Base Your Employee Incentive Program on Performance

by on June 15, 2009 · 0 Comment POSTED IN: HR Info Center

A concrete employee incentive program can be better than a subjective one

An employee incentive program can be based on performance and it’s not often a point of contention. Sometimes people say you’re too subjective. And sometimes that may well be the case. But these are not usually where people have the biggest problems.

If you design an employee incentive program that’s in the middle of the road and is based on business objectives with a little bit of activity from you, it normally works. People don’t resent it. Just be careful because if you get too creative because you can sub-optimize by giving them bonuses only for sales then they don’t really care whether you can actually produce things as long as they get a bonus from selling it. And you can get yourself in trouble. Likewise, you can incentivize a production person for manufacturing things that you can’t actually sell anymore.

And so if you’re not careful and you don’t have something that’s tagged primarily to the larger part of your organization, your bonuses can get you in trouble.

So be careful, bigger measures are normally better. A concrete employee incentive program is normally better than the purely subjective ones and just be careful about paying for superior individuality, because if you pay for superior individuality but you ask for team work, guess what you’re going to get.

Profit sharing usually is done at lower levels and that’s normally a positive in almost every case. If you don’t have the profits, you don’t pay it but it’s a fun thing to do if you do.

Edited Remarks from “Salary Talk: How To Discuss Pay So Employees Feel They’re Treated Fairly” by Gary Markle

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