Every company has different goals, culture, and employee profile, so when putting an employee incentive programme in place, it is important that is tailored to your company’s specific needs.
However, to launch a successful employee recognition programme that engages staff and delivers the desired results, there are common pitfalls that every company should try to avoid. From our extensive experience of running incentive programmes, here is a list of the most common pitfalls-
1. Not Making it Fun!
Performance incentives have serious objectives, but the more fun they are to participate in, the more successful they will be. Get creative and introduce some gamification – monthly scorecards, leaderboards, spot prizes, team awards, prize draws, all-hands shout outs. Have fun with the branding, and with the communications. Incentives are all about celebrating positive results, and therefore are naturally more fun than, for example, performance reviews or commission structures.
2. Not Choosing the Right Rewards
The key here is knowing your employees. What do they like? What rewards would make them sit up and take notice? In some companies, you need to have a money-can’t buy trip of a lifetime in order to gain employee interest. In other companies, being able to win €20 of shopping vouchers regularly is what attracts the biggest reaction. It all depends on the profile of employee you are targeting.
If the employee base is diverse, you may need to offer both ongoing points earning and year end jackpot rewards to keep everyone on board. Remember that cash is rarely as motiving on incentive programmes as other forms of rewards, as cash tends to be viewed as compensation as opposed to a reward.
Finally, make sure you take account of the Law of Incentive Engagement, which states that
Incentive Engagement = Reward / Effort
So if the rewards offered are too low in perceived value vs the effort required to win them, then employees simply won’t be engaged. And by effort, we mean both the targets that employees need to reach and what they need to do to record their performance. Get the rewards right, and make the effort worth it, and your incentive will avoid one of its biggest potential pitfalls.
3. Making the Programme Cycle Too Long
Successful incentive programmes establish a strong link between the performance and the reward by keeping the lag time between both to a minimum. Usually, this means a monthly programme cycle where every month KPIs are measured and results published / rewards issued.
For shorter term promotions, weekly or even daily rewards may be ideal. Longer programme cycles – quarterly, 6-monthly or annually – can struggle keeping momentum and engagement going.
One of the most effective programmes Allgo is currently running is an inside sales incentive for a 3 month sales campaign where staff are emailed rewards on a daily basis for the sales made the day before. And they receive them before they start their sales drive for that day!
Generally to keep engagement high, we find it is better to issue lower value rewards more frequently rather than one-off rewards less frequently. Also, consistency is key – if the programme promises that employees will get rewarded at the end of every month, then it is vital that they actually receive their rewards no later than the first week of the following monthly and that this takes place like clockwork.
4. Making it too Complicated!
Companies naturally want to incentivise employees on all the key performance criteria. However, this can mean manually amalgamating results from various systems in order to translate individual employee performance into points or rewards.
Having too many criteria, or too complicated criteria can cause two serious structural weaknesses in any programme. Firstly it can make the programme difficult for employees to figure out, and can make simple and effective communications on the programme impossible.
However, even more damaging can be the problems that over-complicated programmes have on measurement – with delays and inaccurate results resulting in negative perceptions from employees – so a programme that’s meant to be motivating actually ends up being the opposite! A lot depends on what systems are available to automatically record and report on the incentivised performance criteria.
Keep it simple, especially at the start is our mantra in Allgo. From measurement to messaging, it is vital that everyone understands the basics of the what and the how. For employees, the main questions are what do I need to do, and how & when will I be rewarded? For the company, the questions are what can be measured, and how automated can we make the required performance reports?
We have seen performance incentives, which on the face of it look sophisticated and clever, utterly fail because the KPIs took so much admin to measure, were never correct and never on time!
5. Only Focusing on the Top Performers!
If a performance incentive programme only rewards the top performers, then a) it is likely that the overall company performance will be unaffected, and b) only the top performers will be engaged, with everyone else adopting a “it’s a foregone conclusion that I won’t win” attitude. Hardly the recipe for company performance improvement!
According to research by BI Worldwide, companies who find meaningful ways to reward over 50% of their sales organisation in a year experience better sales and higher employee retention than those who don’t.
Fortunately, there are plenty of techniques available in incentive programmes to reward the top performers while still motivating the wider base, and increasing the average results. These include having points programmes that reward individual performance (as points can be redeemed for rewards), with additional prizes, prize-draws and recognition for the top points earners (perhaps using leaderboards to gamify the incentive over the year). Spot prizes for Most Improved, Best Newcomer, or Best Category (eg Attendance Champion for example) can also be effective in moving the overall performance dial in a positive direction.
6. Not Communicating Enough
We have found that communication is almost as important as the rewards themselves on incentive programmes. If fact, rewarding employees and keeping it secret is actually the definition of a pay increase!
You cannot communicate too much on an incentive programme – keeping employees engaged and up-to-date on their performance and the overall programme. And the great thing is that all incentive programme communication is positive and encouraging - congratulating winners, issuing rewards, publishing leaderboards, announcing new rewards – so of course you can’t overdo it, and employees really welcome it.
It is surprising though that many companies under communicate or are really inconsistent with their programme communications, and this really is an opportunity lost to maximise the effectiveness of an incentive programme.
7. Rewards without Recognition
When you reward performance, you encourage it. But when you recognise an employee for that performance, you create engagement that is far more motivating for future performance.
This is borne out by many studies, including the Mazars External Employee Motivation Survey 2017 that showed that Praise & Recognition is the 2nd biggest motivator for Irish employees.
And the great thing about recognition is that it doesn’t cost anything! So while rewards place tangible value on performance, and therefore underlines its importance, recognition can actually multiply the effect of those rewards on your employees.
When planning the recognition part of an incentive programme, it is worth taking on board the results of a recent Gallup workplace survey that showed that employees reported the most memorable recognition comes most often from an employee's manager (28%), followed by a high-level leader or CEO (24%), and the manager's manager (12%).
8. Never Starting!
We regularly meet with clients about a potential incentive programme where the company is keenly aware of the performance criteria they need to improve. They may already have a sub-optimal incentive programme in place, or are struggling with inhouse resources to make their programme work better. They welcome the outside expertise and especially the sharing of case studies that show the ROI generated from incentive programmes in similar companies. It’s all systems go, and then……nothing!
Very often, developing and introducing an employee incentive programme fails to gain traction as it simply gets swallowed up in the immediate priorities of running the business. Incentive programmes take time, energy and focus from management to get started. They require leadership from an incentive champion at a senior enough level to get the budget approved and ensure the programme is set up correctly.
Designing and rolling out an incentive programme can look like it is costing time and money, with any potential results off in the future somewhere. All this is true, however as Stephen Covey in the 7 Habits of Effective People explains, it is exactly these types of important but not urgent tasks that end up making the difference to an individual’s performance, and by extension the company’s performance.
The bottom line is, if the case for introducing or improving a performance incentive programme is there, there are companies like Allgo that can make it happen with the support of the right people internally. Not starting at all is a wasted opportunity.
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