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The Hub

The creative centre for all things HR

Tuesday 14th November 2006

“The benefits of staff incentives”
Key Speaker: Alison Green, RoadChef

Incentives

“Great organisations incentivise” says the Wright Solutions-sponsored HR think tank The Hub, where senior HR executives from financial services, retail, distribution and project management met to discuss incentive schemes.

Keys

	It is vital to know the desired result of an incentive scheme - profits, retention, customer service…

	Incentives must be very closely linked to the company’s top few objectives and communicated clearly and constantly throughout the organisation.

	Bonuses should be dependent on the company’s annual financial success.

	Age, salary and individual tastes are amongst the factors that will determine the success of an incentive scheme – flexibility is valuable, though potentially expensive.

	Blending team and individual incentives combines the benefits of peer pressure with the advantage of individuals controlling their own destiny.

	Schemes must be straightforward and user-friendly so they are accessible to managers, who need to be able to see the payoff in terms of profitability.

	Training for managers is critical in achieving robust performance management.

	Senior managers must own incentive and performance assessment schemes so they are not dismissed as HR initiatives.

	Incentives and performance assessment schemes should be objective and written down rather than discretional.

	It is better to reward outcomes, rather than performance.

	Change is essential in keeping it alive!

The possibilities are endless

Prizes, vouchers, loyalty schemes, points systems, duvet days, leave entitlements, company cars, profit sharing, bonuses, co-operatives, share options, pension schemes, exotic conferences, days out, partnerships, flexibility…

However, getting it wrong is demotivating and there are contractual risks as well as staff unrest if conditions are not clearly established and discretion holds too much sway. Care must be taken to avoid conflict between the targets for individual teams and the company as a whole.

In introducing new schemes resistance will be experienced, for example if managers are inflexible or under-performers have previously received bonuses which will not continue. However, the process can help to shake out those who remain resistant to progress.

Some real-life scenarios

	The spur of partnership together with less important benefits along with bonuses for retention of professionals in short supply.

	Performance management scheme with a mixture of targets, some bonus-related, some personal.

	Management bonuses of 20-25% for achieving annual strategic plan.

	For workers earning on average £17k (£7-8 p/h) a £500 payment for every six months completed – beneficial to stable employees, less successful in overall retention. A presentation of £100 per 10 years served, at 10 year intervals. Additionally, a disincentive scheme for absenteeism – loss of £100 bonus plus loss of a day’s pay, approximately £60, which is successful and easy to manage

	For sales people, commission, campaigns with targeted incentives, and good cars.

	Future possibilities: weekly pay, pensions, salary sacrifice for subsistence allowances and contract car hire.

	A highly structured scheme, closely focused on profit with factual, measurable indicators. The ‘increasing customer spend’ and customer service elements are inexpensive and highly successful. All recruitment, incentivising, reviews and development are focused on customer services.

	Board bonuses depend on achieving profits

	Directors achieve a bonus of 30% of salary upon meeting profit targets, less if not all the other key indicators are achieved.

	Managers – On customer service: managers and team members receive a monthly scratchcard if the team achieves 100% success on surveys. Prizes are cash, up to £1,000, plus a monthly draw for a Caribbean holiday. Additionally the highest scoring staff each month receive a £100 value prize (£300 for the highest scoring team). On increasing customer spend: £100 bonus for the winning team at each location; £100 per team member at the overall winning team in the company.

	For professional sales staff –investment in training (creating status), plus high salaries and bonus schemes, with an annual sales convention in an exotic location for public acknowledgement of achievements and the occasional large prize. Awards are individual and linked to good customer service feedback. High basic salaries encourage building long term relationships with clients and providing quality advice without the need for a pushy or “desperate” sales pitch.

	Area managers receive a 30% of salary bonus if all their sales staff meet targets and has additional incentives, such as golf days, to offer his team.

	Head office support staff paid slightly above market rate, with additional benefits, such as long service payments and a good pension scheme.

	A 30% incentive for senior managers/directors, now being extended to other staff too.

	A move towards paying middle-market rates to provide greater flexibility on benefits, with staff being encouraged to take some initiative in their own progression.

Future topics for discussion
Bringing senior managers on board with HR initiatives.
Subsistence allowances for mobile workers.
Training - latest developments and leadership thinking

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