For many companies, incentives are a simple proposition: Do this and you'll get that. This approach usually works, but your company will get more mileage out of its incentive programs if it recognizes all the factors that affect performance: motivation, skills, understanding of the goals, recognition, and ability to measure progress.
To make your program as productive and measurable as possible, we recommend that you create an Incentive Planning Worksheet outlining all the steps of your plan. We have provided recommended worksheets for many of the following sections. Adapting them for your program will help ensure you that you have covered all the key steps.
STEP 1: UNDERSTAND THE ROLE OF INCENTIVES IN BUSINESS
Incentives are used to get people to focus both on your goals and what they can do to achieve them. Offer your employees, sales team, or distributors a valuable enough incentive and they'll do anything they can to meet your goal. But, you'll be wasting your money if, to do it, they sell unprofitable business, offend a lot of customers, or convince customers who would have bought anyway to buy during the contest period. Incentives work best when they focus people on sales, productivity, or quality goals, as well as the steps they can take to achieve those goals.
Companies use tangible incentives, such as merchandise, to distinguish their incentive campaigns from cash compensation or pricing issues so that the campaigns do not become an expected part of an employee's, agent's, or dealer's income. Merchandise is used in business to recognize and thank people for performance in much the same way that people give gifts in their social lives. We tip the doorman and waiter as a bonus for good service; we give gifts at holiday time or other occasions as a p ...