8 Steps to Employee Performance Incentive

1. Select the Target, Set the Goals
Firstly, you need to decide which employees to target with the incentive. Is it a single function like sales, or is it all employees? Does it include all locations, or just one? Will managers be included or have a separate programme? Will part-time employees or contractors be included?

Secondly, you need to set the goals – firstly the overall objectives for the programme, and secondly specific targets that each employee in the programme can work towards. In each case, the key is making sure the goals are clear AND measurable – ideally in a system you already have in place for recording the activities you now want to improve.  

2. Choose the Incentive Type
The incentive type could be -

• Do This / Get That
• Leaderboard
• Incentive Race
• Nomination-based
• Prize Draw-based
• Stepped Rewards
• Team-based Performance
• Matrix Incentive
  
  

 The right incentive type for your company will depend on both the programme’s goals, the budget, and the employee profile. The key is simplicity – the incentive type should fit with the company goals and budget, and is easy to explain, measure and administer. 

3. Choose the Rewards
There are two key questions you need to ask when selecting rewards for an incentive programme – 

1. What would excite and engage my employees?
2. What budget do I have to work with?

If your profile of staff is high earning, high tech millennials, you might want to select specific high end travel or event experiences that will create a buzz in the office. If you want to appeal to a really diverse set of people, then allowing them to Choose their Own Rewards through a points-based reward programme might be the best.

Often times, mixing a number of different rewards for different elements of the programme can offer the best of both worlds.

4. Decide on Recognition
Rewarding employees is only half the story, because what really engages employees in an incentive programme is recognition. So in any incentive programme, it is vital that employees are actually congratulated for earning performance-based rewards, and this can be done in numerous ways, including –

• eZines
• Notice Boards
• Incentive Website
• Company Intranet
• Comms Tools (think Slack, Yammer etc)
• All-Hands Shout Outs
• Manager Praise
• CEO Hand-written Notes

5. In House or Outsource?
Mostly, this comes down to budget, the  complexity of the programme, and the administration required to run an incentive programme without a purpose-built incentive platform. It often happens that companies start programmes in-house, and then look to migrate to an external provider to remove or reduce the admin burden. The main reasons to use an outsource agency to run your incentive programme include-

• Incentive Expertise
• Programme Administration
• Keeping Track of Employee Reward Balances
• Purchasing and Storing Reward Stock
• Delivery of Rewards to Employees
• Reporting
• Tax Compliance

6. Set the Budget
By far the single biggest cost component of any recognition programme is that of the rewards themselves. It is important to note that the level of rewards on offer must be high enough for employees to engage with the programme. Make sure you take account of the Law of Incentive Engagement, which states that-

Incentive Engagement = Reward / Effort

So depending on the type of employee you are looking to incentivise, there will be a minimum level of reward that is required to get them engaged. This could be anything from €50 - €300 per employee per year.  But it is important to note that if you make the incentive programme easy for employees to participate in (eg don’t ask them to register, or submit sales reports, or additional form filling to record their performance), then you reduce the effort required, and therefore the level of rewards needed to make the incentive attractive.

7. Plan the Launch
It is vital to use the launch of any programme to hit the ground running with both employees and managers. Everyone needs to be aware of the new programme and needs to know how it is going to work. More than that, though, the launch of any programme affords a great opportunity to generate momentum and a real buzz among staff.

An employee incentive programme launch plan could include: direct mail to all employees, training for line managers, internal communication channels like CRM, town hall meetings, internal presentations, marketing material at all sites, use of internal electronic screens, company social media, launch party or event etc

• Monthly eZine to give the highlights on the programme, winners from past month, new opportunities to earn rewards, new rewards etc
• Quarterly / annual events to publicly call out winners
• Personalised emails to encourage the individual to reach their specific targets or get to the next level by month/quarter end
• Social recognition, where all rewards are published on the websites and perhaps company intranet
• Direct mail – slightly old school, but can be surprisingly engaging in addition to all the digital communication out there.

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The Definitive Guide to Performance Incentives This expert guide gives lots of practical tips and insights into running employee incentive and reward programmes. What Performance Incentives can be used for Types of Performance Incentives Types of Rewards Steps to a Successful Performance Incentive Calculating the ROI on Performance Incentives Mistakes to Avoid in your Incentive Programme Case Studies