Getting the Most Bang for Your Incentive Buck
“Effective incentives describe what the person gets paid to do.”
Effective incentive design is an increasingly important opportunity. Obviously, we want to get the most mileage possible from our incentive awards.
There are four rules to apply when seeking to increase the motivational mileage of incentives, except those directed at the highest levels of the organization.
Effective incentives are:
- Boldly designed.
- Quickly paid.
- Attention grabbing through celebration.
- Paid in cash (be sure to treat cash payments properly for tax purposes). Optimize the impact of a boldly designed plan by scheduling payments at least monthly. Quarterly, semi-annual or annual payouts don't have the punch that monthly or more frequent payments have.
Why do incentives exist? To share and to motivate. While a dollar is a dollar, a delayed dollar greatly reduces its motivational value. On the other hand, if our associates work hard this month to get paid extra next month, they are likely to want to get out there and go for it.
Our restaurant group embarked on a mission to significantly upgrade the quality and tenure of our restaurant co-workers. We created the Cash Bonus Account, which we called CBA, and offered a dollar per hour cash bonus to each employee meeting stated criteria. Its impact was extraordinary.
I was checking into a Des Moines hotel a couple of weeks after we announced this unique and inviting incentive. When I offered my corporate credit card the night manager said, "I know you. You're the guy who pays your employees so well."
Gee, that was neat! Indeed, it was a bold effort and an unusually attractive opportunity for our people. We knew almost immediately that it would accomplish its purpose. But the kind of recognition and goodwill our organization received was a surprise bonus.
This incentive's purpose included a retention goal, so we couldn't pay it more often than quarterly. When the first quarter was over, however, we weren't timid. We loaded $38,000 into an armored car, and our vice president and general manager followed the truck to each restaurant and distributed the cash, one employee at a time. What energy we created!
It was a successful incentive, quickly serving notice that we were the market leaders when it came to treatment of co-workers. We became one of the employers of choice in Des Moines.