Reward incentive program

By Matt Williamson
Info Guru,

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There are many who question that a reward incentive program enhances productivity
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Should you have a reward incentive program?

Are incentive programs good for the company or bad for morale? It depends on whether the reward incentive program helps support corporate goals, such as increased profit and customer loyalty, or if it merely engenders unhealthy competitiveness and back-stabbing among employees. If you do decide to establish a reward incentive program, a careful balancing act is necessary to ensure positive returns.

Disney World has over 20 reward and incentive programs in place. All good businesses have at least one or two. Incentive programs serve a specific purpose. Some programs show appreciation to employees. Other programs are designed to improve performance and create behaviors management would like to see. No matter what type of reward incentive program you have or want - designing the program is critical to its success.

Before deciding what reward incentive program you will have, you first must focus on the desired behavior needed or the goal of the program. Begin with a clear, briefly stated objective. Identify what goal/objective needs to be accomplished, for example: improved attendance, longevity, reduced accidents, etc. The objectives must be specific, simple, and obtainable.

Do you want to change your corporate culture using positive reinforcement on a daily basis to transcend those traditional programs that so often feel manipulative. Should you or shouldn't you? Before you implement or change an employee reward incentive program, ask yourself the following questions: How will the program help support our corporate goals, such as increased profit or customer loyalty? How will the program support customers' expectations of our products and services? How can I make sure the program criteria is objective? Which employees will be included? How much of a hardship, if any, will the program place on our organization? Am I committed to repeating the reward incentive program or is it a one-shot deal?

According to an article posted on, Seven years ago, CEO and president Rob Rodin eliminated all individual incentives for the 1,800 employees at Marshall Industries, an El Monte, California-based distributor of electronic components. To your average outsider, this may have seemed like a great way to cripple an entire workforce - take away the American Express certificates and Alaskan cruises and motivation drops faster than a helium balloon rises. After all, who wants to slog away at work if there's no food in the dispenser?

Rodin analyzed the five-year earning potential of each employee, concocted a formula, then went person-by-person and assigned salaries. Profit-sharing potential was set at the same percentage figure for each employee, regardless of salary, based on the company's overall performance. "It wasn't as if we imposed communism," Rodin says, "but our company was divided by internal promotions and contests. We weren't working together with a common vision. Managers were fighting over the cost of a new computer because no one wanted to put it on his P&L, and departments were pushing costs from one quarter into the next to make budget. Fundamentally, we eliminated these distractions. Now we have collaboration and cooperation among sales people, and between divisions and departments." And, he says, productivity per person has almost tripled.

The article continued by saying that last year in Portland, Oregon, president and CEO Mary Roberts discontinued a bonus program for the 200 employees at Rejuvenation Inc., a company that manufacturers decorative brass lighting fixtures. The manufacturing managers, Roberts maintains, begged her to discontinue the program because craftsmen were stealing parts from other craftsmen to meet quotas, and workers were pacing the production of fixtures to gobble up overtime, and then working like maniacs to achieve production bonuses.

Roberts said that a reward incentive program can create competitiveness, and that's not necessarily best for a company like hers that is growing. "I don't think people are motivated by rewards and bonuses. I think they're motivated because they're excited about their jobs or because they're doing something that provides a service to the world."

Does an incentive reward program undermine corporate goals?

It's wildly unrealistic to assume that all incentive programs work, or that by taking away individual rewards, productivity per person will triple. Maybe that's why commissions and bonuses and other rewards programs seem always half-assembled - no one has figured out yet how to devise the perfect system. Some say that to impact the bottom line, you must invest in people, and not just with money, but also with recognition rewards.

Although it's impossible to create the perfect reward incentive program, a good way to start is to see what your employees really want. Then go from there!

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