How to create a great employee incentive program

Secrets for improving employee performance

By carefully selecting the goals, the rewards and the right program structure, an excellent incentive program will help to inspire, encourage, motivate, cheer on, congratulate, celebrate and reward employees as they culture habits of success, grow in confidence, and rise to higher and higher levels of excellence.

Here's a big secret to know when designing your program. Think of your team as divided into three categories:

  • Your Top 5-10%   -   Typically, your highest performers are highly-motivated and highly competent. Outstanding incentive programs will reward and recognize these employees as models of outstanding performance so that your middle 80-90% want to emulate them. As your most valuable employees, you will also want to help these top performers to reach even higher levels of success and culture real job satisfaction and company loyalty with these people.

  • Your Middle 80-90%   -   The middle performers in your company commonly offer the greatest opportunity for improving overall performance. An outstanding employee incentive program helps to build motivation and skills that will help propel an employee to new and higher levels of performance. Outstanding programs are designed to significantly bring into focus what's important, and to keep that focus there in a way that is fun, positive and highly motivating. By quickly rewarding each higher level of performance, great incentive programs help your employees to culture new habits for higher and higher levels of performance.

  • Your Bottom 5-10%   -   Some of your lowest performers may simply be lacking the focus, skills, training or motivation to perform at a higher level. An outstanding incentive program will create an extra impetus for these people to move into a higher gear. The presence of the incentive program may reveal those employees who are not currently well-suited to their positions.

Avoid the common incentive traps

By taking care when designing your program, you can help avoid the common pitfalls that hurt incentive program success. Try to avoid these traps:

  • The contest trap   -   This is a scheme that pours your budget into a few prizes for the top performers and leaves the rest of your team without a reward. Sometimes it's hard to resist creating a first-second-third prize scenario; after all, it's so easy to budget. But the results can leave employees who poured their hearts into increasing their performance feeling unappreciated. Better than a contest, offer the same rewards to everyone who meets a certain goal, or a variable number of reward points based on performance. This type of program levels the playing field and treats all employees like winners, and invites everyone to perform well and be rewarded.

  • The one-gift-fits-all trap   -   Here's another trap that's easy to fall into. A manager or management team decides on a great reward to offer employees for a certain goal. This is so appealing because it's so easy. The only problem is that not everyone has the same tastes. It may seem "obvious" to management that everyone will want a new tablet or a dinner at a certain restaurant or a vacation at a certain destination. But you immediately discount anyone who isn't motivated by the chosen reward. A better solution is to give reward points which participants can use for small gifts or large gifts, for merchandise or travel. You can highlight certain selections from the reward collection as examples of what they might earn, but leave it up to each participant to select the gift that they might like best.

  • The money trap   -   Someone may come up with a brilliant idea: why not just give money? It's easy, it's simple, and no one has to decide anything. After all, everyone loves money, right? If it were that simple, the incentive industry wouldn't exist. And personal gift giving at holidays would be so simple—all handled by electronic bank transfers between friends and relatives. Simple, easy, and no more shopping. The only problem is that people are typically much more motivated by a specific item that appeals to them than by the amount of money that pays for that item. And people get much more excited and motivated about specific items that they see in a reward collection than by the money it takes to buy those items. If you skipped over the previous two sentences, it's worth re-reading them. Understanding this can help prevent you from wasting your incentive budget, and possibly making it much harder for you to introduce a future incentive program to your employees. You might tell people that if they work real hard for three months and accomplish a special goal, you'll give them an extra $5, or $10, or even $20 a day. Or you can tell them that if they accomplish a certain goal in 90 days they'll get enough points to get their choice of a new iPad, a smart TV, a home fitness machine, diamond earrings, or one of 100 other great rewards. Which one do you think will work better?

  • The gift card trap   -   This is just another version of the money trap. (Please see above).

Design a great incentive program

We suggest that you design your program with these principles in mind:

  • Keep it simple   -   Avoid complicated schemes and long lists of goals. Select one goal, (or very few very important goals) and put your focus there. Over time, you can update the goals, or exchange some goals for other goals.

  • Use reward points   -   Instead of rewarding with specific gifts, award points that your employees can redeem for their choice of reward gifts. Use an excellent incentive company to manage the gift collection and shipping for you.

  • Design a program that everyone can win   -   Avoid giving awards to only the top performer or a few top performers—or similar schemes. Design a program that everyone can win if everyone performs. This doesn't mean that you should set easier goals; it means that you should invite everyone to perform at an excellent level, and then reward that performance.

  • Focus on the positive   -   Make the program fun, by emphasizing the positive, cheering people on and celebrating success. Use the success of individuals in the program as an excuse to have meetings and events at which you can review the goals, applaud individual successes, and help others learn how they can rise in excellence.

  • Keep the program exciting   -   A successful incentive program isn't something that just happens. All incentive programs are not created equal. Well run programs aren't started then neglected; they are very visible and highly charged currents running through your organization one upbeat day after another. To really make a program successful, pull out all the stops. That includes cheering people on, all along the way. Have high-energy meetings, send out enthusiatic, inspiring messages, heap praise on participants when successes happen.

Launch your program with enthusiasm!

Whenever possible, launch your program with a live event, announced by one or more presenters in front of the program participants. It's better to have the "event" on or as close as possible to the actual launch date, so that participants can leave the event ready to start. Announce the event in advance, to help build interest and to add importance to your message. Keep some mystery about the event, promise that it will be something new and exciting. Depending on the work environment, announce the event in advance in multiple forms of communication, including posters in the workplace. Even if you are hosting to a small group, announce the event in advance to enhance its significance.

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Keep the excitement going

Once your program starts, you want to keep the momentum building. Congratulate successful participants at meetings. Encourage them to share their secrets of success. Keep the program goals alive. And keep it fun!

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