Employee Incentive Schemes: What are they and are they worth it?
Employee incentive schemes focus on recognising and rewarding staff for their hard work. Incentive schemes can vary in terms of the rewards given, but they are usually put in place to encourage employees to work towards specific targets. . Many businesses use employee incentive schemes to create high productivity rates, boost morale and retain employees.
How to set one up
Setting up an employee incentive scheme is open to interpretation in many ways and your employees will probably appreciate it even more if you tailor it slightly to their needs. Here are some key tips and ideas:
- Set out objectives – consider what it is you want to achieve from the scheme. Is it equipping your staff with better skills? Or increasing margins/turnover? Have a clear idea of what it is you want to get out of the scheme, so you are better able to tell if it has been successful or not.
- Set out targets – who is it you are setting these objectives for? In some cases, you will want to set out targets for teams, and in other cases, you will want to set them out for individuals. It is important that everyone is included in some of the schemes, so as not to de-motivate or anger anyone in your business. In terms of the targets themselves, make them challenging but achievable, so people are neither disheartened nor bored.
- Timing – It is important that timings are set out very clearly with people on incentive schemes, so that they can complete the work to the best of their ability. Depending on your goals, you may need to set out longer time frame of a few months, but it would be wise to split long goals into shorter ones, a few weeks long, to keep the momentum going.
- Rewards – This is the part of the scheme that allows you to be creative, and show appreciation for your team. Rewards can range from things such as free lunches, vouchers and spa trips, to more practical things like some paid holiday, or a better workspace. It is definitely worth asking your employees, either through a survey or in person, what their ideal rewards would be – this way you can make sure they are fully incentivised to work hard. Make sure though that your rewards do not have any tax implications for your staff as may cause unintended consequences.
- Measuring success – Lastly, in order to know whether your scheme is working or not, you need to devise some ways of measuring its success. You can measure sales, profits and margins numerically through business records, but remember it’s also important to ask the people involved in the scheme what they thought of it, and whether they think it enriched their working experience or not.
Are they worth it?
There are arguments to support both yes and no. Some people believe this ‘carrot and stick’ method isn’t viable for long-term progress and doesn’t help to create employees who are invested in the business. Furthermore, in some cases this approach can seem patronising and people find it better to take a more organic, self-determined approach to their work.
Others argue that incentive schemes can be incredibly helpful in building growth within a business, and that it can be really difficult to maintain a grip on progress without some schemes. However, what most people will agree on is that an employee incentive scheme cannot be seen as a quick fix and it is crucial that your workforce is invested in their work beyond the rewards they might be able to receive.
Your biggest priority and the one that will reward you in productivity and retaining your employees,is to create a business with good morale, and invested, productive employees.
Do you have any experience with employee incentive schemes? Tweet us @kingstonsmith and let us know!