By: Carrie Cavanaugh, SPHR, SHRM-SCP, CCP
Senior HR Consultant
At the start of each year, conversations around goal setting are common. Most often when we think about goal setting, it is focused on personal growth and individual goals. As you set and review goals for 2024, we’d encourage you to also consider how you can connect employee goals to business growth and profitability – and how you can incentivize those goals.
In order to make this connection, it is important that goals are well-drafted, well-defined, and have clear metrics behind them, so that an incentive program can be properly implemented and managed. Most incentive plans are designed to encourage employees to reach a certain goal that ultimately brings success to the organization.
Today, we are looking at benefits of incentives, types of incentives, and tips for getting started with incentive programs.
Benefits of Incentives
Incentives, both financial and nonfinancial, can increase productivity and foster employee loyalty. Incentives can also increase morale and accountability because employees may feel more valued when rewarded for their achievements and have a stronger drive to accomplish their goals. The use of incentives allows an organization to tie compensation to productivity – thus being another way to measure success in a position.
Incentives are most effective in roles that have clear metrics, but can work in many different situations. The most important thing to remember is that incentive plans work best when everyone knows and understands the goal of the incentive. If there is not a clear understanding of what it means to succeed, then incentives can become a point of contention rather than motivation.
Types of Incentives
When most people think of incentives, they are thinking of monetary incentives – these would be compensation-based incentives that provide income above and beyond the hourly rate or annual salary of an employee. Since motivation is internal and often unique to individuals, we also recommend that you talk with your team about what would incentivize them. Some employees want cash, but others might be incentivized by additional time off, company swag, internal or external recognition, and more. By understanding what your employees would like, you can tailor your incentive program to your company, balancing monetary and non-monetary incentives.
Tips for Implementing Incentives
1. Have the right people involved, including employees.
People will support what they help create, so getting buy in from all parties early in the process is essential.
2. Ensure that your program has extremely clear goals, along with metrics to measure those goals.
Some topics to think through include what you are going to measure, where will that data come from, are there any exceptions or special situations, etc. Make sure this is all clearly outlined and communicated to employees. It’s also essential that employees understand the specifics of the metrics.
3. Ensure that the people involved have the ability to participate in the goal.
Incentives should be tied to something the employee can actually influence. For example, if you are setting a production goal, that would need to be an incentive for production employees, not salespeople.
4. “Pilot” the program – look at the best and worst care scenarios.
You don’t want to create an incentive plan that you ultimately cannot afford or one in which achievement is impossible. Look at your best years and your worst years and see how the program would have panned out so you can prepare for all scenarios.
5. Honor all the promises that you make.
Don’t implement an incentive program and forget about it. Your employees are working towards a goal with a reward in mind, and if you don’t see that through, you will lose credibility and potentially create an apathetic workforce.
If your company doesn’t have an incentive program in place yet, but would like to act towards implementing one, start with the end in mind – what you are trying to improve, solve, etc. – and then work backwards. If you would like additional assistance on implementing incentives, or you have questions about incentivization, please contact our team! We would love to help you get started.
