Business success relies on a highly productive and motivated work force. CEO’s and business owner’s are always looking to get the most from every employee. To ensure that employees reach and maintain a high level of motivation many companies are implementing incentive programs.
An effective incentive program should be designed to promote employee actions and strategies which will result in positive measurable outcomes. Any business, big or small, should consider an employee incentive program. Here is the how and why.
What are the major goals of an effective incentive program?
Designing an effective incentive program can seem overwhelming at first. But it doesn’t have to be. According to an online article on employee incentive programs written by Dr Billy M, every good incentive program should be focused on three main goals:
- Provide employees the opportunity to share in the financial success of the company. If an employee understands that when a company succeeds so too do they, employees will work harder. Incentives like profit sharing will ensure employees see the company as partially theirs and not just a paycheck. This will increase productivity.
- Motivate and encourage workforce to focus on specific performance goals. Understanding what the goals are give employees targets to shoot for. The goals should be clearly defined and understood by every employee. Having understood goals not only leads to better clarity but also gives the employer a way to enforce accountability. If goals are reached than the employees can receive their promised incentives and if the goals are not realized the employee can better understand why the incentives were not given.
- Employee rewards should be given every year. These rewards should be based on the overall performance of your business. Yearly goals keep employees motivated over the whole fiscal year. If incentive come too quickly they can be taken for granted and if they don’t come frequently enough they can seem out of reach. Yearly goals also give a reasonable time frame for every employee to produce and give the company enough time to calculate the real employee/business production relationship, and calculate the proper incentives.
Are Big companies using Incentive Programs?
As their popularity grows, incentive programs are becoming very big business. Incentives for employees are becoming so popular the following facts can be stated:
- Over 50% of America’s companies utilize incentive programs.
- American companies spend over $100 billion every year on employee incentive programs.
- Incentives (not including cash) have become a $46 billion industry, and has more than doubled in the last 10 years.
These numbers show that big companies are seeing the benefits of incentive programs and find them worth the investment. With huge increases in the last ten years, incentive programs are sure to keep rising. Every company should be looking to utilize incentive programs. Companies not offering incentive program may find it difficult to hire and retain highly skilled employees.
How Can Incentive Programs Help strengthen my workforce?
- Incentive programs will ensure that employees stay focused and motivated everyday. An employee is most motivated when they believe their efforts will reap rewards. So a properly motivated employee is, more often than not, an incentivized employee.
- A solid incentive program can also help your business retain valuable employees. Most people leave their current places of employment because they believe that new opportunities will offer new or better rewards. If your business has a well designed employee incentive program, employees will be less likely to look to other opportunities.
- A good incentive program can attract a higher caliber of employee. Every company wants the best and brightest workforce. One one line source writes that some of the distinguishing qualities for a world class hire are, loyalty and reliability, and, energy and endurance. A properly incentivized employee will have little reason to seek other employment or become unreliable. Also incentives can ensure that a new hire remains at a high level of production and remains a loyal and trusted employee.
What does a good incentive program include?
A good incentive program needs to be tailored to a specific business desire. Sales incentive may be different from administrative incentives. Here are some good incentives for specific areas of a business.
- Commission based incentives are incentives based on sales performance. This is a good strategy for business looking to increase conversion rates from leads to sales. If the sale person is incentivized to convert sales by directly sharing in the profits converted from each sale they will be better motivated to raise their conversion rates. This type of incentive is great for employees who need to be highly motivated in regards to every potential client. Commission based incentives can dramatically increase sales production by providing individual rewards.
- Target based incentives are incentive given if-and-when particular goals are meet. These types of incentives can be good for individuals but can be great for departments. A targeted goal can be a galvanizing factor for any department. Teamwork and cooperation can be increased when a department understands that if a target is reached they will all be rewarded.
- Percentage based incentives can be a great way to revamp a project, strengthen a department, or motivate new management. If a business is looking to develop a struggling sector, directors and employees can be incentivized to strengthen the department by sharing in any increases due to their new direction. If the project or sector increases its profitability so do the people directly involved in the new directives.