How to Incentivise Employee Performance

Posted by Gary Purcell on Apr 18, 2018
Find me on:


Moving away from Year-End Bonuses to more frequent Performance-Based Rewards

Bonuses have long been used to help align employee performance to company results. Traditionally, year-end company results combined with individual performance ratings, determined each employee’s annual bonus. The dreaded annual bonus sit-down with your manager was born!

Having a performance culture and aligning employees with corporate results works for many companies still. However, some companies are moving away from this type of annual bonus scheme towards more continuous performance recognition.

The rise of data analytics in management is enabling companies to more easily identify the success metrics for their business. Many companies are using these metrics to develop KPIs for their employees that they know will have a direct impact on the company’s financial success.

This means that companies don’t have to wait until the end of the year to calculate bonuses based on previous year’s performance. Instead KPIs are tracked throughout the year and action can be taken to correct underperformance before it is too late.

It also means that employees are provided with regular, objective, individual performance data. This in turn helps develop a culture of performance and recognition, which is actually self-perpetuating.

Here are some examples of what our clients are including in performance recognition KPIs-

  • Attendance Goals
  • Productivity Targets
  • Customer Reviews
  • Business Referrals
  • Quality Targets
  • Health & Safety Standards
  • Compliance Goals
  • Company Values & Behaviours
  • Learning & Development Milestones


KPI Measurement - The Key to Success

The success of these programmes of course depends on the ability to easily (if not automatically) measure and report on the KPIs set. Normally this is done by HR on a monthly basis, by amalgamating reports from a small number of different systems to give accurate KPIs scores for every employee.

If the administration involved is too manual and too onerous, at best the programme will lose impact by always being slightly out of date, and at worst it ends up becoming too awkward and expensive to run.

While some KPIs have a contractual element to them (eg attendance, training qualifications), many of the above KPIs are discretionary, and depend on buy-in and active effort from employees.

Performance programmes systematically reward the right people for the right behaviours, and takes all the subjectiveness out of the equation. It champions not just the highest performers, but also the less visible quiet performers, who reliably deliver without having to sound their trumpet to get recognition.

KPIs that are achieved and celebrated (and rewarded) can have a powerful influence on the company culture, re-enforcing the performance culture and upping standards across the organisation.

In some companies with a strong competition culture, KPI leaderboards are published to give an official shout out to the best, or most improved, overall KPI performers. This allows for a degree of gamification that adds spice to the programme and can increase engagement (but is not suitable for every company).

In addition to the ongoing performance feedback and recognition, many employees in these companies really like the fact that rewards are regular and highly individualised, instead of company-based and once-a-year in the traditional bonus model.


Rewards - What's in it for Me?

Rewards vary by company. Many implement a points-based system where employees can earn points for each KPI on a monthly basis. The points can then be cashed-in on a reward catalogue, or in some cases paid out automatically through payroll, normally on a quarterly or 6-monthly basis.

For catalogue based rewards, we find that retail gift cards and vouchers are by far the most popular redemptions for these programmes, though employees do value a choice so travel, hotel & restaurant, and technology, and sports equipment also feature in most programmes we run.

In some companies, the reward amounts that can be earned are significant, potentially running into thousands of euros per employee per year (normally where the programme has replaced a previous company-based bonus scheme). In other cases, the programme is made tax-efficient by capping rewards at the €500 Small Benefit limit, and ensuring that the programme is compliant by using a Revenue-approved points-based system, like the Allgo Reward Hub.

If leaderboards are used to highlight competition, often the top 10 are entered into a draw for a jackpot prize like the latest technology gadget or a trip for two.

Performance Recognition helps with Recruitment and Retention because a) it clearly defines the measures of success for new staff, and systematically rewards them for achieving them. Overtime, it ensures that people who chime with the culture and can perform in it, are the ones who engage and remain in the company.

If you would like to find out more about how to implement a Performance Incentive programme in your company,  just contact Allgo and we'll be delighted to help.

Download our eBook
In the latest eBook from Allgo, we look in detail at how employee rewards can help improve both recruitment & retention. Download it for free today by clicking the Download Now button below


Download our FREE eBook:
How Employee Rewards Can Improve Recruitment & Retention 

Learn how employee reward programmes can help recruitment and retention by:

  • Building a strong Corporate Culture
  • Getting Managers to Reward Staff more
  • Recognising Employee Performance
  • Making Bonuses Tax-Free
  • Revamping your Service Awards
  • Replacing December-only gift cards with year-round rewards

Click here to Download eBook Now


Tags: staff motivation, employee motivation, company bonuses, bonus, staff incentives, performance improvement, high performance team, employee performance

Subscribe to Email Updates