Effective Incentive Spiff and Bonus Programs- a Thoughtful and Deliberate Approach

Incentives, including bonuses, can be a very effective tool for driving positive and lasting behavior toward achieving clear goals or objectives. Handle with care! My experience in corporate management, both private and public sector over the last thirty-something years, has clarified the power of effectively deployed incentives and bonus programs. My experience has also seen scars of team destruction when incentives are ill conceived and deployed in healthy organizations.

Historically, when incentives are introduced in an organization, top management ranks, tend not to thoughtfully and diligently consider or monitor the overall impact on human behavior and ultimately Corporate Values and Corporate Culture. Human resources is rarely invited to these incentive creation sessions. Why not? The tragedy: once incentives cause people, especially executives, to only focus on those areas 'that pay' the ugly side of competition and greed can take hold. If unchecked, again especially at the executive level, this can escalate into self-serving actions and maybe even deceit and collusion. Remember corporate disasters like Enron, WorldCom, Nortel?

Some things to consider when deploying incentives in an organization:
1. Who should be entitled to incentives - Executives, Management, Staff? Only those taking the front line risk? Who will not receive this incentive and what impact can be realized?
2. What specific goal(s) or objective(s) do you wish to achieve. What is an appropriate incentive - money, prizes, gifts, etc?
3. Where in the organization is the most appropriate place to introduce the incentive - sales and/or non-sales, management and/or non-management, group or individual level incentives?
4. When should each incentive be introduced, its duration, ongoing review of payouts, milestones and termination?
5. Why is there a need for an incentive? Are there other ways to accomplish the goals without incentives?

How will the incentives be administered? Announced? Monitored? Measured for ROI or Success? Will awards be publicly broadcast or privately awarded? How will the incentive(s) be received by those that are eligible and those that are not eligible?

Incentives that cause individuals to have a myopic self-serving focus which could result in little regard for preservation of corporate values, team effectiveness and good work ethic can be organizationally destructive. Badly executed incentives could even cause permanent damage to corporate culture.

Incentives typically deliver a promise of an improved financial gain for individuals involved. This carries an impact beyond any other motivational incentive. Always consider the effect such financial incentives could have across the entire organization. Passing over the support areas of the organization when considering incentives may create cross-functional distaste and team erosion. The ultimate goal is to increase and improve customer presence (sales) and satisfaction (returning customers). Everyone in your organization has a part to play in selling solutions to your customers. For those not directly touching your customers, but supporting your field teams, consider team or group incentives. Team or group incentives will often have a more positive long-term effect of building stronger local and regional teams. Certainly all management studies and teachings indicate that healthy teams are most effective. Personally, I would recommend to first introduce team oriented incentives and recognition programs before considering individual achievement awards.

For No Person is an island. Go Team GO !