How to Develop an Incentive Program
Well some people don't think that people work better with a little extra motivation or incentive. Well if that is you then you can stop reading.
#1 Establish Objectives
Identify what goal/objective needs to be
accomplished, for example: improved attendance, increased sales of a particular
product, etc. The objectives must be simple, specific, and obtainable. Begin
with a clear, briefly stated objective and communicate it to all participants.
#2 Outline the Strategy
Build the foundation of the Incentive Program
carefully, expanding on the methodology to be used. The structure of the
program should detail exactly who is the target audience, and anyone else who
will be influenced by the program. The size of the group is important to the
budget of the program, as well as the ability to communicate clearly and
measure the results accurately.
Other considerations are geographic boundaries
or sales regions, legal considerations, family issues, the length of the
program and timing, individual goals or team goals, and of course, the reward.
#3 Measure Performance
Define both quantifiable and qualitative goals
that can be measured, and keep it simple. It might be necessary to look at
historical data and come up with an average in order to define a particular
sales goal. The goal needs to be fair to all involved, and obtainable by
everyone.
#4 Establish the Budget
Depending on whether the program involves
sales or non-sales personnel, the budgeting will be different. In general, the
three elements of budgeting include: 1) number of participants, 2) length of
program, 3) expected results.
There are two types of award budgets: 1)
closed-ended, and 2) open-ended. You would need to determine the maximum costs
involved with a closed-ended program, and an estimate of costs involved for an
open-ended program.
In a sales program, the primary rules are: 1)
Anywhere from 5% to 10% of additional (incremental) gross sales during the
incentive period can be applied to the total cost of the program, and 2) The
cost of the incentive awards should equal 5% of all compensation for the
program period.
In a non-sales program, it is more difficult
to put a monetary figure on the value of "improvement," but some
measures are possible that involve increased productivity, improved attendance,
and improved safety (fewer traffic tickets, for instance). The budget is then
determined by the "value" the company will realize from the
improvements made by the Incentive Program.
#5 Budget Elements
Awards
|
80%*
|
Communication /
Promotion
|
10%**
|
Administration
|
5%**
|
Training/Research
|
5%**
|
* For merchandise awards, this includes
shipping (about 10% of the cost of the items) and taxes (about 6% of cost).
**The last 3 categories are fixed costs comprising 10-20% of incentive program
costs.
#6 Select the Perfect Award
It is important to select the correct award
because if the individual is not emotionally vested in obtaining the incentive
award, he or she will not pursue the goal. Spend some time speaking with the
target group and select an award within the framework of the budget that will be
important to the group.
#7 Administer the Program
Administration is approximately 20% of the
program budget, and a good 50% of the planner's time. The target group needs
clear, consistent communication and timely feedback on measurement of their
performance.
#8 Celebrate the Success of the Program
The end of the program should be celebrated
with the target group and performance measurement by individual or team should
be provided at this point. Individuals should then receive their awards.
#9 Analyze the Success of the Program
Did the Incentive Program achieve its
objectives? Were the participants motivated to change their behavior? Remember,
an Incentive Program provides a short-term gain, and follow-up programs are
important. Start planning the next one today.
Give us a call at 609 807 8856 and have a 30 minute conversation about the merits of an incentive program.