development manager, and technology driver for many years, it has been my passion to help our IT staff to keep up in light of global competition. On the previous episode of the AlignIT Manager Tech Talk, I shared with the audience my advice on how IT managers can play an important role in their team’s training. I would like to summarize a few important aspects to keep in mind when it comes to planning and managing training for your staff. 

It’s an investment that pays off

Sure, everyone is very busy these days. And most IT managers have long days in addition to the constant bombardment of mobile messages. However, if you neglect to put a good effort to nurture your IT staff, it will come back to bite you in the form of low employee morale, low productivity, high turnover, and lack of innovation to name a few. Thus, preventive steps on a consistent basis is essential to keep a healthy workforce working for you. So take the time to nurture your valuable IT staff.

Upper management buy-in is a must

Now that you’ve been reminded of the importance of nurturing your staff, is that enough? My experience tells me that unless you also get your boss to recognize and help drive this important aspect of being a manager, it might be an uphill battle you’ll be taking all on your own shoulders. So do spend time to keep the benefits of training front and center with your boss amongst many “must do’s�. Having well trained IT staff will not only benefit both you and your boss in achieving and exceeding your deliverable objectives while creating a great work environment for all.

The 10% allocation rule

So you and your boss are persuaded. But how much should be set aside for investing in people without affecting your capacity to deliver? Well, many IT businesses tend to be cyclical and you should definitely take advantage of the downtime for training. But by default, use the 10% time allocation rule over the course of the year to ensure reasonable time is dedicated for your IT staff to up keep their skills. Now, that doesn’t directly translate to a 10% reduction in productivity. There are a number of ways you can afford to keep with the 10% rule without breaking your bank. So read on.

Know strategic directions for your company and industry

Great, your boss is on board and you’ve set a budget aside. What’s next? Well, just like you don’t get on a highway before deciding where you are going, you need to know the strategic focus of your company and trends in your industry before you start planning with your staff. As an example, I recently purchased a state of the art, air-thin laptop for my son for his university study away from home even though I know it doesn’t run all the fancy shooting games that he loves on his desktop at home. As a result, he now has a sleek laptop that’s the envy of his friends while he’s getting top marks because he doesn’t waste hours shooting at colourful pixels. Mean dad you say; may be. But he ends up ahead with his leading edge gadget while happy getting top marks in university – just have to borrow his friends’ clunky desktops for the occasional thrills. Likewise, as an IT manager, you need to know what’s good for your company and where the industry is heading before entertaining any training requests.

Listen to your staff

Now you are aware of the direction of your company and industry. Time to sit down with your staff to listen. Knowing everyone’s different, you definitely need to spend time listening carefully to the areas that they feel they need to beef up while you let them know the direction that’s important for your company and what you see as the important trends in your industry. Help them focus on some concrete and measureable goals so as to keep a focus on the objectives. Do encourage creativity from your staff in terms of learning style so to maximize the benefits based on your budget.

To be continued next Monday.

Share Your Thoughts

How do you go about planning and managing training for your staff? Do you have any pointers or advice for others? Join the conversation in the AlignIT for Infrastructure and Development Managers group on LinkedIn.

Stuart Ngai

Stuart Ngai, Director of Technology Solutions at VERAX, is an IT professional with over 25 years of experience. As a development manager, lead enterprise architect, and a Senior Leadership Member, Stuart has led the delivery of many leading edge systems through several technology eras and guided many IT professionals in enriching and re-energizing their careers. With 7 years teaching software courses at Seneca College of Applied Sciences followed by another 7 years teaching software engineering courses for the Faculty of Applied Science and Engineering at the University of Toronto, personal development through perpetual training has been a theme in which Stuart helped many IT professionals to achieve and sustain their career growth. Stuart is a certified P. Eng. and PMP with a Masters degree in Engineering from McGill University and a management degree from McGill's School of Management. He has been with the software consulting firm VERAX Solutions Corporation in Toronto since 1993 focusing on building strong delivery teams and delivering results to their customers in the financial sector.

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