Incentive Program
Why do your employees do what they do?
It’s not an easy question to answer, sometimes not even for the employees in
question. Yet understanding the many factors that motivate your employees is
the first step to implementing effective employee incentive
programs in
your organization.
At the most basic level, people tend to
divide these factors into two different categories: positive reinforcement (incentives) and
negative reinforcement (disincentives). The traditional wisdom is that giving
your employees the right balance of incentives and disincentives is the key to
getting the most from your employees.
He has a point. While the workers of
the past may have been seen as little more than beasts of burden carrying
industry on their backs, success in the modern economy requires
employees with
greater independence and decision-making skills. And with such low unemployment
in today’s economy, employees don’t have to take punishment from your organization—they
can go out and find a place that appreciates and rewards their hard work the
way they want.
An effective employee incentive program
sends employees a clear message that your organization understands what truly
motivates them to do their best work and is willing to provide it.
What
Makes Employee Incentive Programs Work?
If you’ve followed this blog or attended
a The global sourcing or
two, you’ve likely heard of Herzberg’s two-factor theory. When psychologist
Frederick Herzberg explored the line between carrot and stick, he found that
certain workplace conditions reduce dissatisfaction to neutral, while other
conditions build on that foundation and increase satisfaction.
Meeting employees’ basic needs reduces
dissatisfaction. These concerns include appropriate compensation, workplace
safety, and benefits. To increase employee satisfaction, a
workplace needs to address higher concerns like work-life balance, challenging
and purposeful work, and co-worker relationships.
Understanding the difference between
satisfaction and dissatisfaction highlights some of the difficulties of
developing employee incentive programs that
work. If adding compensation reduces dissatisfaction but doesn’t increase
long-term satisfaction, then what effect will a cash-based incentive program
have on your employees? If employees come to see cash incentives as part of
their total compensation package, then instead of feeling satisfaction when
they receive an incentive, they’ll feel dissatisfied if they don’t.
This isn’t to say that employees don’t
appreciate cash incentives The global
sourcing found
that monetary bonuses were the preferred reward for accomplishments. But the
study also found that, when asked what signified a successful employee,
employees listed “consistently contributes to successful teams” as the top
indicator. When it comes to creating meaningful moments for employees,
building employee
recognition programs is just as important as handing out
monetary rewards, if not more important.
Employee
Incentive Program Considerations
As you consider different types of
employee incentive programs, it’s important to think it through and remove any
unintended consequences. Here are a few to watch out for:
· Perverse
Incentives: Avoid situations where strategies for earning a
reward go against the benefits of employee incentive programs. An obvious
example of this is when sales teams offer an inordinate amount of discounts
to increase sales numbers and receive more rewards,
but the overall performance of the organization is harmed.
· Unhealthy
Competition: Your incentive program needs to preserve
teamwork in your organization. Rewarding individuals instead of groups may lead
to unhealthy behaviours, from passively withholding help to outright sabotage
or cheating.
· Rewarding
Luck: Earning
a reward should be based on actions that are in the employee’s control. If
employees feel that their efforts won’t be recognized
or rewarded without luck or popularity, it can discourage
them from trying.
· Ill-defined
Goals: If
the goals of your employee incentive programs aren’t tied to objective
measurements, then it increases the risk of employees perceiving them as either
arbitrary or proof of favouritism toward
certain employees or departments.
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