How Can You Improve Your Incentive Scheme?

Incentive schemes have been much criticised in recent years, and it is quite true that some schemes have been singularly unsuccessful.




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 look at some key points, as shown below:-

What Are Your Reasons For Introducing 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.

What Type Of Work Needs An Incentive Scheme?

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?

Can Other Sections Of Your Organisation Cope With The Changes That Will Be Produced?

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?

What Will Be The Main Features Of Your Incentive Scheme?

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?

But What Type of Incentive?

Incentive awards are a way of rewarding employees and others with cash, goods or holidays rather than increases in pay.

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.

Schemes may be intended to benefit employees or the self-employed, or both.

There should be increasing consistency in the ways that reward, recognition and incentives are offered to customers, staff and distributors. Bespoke awards, where the circumstances require a uniquely tailored solution.

Participants should always have the power of choice, enabling them to self-target and work towards things that are exciting or important to them.

You may be looking to get the most from your staff by increasing motivation, improving morale and encouraging efficiency.

Awards may be made by the employee’s direct employer or by a third party with an interest in the performance of the employee.

For example, a car manufacturer is more likely to give an incentive award to a person employed by a dealership than the direct employer.

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.

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.

Types of Incentives

There are Two Basic Types Of Incentive Scheme, Financial and Non-Financial

Non-financial (and indirectly financial) Incentives

These Include:-

formal recognition/awards

vouchers

extra holidays

gifts

company cars

Financial

Financial incentives are useful for improving performance and can be self-financing.

Profit-related and share option schemes bonuses

commission

Conclusion

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



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