1. Lack Of A Clear Business Connection
Rewards and incentives have two purposes – to reward staff and to enhance your business. You need to make the connection absolutely clear. And ensure that your employees understand that connection.
2. Rewarding Behaviour
This is a common error. Your scheme must reward performance: what staff achieve on the job. Rewarding behaviour: what staff do that may or may not achieve results debases the incentives. In other words, rewards sales closed, not calls made. Reward orders processed and delivered, not paperwork completed.
3. Rewarding What Staff Are Already Paid For
You pay your employees a basic salary. In return, you expect a certain level of performance. When an employee meets your performance expectations, he or she has satisfied the “basic contract”. Do not pay incentives for performance that you could reasonably expect in return for basic salary.
4. Absence Of An Incentive Scheme
Rewards and incentives should be contained within a system. The system or scheme should have specific goals. The value or nature of the reward should be clearly related to the goals. One off “slings” of cash or time off or gifts may be a minor part of the system. But they are not a system.
5. Lack Of Transparency
Your scheme should be open and available to all involved. No secret entries: no “little black books”: no “wink, wink, nudge, nudge” tricks known only to a few favoured employees. Every employee involved should know the rules. Records of rewards, who received them, why and their value should be easily available to all. This means that you must establish accurate and reliable records of achievement.
6. Ignoring The Team
Many otherwise sound staff rewards and incentive schemes focus entirely on individual performance. They ignore contribution to team effectiveness. This allows individuals to manipulate the scheme to their own advantage. It may damage the business too. An outstanding salesperson may earn massive incentives while the sales team fails as a whole. That’s not good for your business. Include team goals when assessing reward entitlements.
7. Lack Of Performance Standards
It’s so simple. If you lack clear, demonstrable, measurable staff performance standards, you can’t have a totally successful rewards and incentives scheme. Both you and your staff must know the standards. They must also know “how they’re going” in meeting them. And they must be perfectly clear about the relationship between standards and rewards. A scheme without performance standards is about as useful as a clock without hands.
8. Absence of Self Assessment Measures
Every employee should know how they’re progressing towards earning incentives. Make this information available weekly and, if possible, daily. It’s in your interests to enable employees to “self assess”. They need to adjust and improve their performance without your intervention.
9. Using Only Monetary Rewards
Money is only one form of reward. Depending on the personal income tax system in your state or country, large monetary rewards may even be a disincentive. The following cases may help.
Case 1. In a “production line” type repair business, overall performance goals are set each month. These are related to inventory levels. When the prescribed inventory levels are attained before month end, all staff earn a day off on full pay. This is additional to specific performance based monthly rewards.
Case 2. In a home maintenance business, tradesperson receive rewards for customer commendations, upsells, referrals and various specific examples of superior performance. Recalls, where a customer requires the tradesperson to return to adjust something they should have fixed on the original call, cost the company dearly. When a tradesperson completes a month with no recalls he or she receives a half day off on full pay.
10. Limiting The Range Of Rewards
You can reward virtually anything you like. But it must be clearly business enhancing and performance based. Don’t limit yourself to only one performance measure. If the performance saves or makes extra money or adds value to the business, consider it as part of your scheme.
Many staff reward and incentive schemes fail But it’s not because the value of the reward and incentives isn’t appropriate, valuable and worthwhile. They fail because a manager has been caught in one or more of the traps I’ve mentioned. Where this occurs, you lose a powerful and valuable motivation tool.
Leon Noone helps managers in small-medium business to improve on-job staff performance without training courses. His ideas are quite unconventional. Reading his free Special Report “49 Practical Tips for Removing Employee Apathy, Aggravation And Resistance In Your Business”. Simply visit http://managingemployeeperformance.com/ and download your free copy now.