Employee Incentive and Reward Systems – 7 Essential Basic Elements

Introduction

Do you want an employee incentive and reward system that works to everyone’s satisfaction? If you do, you need to ensure that you cover 7 essential basic elements I call this PAMSITS.

1. Performance

The purpose of incentives and rewards is to improve performance. It may seem obvious. But as that’s the case, performance should be the focus of your system. Simply defined, performance means on job results. It’s the absolute basis of any system. And remember to reward team performance as well as individual performance.

2. Achievable

Performance targets must be seen by employees to be achievable. If employees regard targets as very difficult or impossible you’ll kill your incentive scheme stone dead. This doesn’t mean that your targets should be “easy” or “soft”. There’s a fine line between “achievable” and “impossible”. Make sure you don’t cross it. Consult with your employees on this before you establish your scheme.

3. Measurable

It almost goes without saying. But the performance required must be measurable. If you can’t measure the performance clearly and definitely, your system will be open to manipulation. Once that happens you’ll be suspected of manipulating it to suit “hidden agendas”. Even if this is untrue, that’s what employees will believe. Then they’ll try some manipulation of their own.

4. Superior

You pay people to reach certain levels of performance. Use incentives and rewards to recognize those whose contribution exceeds what you expect as a minimum standard. Providing extra rewards for “normal” work, causes one major problem. It virtually tells employees that “normal” is good enough. They stop striving to be superior performers.

5. Integrity

Lack of perceived integrity is probably the greatest threat to any reward and incentive program. Note that I used the term “perceived integrity”. It’s how employees perceive the system that matters. If you fail to pay detailed attention to any of the other six elements, you place the integrity of the scheme in jeopardy. Should employees lose faith in its integrity, your scheme will fail.

6. Transparent

However and whatever you decide to reward, absolute transparency is essential. Every participant must know exactly how the system works. They should also be able to check their own progress and that of other participants. Lack of transparency leads to suspicion of “favouritism” or “bias” in the system. Discuss methods of reporting progress with employees so that they’re involved in setting transparency parameters.

7. Support

Many incentive and reward systems recognize those who achieve outstanding job results. Few recognize the staff who do all the “legwork” that supports the high achievers. Yet without this support the performance “stars” wouldn’t reach such high standards. When constructing your system, ensure that support staff participate in the rewards. They too are part of the successful team.

Conclusion

So there it is: PAMSITS. But it’s more than another acronym to remember. It contains the essence of building rewards and incentives that improve employee performance. In doing so, they help your business grow and develop too. Such systems rarely fail because the amount of reward is inadequate. They fail because the basic “architecture” of the system is poor. That’s what PAMSITS is designed to ensure.

2 Responses to Employee Incentive and Reward Systems – 7 Essential Basic Elements
  1. Exercise Balls
    December 6, 2010 | 8:55 am

    Pretty nice post. I just stumbled upon your blog and wanted to say that I have really enjoyed browsing your blog posts. In any case I’ll be subscribing to your feed and I hope you write again soon!

  2. Leon
    December 13, 2010 | 8:52 am

    Thanks for your comment Shaterdernari. I publish posts twice weekly and welcome comments and feedback

    Leon

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