Staff Rewards and Incentives –10 Traps That Trip You Up

Introduction

Do you have a staff rewards and incentives scheme in your business? If you don’t, you should have. Rewards and incentives work well to improve staff performance. But there are some tricky little traps. Watch out for them.

1. Lack Of A Clear Business Connection

Rewards and incentives have two purposes – to reward staff and to enhance your business. You need to make the connection absolutely clear. And ensure that your employees clearly understand and appreciate that connection.

2. Absence Of A Proper Scheme

Rewards and incentives should comprise an intact system. The system or scheme should have specific goals. The value or nature of the reward should be clearly related to the goals. One off “slings” of cash or time off or gifts may be part of the system. But they are not the system.

3. Ignoring The Team

Many otherwise sound staff rewards and incentive schemes focus entirely on individual performance. They ignore contribution to team effectiveness. This allows individuals to manipulate the scheme to their own advantage. An outstanding salesperson may earn massive incentives while the sales team fails as a whole. That’s not good for your business. Include team goals when assessing reward entitlements.

4. Lack Of Clear Performance Standards

It’s so simple. If you lack clear, demonstrable, measurable staff performance standards, you can’t have a totally successful rewards and incentives scheme. Both you and your staff must know the standards. They must also know “how they’re going” in meeting them. And they must be perfectly clear about the relationship between standards and rewards. A scheme without performance standards is about as useful as a clock without hands.

5. Using Only Monetary Rewards

Money is only one form of reward. Depending on the personal income tax system in your state or country, large monetary rewards may even be a disincentive. The following actual cases show alternatives.

1. In a “production line” type repair business, overall performance goals are set each month. These are related to inventory levels. When the prescribed inventory levels are attained before month end, all staff earn a day off on full pay. This is additional to specific performance based monthly rewards.

2. In a home maintenance business, tradesperson receive rewards for customer commendations, upsells, referrals and various specific examples of superior performance. But recalls, where a customer requires the tradesperson to return to adjust something they should have fixed on the original call, are an accepted part of the industry. They cost the company dearly. Management introduced an incentive. When a tradesperson completes a month with no recalls he or she receives a half day off on full pay. Recalls fell to less than 1% of all work.

6. Rewarding What You Already Pay For

You pay your employees a basic salary. In return, you expect a certain level of performance. When an employee meets your performance expectations, he or she has satisfied the “basic contract”. You could reward cumulative “ideal” performance e.g six months without any customer complaint. Do not generally pay incentives for performance that you could reasonably expect in return for basic salary.

7. Rewarding Behaviour

This is a common error. Your scheme must reward performance: staff achievements on the job. Rewarding behaviour:  what staff do that may or may not achieve results debases the incentives. In other words, reward sales closed, not calls made. Reward orders processed and delivered, not paperwork completed. Reward results not process.

8. Lack Of Transparency

Your scheme should be open and available to all involved. No secret entries: no “little black books”: no “wink, wink, nudge, nudge” tricks known only to a few favoured employees. Every employee involved should know the rules. Records of rewards, who received them, why and their value should be easily available to all. This means that you must establish accurate and reliable records of achievement.

9. Absence of Self Assessment

Every employee should know how they’re progressing towards earning incentives. Make this information available weekly and, if possible, daily. It’s in your interests to enable employees to “self assess”. They need to adjust and improve their performance without your intervention.

10. Limiting The Range Of Rewards

You can reward virtually anything you like. But it must clearly enhance the business and be performance based. Don’t limit yourself to only one performance measure. If the performance saves or makes extra money or adds value to the business, consider including it as part of your scheme.

Conclusion

Many staff reward and incentive schemes seem to fall short. But it’s not usually because the value of the reward and incentives isn’t appropriate, valuable and worthwhile. They fail because a manager has been caught in one or more of the traps I’ve mentioned. Where this occurs, you lose a powerful and valuable motivation tool.

What To Do Now

What are you rewarding in your business? What do your staff believe you’re rewarding? Do you have a true rewards and incentive scheme? If you don’t, you’re missing a major motivating force. Tell me what you think.