Incentive Plans: What They Are and How to Use Them
The traditional way of thinking about incentives trends toward variable-compensation. Perks like bonuses, raises and other performance-based monetary incentives have been employed for the sake of retention and motivation for many years.
Traditional thinking notwithstanding, none of these things are incentive plans. Some may believe they are, but they’re not. Incentives are a horse of a different color. They’re structured differently and rely on much more measurable criteria for their success than variable-compensation strategies do.
Variable-compensation is somewhat predictable. We know it’s coming but we’re perhaps unsure of what’s necessary to obtain it. Incentive plans are designed to impact employee behavior and performance every working day.
Incentives invite people to step up and give it all they’ve got. They’re engineered to inspire teams to more precipitous heights of collaboration and innovation. With incentives, showing up isn’t enough. Stepping up is what gets you in the running for the incentive offered.
This post is about incentive plans: what they are and how to use them. Let’s break it down.
One of the most compelling features of incentive plans is their transparency. They define a goal on a short timeline. They tell employees in no uncertain terms what’s required to win the incentive.
There is no ambiguity with incentive plans, which is a tremendous improvement on the variable-compensation model.
A well-crafted incentive plan allows managers and employees to work together in the process of defining short-term goals. This creates buy-in from all stakeholders. Total skin in the game.
Everybody wins. Employees do what’s needed to meet (or exceed) the goal and the company’s financial performance is served.
By being apprised of the impact of their work on the bottom line and working to improve it, employees take ownership. It’s more than “just a job”. They’re working for something specific.
In the transparency offered by incentive plans, employees are also provided with an opportunity to excel. That builds your talent base and creates the leaders of your company’s tomorrow.
Let the Ideas Flow
Establishing the goal of any given incentive is crucial. What’s more crucial is how the goal is arrived at. Tier 1 executives certainly have their own ideas of what company goals should be, but how many ideas never make it to the right ears?
Establishing short-term goals teases out the hidden brilliance of your people. When they know that this “new way of doing things” is part of a cultural shift which advances an incentive plan, the excitement will be palpable.
And that’s the brilliance of incentive plans. While you’re incentivizing your employees, you’re engaging them at a creatively productive level that changes the game for the company and for them.
Pulling employees to the place where the rubber meets the road is a key facet of incentive plans. Your spend per employee comes back 14-fold (the actual ROI), with higher retention, the nurturing of pivotal talent and a whole new way of creating the mechanisms of success.
Incentive Travel Group builds effective incentive plans that change the game. Contact us.