Incentives are one of the significant ways to motivate employees to give their best performance to the organization. But on the other hand, it is crucial to managing the incentive programs per the organization’s goals and objectives. It requires skills, strategy, and systematic trial and error to achieve the maximum impact of an incentive program on an organization’s performance. A combination of both behavioral science and pure economics is essential for building better incentive management.
In this article, we will discuss the Incentive Management Program, its benefits to the organization and employees, and practical guidelines that need to be followed to create incentive management programs.
What is an Incentive Management Program?
An Incentive Management Program is a program is, better known as a motivating program designed to encourage employees to give the best performance.
Every organization sets different goals around its employees’ performance, safety, and health. To achieve these goals, organizations provide various financial and non-financial rewards. The motive of the incentive management program is to manage the incentives efficiently so that every individual employee can get incentives as per their performances and hard work.
It is considered a management strategy including performance tracking, metrics analysis, and rewarding the staff accordingly. Many studies have stated that employees become more productive when their organization provides incentives and simultaneously increases the organization’s profitability, and satisfied employees result in an asset to the organization.
Benefits of Incentive Management
Businesses have noticed that a good incentive management program has many benefits and may remove the hindrance that might affect the company’s turnover, productivity, and profitability.
Organizations who integrate incentive management programs into their company structure, offering a variety of incentives, including financial and non-financial incentives, reap the full benefits of incentive management. Here we list some benefits that an incentive management program may provide organizations.
Motivate Employees
A good incentive management program helps motivate employees by providing them the good incentives. When colleagues are rewarded, employees get motivated and start giving their best performances. A self-motivated staff leads to a happier management team, as well. When the partners are getting incentives, it positively impacts employee morale.
Build Loyalty
Loyalty can be built among employees when treated well and inspire employees to connect with the organization for a long time. Incentives help create a healthy relationship with employees and make them more loyal to their work and organization.
Reduce Employee Retention
Employee retention refers to the time of the employee working with the same company. If employees are leaving the organization in the short term, it significates that the employee retention of the company is high. Incentives help reduce employee turnover that can bring positive change in the overall turnover of the organization.
Increased collaboration
Well-organized incentive management does not pit employees against each other, and it creates a healthy and collaborative environment among employees. Using the team and project incentives may be imposed to increase collaboration and build a harmonious team.
Increased productivity, earnings, and competency
An employee is an asset to a company, and its employees’ skills and knowledge determine the company’s growth. The incentive management program helps provide them with satisfactory incentives based on their performances. If employees are giving their best performances, it instinctively increases the organization’s productivity, earnings, and competency.
Guides to Make Incentive Management Program More Effective
While creating an Incentive Management Program, always choose incentivized behaviors pertinent to employees and the organization. Do not forget to describe the program’s time frame and exciting compensation.
Here is a list you can follow to make the incentive management program more effective.
1. Consider Desired Outcome of Your Incentive Program
State the details of incentive programs to the employees. In a documentation form, give a detailed description of what the employees need to do or accomplish to be eligible for the incentive. If not appropriately stated, employees may try to skew the incentive game.
2. Make Incentives Transparent
While providing the incentives in the monetary form, always keep in mind to make it transparent among all employees. Present the monetary incentive as a badge of appreciation to wear. Share the results in front of the entire workforce and discuss how the program influenced the company’s performance by targeting the individual who won the incentive and accomplishing the whole team as well. Top management and program organizers must be on board, so ensure they’re involved during appraisal.
3. Select a Motivating and Equitable Compensation Model
Incentive Research Foundation has stated in its studies on incentive compensation that employees prefer time and experience-related rewards such as time off, flexible scheduling, and paid lunches/events. When setting a compensation plan, it is essential to consider what each team values. Organizations must ensure that whatever compensation type and structure they choose is fair, attainable, and equitable for everyone.
Examples of incentive management compensation include:
- Stocks
- Prizes
- Flexible working hours
- Office perks
- L&D opportunities
- Redeemable points for time off or gifts
Incentive Management Program Requires Team Effort
Creating a most effective incentive management program requires leaders and employees to work together. So it is a team effort to perform the best management incentive plan. Take a bottom-up, communicative approach to incentive management, in which everyone is involved in decision-making and provides regular feedback on their experience. You can consider an authority to manage the Incentive management program on behalf of your organization. Aurochs Solutions delegates incentive management authority to improve your team’s accountability and commitment by providing a sales incentive engine with built-in IC intelligence and business workflow.
