Head of HR
London Bridge Media Ltd
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Incentive Schemes

Incentive Schemes

I've been tasked with researching and looking into setting up an incentivisaton scheme with a view to presenting to my MD...any assistance would be appreciated.
Amanda Appleton


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30th Apr 2009 12:48

I have never seen an incentive or pay scheme that had anything except a destructive effect on performance.

Whatever was driving performance in the past goes straight out of the window when an incentive scheme is introduced.

The workforce become entirely focussed on achieving their bonus to the utter disregard of all other considerations, customer
satisfaction, quality etc.

Alfie Kohn wrote a book "Punished by Rewards" in it he goes into detail about why incentive schemes fail.
It is not about what to do to make them work, it is about why they never do work.

Peter A Hunter

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28th Apr 2009 15:00

You have some good guidance from Alastair already. I would add that the targets need to be set at a level which produces the financial results you need, but is also seen as achieveable by the employees concerned. Something they feel they can never get paid is not motivational.

Think about how frequently you want to pay. This really depends on the employee group you are incentivising e.g. you may want to pay out a sales incentive more frequently than a managment incentive.

As well as the incentive structure, think about what you need to do to measure it and make payments. It should be clear for employees to see how they will be rewarded and when they can expect payment. If it is going to need a lot of sign off, make sure you build this time into the plan rules.

Think also about plan rules. How will you treat part time employees, leavers, long term absences etc in terms of calculation.

Also consider whether you need any consulation. If this fundamentally changes the way that the employees are rewarded it may be necessary to carry out a period of consultation ahead of the launch of the product.

There is quite a lot to think about, but a good incentive plan is motivational and increases profitability so it is worth spending some time at the planning stage so that you get a good product.

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By Anonymous
23rd Apr 2009 13:03

It is difficult to offer input without knowing the purpose/objective of the scheme.

They should certainly be self financing so you will need to know the costs and benefits to the business.

Incentives also drive/change behaviour so you need to think thru what the changes might be and if they might be problem.

Incentive schemes have a finite life so you should always include a clause to change / cancel them.

Incentives should have an up and a down side and have enough clout to make what you want to happen, happen.

Hope this might help with a starting point.

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