Employee incentive plans increase employee performance, satisfaction, and overall business success! Read on for strategies and guidelines for effective incentive programs.

Ann Clifford

Dos and Don'ts
Can individual incentive plans be created for each position?

See answer provided below.

4 Keys to Effective Incentive Plans
According to a study of 2,000 employees conducted by Partners for Incentives, 43% of employees at companies with an incentive program were extremely satisfied with their current company compared to 9% of employees at companies without incentives. The bottom line . . . incentive programs increase employee performance, thus increasing company performance.

Suggested Guidelines:

Company wide: Make the plan available to all employees.
Simple: The plan should be uncomplicated, easy to understand, and tied to one key performance indicator.
Self-funding: Set a minimum profit the company must reach before incentives are paid.
Over-all company success: Structure the plan around overall company success, rather than departmental or individual results.

"Bonus as Entitlement" Syndrome
If poorly drafted, incentive bonus plans can become an expected component of an employee's annual salary. Implement the following steps to avoid employees viewing incentives as entitlements.

Establish clear goals and report on progress throughout the year.

Pay bonuses at a time other than December or January.

Create and reward incremental goals, such as quarterly targets, rather than one large annual pay out.

Consider non-monetary rewards such as vacation days, trips, or products from a catalogue.

Details on how to accept or decline the offer.

If your company resides in an "at will" state, clearing express that employment is "at will" and the employee can be terminated at any time for any reason.

Safari Interview Tip
Premiere Credit offers an industry leading compensation package that truly rewards for performance. Through a targeted recruiting plan, Safari Solutions marketed their dynamic incentive package resulting in the hire of 23 Collection Specialists in December 2007!

Did You Know
According to a survey by American Express Incentive Services (AEIS), 63% of respondents said their loyalty would increase if their employer offered an incentive reward program that allowed employees a choice of rewards.