Staff incentives should be targeted and meet your objectives, says Val Leveson
How companies reward people for their work can have a big effect on their levels of engagement and motivation, says HR consultant John Butters of John Butters and Associates.
But reward schemes should be tailored to the organisation and reflect its culture, and should also achieve a business goal. "What do you want your business to look like and who are you aiming to service?" Butters says.
He cites an insurance sales organisation that employed mainly baby boomers. Someone came up with the bright idea of moving to commission payments to reduce costs.
Staff members were given the choice of whether they used the commission scheme or stayed on salary - the problem was that the top salespeople decided to go for the commission, as they worked out that was a way to earn more, and the worst performers chose to remain on salary.
But the costs to the organisation increased and the top salespeople, who were making a lot on commission, kept business to themselves instead of being team players.
"This idea was driving individualism and not teamwork, and was a big mistake," says Butters. "In short, when instigating incentives be careful of what you are encouraging - it may not be quite what you intend."
He says reward systems should be looked at generationally. "Call centres tend to employ Generation Y staff, who are generally happy to go with team remuneration.
"This group tends to work together, socialise and play together. For these employees establishing an organisational lifestyle with social get-togethers could be good."
If you are trying to create better teamwork, giving the best team of the week a pizza or top employees supermarket vouchers could work well to help them feel valued, and give others an incentive to work harder.
"What you do really depends again on the employees and the culture of the organisations - for blue-collar roles, for example, supermarket vouchers tend to be very popular."
When looking at rewards over salary, it's important to look at performance measures. "Managers should have special initiatives that they are trying to achieve, and reward employees for achieving them. Fairness is most important in planning allocation."
Where the business is in its lifespan - whether a start-up or established - is also important. New companies in particular need clear ideas and flexibility. "In hard times, a company doesn't want to be spending as much on extra incentives."
And growing businesses have different goals from ones that are downsizing.
"If you are expecting employees to work longer hours and take on more pressure because their colleagues have been made redundant - or in fact they are being made redundant but are still needed for another month - you need to show appreciation, and the reward system needs to be in real time."
Rewards don't have to cost the company much. "Remember, Napoleon had them dying for medals - it's not just about the money."
Role clarity is also important. "What you want needs to be named: if you make the sales budget, you get rewarded.
"Reward good behaviour, and hours put in. Maybe reward co-operation and relationship building and customer service.
"Immediacy is important here - note the behaviour you want repeated."
It's also a good idea for managers to let it be known that rewards are evolutionary, and can be changed or withdrawn as needed. "This way, companies who are going through hard economic times can have an out."
Flight Centre has built its culture on incentives and rewards.
Sue Matson, peopleworks leader for the group, says the travel company's philosophy is: "What gets rewarded gets done."
She says everyone is paid on an incentive basis - even the support people in finance and IT. Rewards for staff are based on achieving their key performance indicators (KPIs).
"The way we do it gives a unity, a focus to the business and to the task at hand," Matson says.
The idea is that people earn what they're worth, not according to how long they've been with the company. "Sometimes a newish employee can be a lot more productive than one who's been around for years. We look at how the person is contributing. KPIs, set by team leaders, help employees see the bigger picture."
She says rewards are set up in all parts of the businesses - new staff achieving a "club trip" is a milestone at Flight Centre.
"We also hold national awards - 1450 people are brought to the Vector Arena for eight hours of awards. We take the time to really acknowledge achievement."
The top performers also get to take part in a world conference that is held in a top international destination.
"It's a 48-hour event where top performers are feted. We've had Michael J. Fox, Bob Geldof and Richard Branson participate."