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Reviewing or designing Bonus and Incentive schemes





Posted by Sarah Lardner on 27 September 2023

Reviewing or designing Bonus and Incentive schemes

Bonus | HR software

The job of reviewing or designing bonus and incentive schemes is something that can fill even the most experienced HR professional or line manager with utter dread. There can be so many permutations. Here is my checklist of important elements to sit down and consider before you make any important decisions:

Align with the company's objectives

If done the right way, a bonus scheme drives cultural behaviour as well as outputs and business results. To tick all these boxes in a seamless way the design needs to be simple, consistent and bound to the company's guiding principles, whatever they may be. Guard against tinkering too much with a bonus scheme as this can easily end up driving the wrong behaviours. Take the time first to consider how it sits within your overall business picture.

Establish precise and measurable metrics

Often we find that bonus schemes work for the majority but fail to scale up and satisfy the strongest workers when they go all-out. To make schemes engaging the metrics need to be precise and easily understandable. Everyone needs to clearly understand how they can achieve against the agreed metrics, and how they can influence their contribution towards it. Goals should be challenging but never unachievable. Tracking employees’ progress is crucial too and needs to be frequent enough to let them know how they’re tracking.

Contemplate both short and long-term goals

A company's 'big picture' progress line may not look familiar to a sales team's more immediate targets and you need to make sure that you marry up the two. Typically, a sales team has short-term finite goals and it is often a real challenge to mesh that kind of thinking with more holistic ‘infinite’ goals that might be culture-led or focused on intangibles like sustainability and innovation. If the short-term sales effort undermines these things your whole culture can quickly unravel so make sure all your players are playing into the bigger picture.

Consider the individual AND the team

Sales can be a lone wolf existence and a pack culture. Some characters and personalities lend themselves more one way and some people will happily do both, but it's important to define a set of behaviour values across the board, and even a common language, to keep people in line. For example, how do you manage a sale that requires team collaboration in a sales cycle? Without a strong understanding of this, and effective communication, things could become fractious.

Also think non-financial

Remember, not every performance metric is based on a sale or can be guided by the bottom line. Some important functions within a 'sales' operation will be less transactional than others by nature, but you need a way to measure these workers just the same. Customer experience, for example, is key to repeat business either in-store or on the phone but these people may not 'make a sale'. Equally, some workers may make 20 sales a week, while others secure one far bigger deal over 18 months.

Plan effective communications

Communications around incentives need to be clear, consistent and transparent. Together these things breed confidence in the scheme and reassurance that it will be applied fairly. Once your metrics are set, set out how it works so that each employee always understands what they need to achieve, how they achieve it, what it means to the business and what they receive as a result. Healthy competition works well to drive motivation so things like leader boards, league tables and personalised recognition schemes can create excitement. One caveat to simple comms: you still need to spell out the detail. With constant communication – the kind you can drive through a Reward App like HAPI – workers are always in the picture and momentum never stops.

Never stop re-evaluating

Reviewing your plan allows for small adjustments if results aren't what you expect. If significant changes have been across the business, ideally the plan will be agile enough to adapt and keep things relevant and effective.

How can Innecto Reward Consulting help?

We take a company through the initial discovery phase, the design process and the implementation process to ensure that a bonus or incentive scheme is relevant, motivating and affordable. Get in touch with Sarah Lardner to discuss how we can help.

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