Should I offer an incentive plan?

Posted on 6th March 2019

It’s my view (happy to be proven wrong) anything that involves people can go as wrong as it can right in the world of business.

If you thought incentive = money benefits when you read the title of this blog, then yes.  Incentive plans can be a great incentive for some employees in some industries, some of the time.  This said, in my usual, some might say, annoying way I would just like you to think a bit differently for a moment, or as long as it takes you to read this piece.  Is a money incentive the best way forward for your business?

The story that could be…

So… you have thought about whether money incentives will work for your business.  Have a read through the below scenario and see what you think afterwards;

A sales company has eight employees, 3 sales people, 2 administrators, an accountant and 2 warehouse/drivers.   It has been decided that a sales target has been set and if it is achieved then all employees will receive a 2% bonus.

So that’s fair as all employees will receive the same bonus because the employer wants to treat the whole team equally.

However, one of the sales team members has a second job that’s performing pretty well and, although doing their job efficiently whilst at work, has different priorities and a 2% bonus isn’t really a motivator financially.

The other two sales team members now feel the pressure to out perform each other to achieve the sales target but have started to resent the lack of effort from the other team member.

The administrators and the warehouse/drivers don’t understand how their efforts can achieve the sales target, it feels out of their control, so they are just carrying on as normal.

The accountant is busy invoicing so that the target is hit in time, however, they are concerned that actually the company might not be able to afford the bonus that’s been agreed, they have also forgotten to update the team on how close they are during the last few months.

It may seem like a story, but you would be surprised at how often we see the above scenario happen.  There are always good intentions but there are some key considerations before you announce an incentive plan.

Know your team…

I don’t mean know them in terms of knowing everyone’s names although that’s a good start.  I mean know them in terms of understanding their motivations for working for you.  Is it the job that they love? Are they financially motivated?  Is it that the job provides some intrinsic satisfaction for them?  We work for a lot of charities where financial motivations for doing the job would be pointless, actually it is more about a vocation for the individual.

It may be that there are different motivations for different teams of people within your business and their managers will be able to guide you with thoughts on what would motivate them.

Once you understand what would motivate the team, for instance in our office supply us with cake and we are happy for about a month! We have some clients where recognition is a key motivator for the employees, so they have an employee of the month award, and some clients that award additional days off in recognition of key achievements within roles, individuals are nominated by other staff and managers.

Once you have considered what the motivators are you can then move onto what, as a business you can achieve.

  • Is it sales, turnover or profit that would benefit your business?
  • How would each team of employees be able to contribute to the target?
  • Is the target achievable either by a team or individuals?
  • How will you communicate the information to all employees and how often?
  • When will you provide the outcome for the incentive (remember it doesn’t need to be money!)

Essentially, think it through from all viewpoints first, communicate it properly and effectively, tie it to individual responsibilities in some way and ensure that if the employees do what you need them to that you reward them for it.

If you are thinking of trying to incentivise your team, please give us a call and we can help you think it through and ensure that you have all the essential structures in place to support you.

Lindsay Baker Character
Written by:
Lindsay Baker
Head of HR