Boost performance with incentives - But think about it first!

If any proof is needed of the impact incentive programmes can have on the bottom line, it comes in the form of a recent survey released by an American organisation, the SITE Foundation. The study shows that "tangible incentives dramatically increase work performance, by an average of 22%..."

The SITE survey also shows that productivity increases by a startling 44% when incentives are aimed at teams, or at the whole company, as opposed to individuals.

These increases in work performance are, in anyone's book, significant.

Geoff Saner, Managing Director of local incentive specialists, Creative Incentives, concurs with the study's findings, but adds some important footnotes on exactly how to go about creating incentive programmes with the ability to truly boost performance.

"A lot of companies only reward the top performers, when in fact they should be looking at rewards across the entire work force," says Saner. "Incentives that cater to the whole organisation motivate everybody. Most people will improve performance if incentivised - but they have to be rewarded in order for this to be true."

"Even if you don't finish at the top of the chart, you must be rewarded for the improvement you've shown," Saner continues. "What we're talking about here are scalable reward systems. If you only reward the top ten or twenty performers then you're actually invalidating eighty percent of your company, and the mood in the office will undoubtedly be lowered. You'll get far better bottom line figures if you offer rewards across the entire organisation."

Although incentive programmes have been around for a long time, they have historically been focused on sales staff - where targets are easy to set and where the measurement of performance is also relatively straightforward. But in the modern (and highly competitive) business environment, leading companies look to stretch the principle to all staff members.

"It's a simple principle," says Saner. "If incentives motivate sales performance, they will also motivate across other work functions."

In addition, modern incentive programmes are also proving very effective in stimulating external business relationships with customers and partners.

"Incentive programmes are not just an internal performance stimulator," says Saner. "They have a significant role to play in business partnerships as well. Incentive programmes are significant tools in the development and maintenance of successful relationships with dealers, agents, brokers and so forth."

The catch is, of course, that seeking to extend incentive programmes (be it internally or externally) can become a complex undertaking, especially when focusing on functions that do not lend themselves to immediate measurement.

In this case, Saner points out the importance of clear business objectives. "A lot of companies don't set out with clear business objectives," he says. "But without clear objectives, the whole incentive process will be subverted. You have to know what you're trying to achieve before you set out."

Equally important is the regular communication and presentation of the incentive programme. Most business people will have experience the grand launch of an incentive programme - and will also have experienced the lack of action that often follows the launch. In order for incentives to truly boost the bottom line, the programme has to be a focal point for the participants throughout the year.

"Regular reporting and publication of results is critical," says Saner. "Percentages and rankings really motivate the participants. If you've been in the top ten and then find yourself at number eighteen in the first quarter, that motivates you to improve... It's a simple principle, but one that needs to be actively reinforced throughout the year."

And this is where we enter the new world of incentive programmes. A world where programmes have to be effectively designed, executed and managed if they are to impact on the bottom line. A world where making it all happen can be a significant drain on company resources.

"Non sales staff incentive programmes all boil down to measurable or non measurable incentives. Most companies want ROI (Return on Investment), which is a business bottom line," says Saner. "But this can become hugely intensive in terms of administration. Department managers don't want to spend a full day every month sorting out incentives. In this case companies should looking to cut their thirty measurable criteria down to five or six areas that internal staff can manage successfully."

Clearly, incentive programmes can be the difference between a high performance company and one that is simply surviving. But equally clearly, managing incentive programmes is a great deal more complex than offering the best sales person a free trip overseas. If your company is going to get it right, it'll have to start at the very beginning.