If business leaders need to consider incentives, how do they decide what’s best for their workforce as well as the business holistically?
Incentives come in many shapes and sizes, yet all have the same goal – to encourage a higher level of performance and achievement among a workforce. However, for New Zealand business leaders, it can be tricky to decide which type of incentive is right for their team. Numerous factors should be considered before implementing an effective incentives scheme.
Incentives – are they always good?
Incentives can be effective to encourage the alignment of planned strategic business direction with behaviour. An incentive structure can make individuals work more effectively and perform to a higher standard. The type of incentive plan will need to reflect the kind of business or the existing culture.
In certain businesses such as not-for-profits or the public sector, bonus schemes can be very rare. This may be because the culture of what these enterprises do doesn’t match up with the idea of incentives. For businesses in the private sector, incentives have long been considered a fantastic option. Yet, businesses can still run into problems if incentives aren’t structured the right way nor targeting the right areas.
What elements make up a good incentive plan?
- A good incentive plan is influenced by what behaviours you are trying to encourage. An example is of those in sales roles where the focus is on conversion targets and goal-based objectives and a commission structure may be effective.
- All incentives have to be measurable in the first part and they shouldn’t be discretionary because it can be meaningless for people. If someone receives a bonus and they aren’t really sure why they got it, it can introduce levels of expectation that aren’t actually true.
- Regardless of what the incentive is rewarding, the plan needs to be structured and intelligent. It also doesn’t have to be about just the individuals either, as there might be the opportunity to have measures for both company and individuals. This way there is a focus on the company completing certain targets and goals, but also individuals are encouraged to carry some of the weight. No one superstar can carry an entire company, but it’s still key to reward these top performers in some context.
Is there a perfect balance for incentives?
Business leaders certainly have plenty of choice when it comes to selecting a particular incentive structure. As mentioned above, it might be based on individual, team and company success or even more specific elements such as sales targets or client satisfaction / quality service.
For businesses that are new to incentives or have outdated incentives that need a refresh, is it better to select one and do it well or mix it up and run multiple incentive schemes at once?
It depends on the organisation. In terms of the nature of the split, it’s always best to work backwards from what’s working already from a cultural perspective. At Strategic Pay, the focus is always on learning more about the business, its customers and its staff to determine what the priorities are and how these can be measured.
Why work with Strategic Pay?
One of the benefits of working alongside Strategic Pay is that we treat every business as a unique case. There’s no cookie-cutter approach to incentives, but there are principles that we apply to give your workforce the best chance of success. It’s this angle that allows us to improve your overall performance by aligning business objectives with a tailored incentive structure.
For more information about designing positive incentive schemes for your staff and your business, get in touch with Strategic Pay today. Find out more on incentives by downloading our brochure.