Unveiling the secrets of effective incentive plans, we delve into the art of testing them. We explore the importance of aligning rewards with goals, and how to ensure your plan truly motivates your team, driving performance and productivity.
When you implement employee partnership, or economic engagement, you are asking people to change the way they do things
Incentive plans affect people’s behavior on the job, day in and day out
- Engaged employees live in a world of cause and effect
- They understand how their actions contribute to the success of the venture
Spell out the details
Most companies I work with pay differential bonuses based on employees’ earnings, with everyone getting the same percentage of their base pay
- They make the payments every three months based on the quarter’s performance
- A good test of an incentive plan is to look at the pool of money at the end of the year and ask yourself if you were given the opportunity to buy an insurance policy whose price was the incentive pool–and if you paid that premium only if you hit budget–would you buy that policy?
Define the right group for the plan
In smaller companies, it is usually the whole staff. In larger ones, it could be a branch or a functional unit, but be sure it includes everyone, support staff as well as front-line workers. Remember that business is a team sport.
Draft up a plan
1/3 of the incremental gains should go to employees in the form of a bonus while retaining 2/3 for the company
