Staff carrots must be juicy

Rewards can be anything from a holiday to movie tickets. Photo / Thinkstock

When it comes to staff incentive schemes, employers need to do their homework to ensure they clearly set down what they want from their staff and make sure the "prize" is something staff actually value.

"An incentive is something that is important to the people who are offered it and will motivate them to achieve the desired outcome," says Susan Doughty of DSD Consulting.

Doughty, whose firm provides salary information and reports on employment trends, says a lot of companies have revisited their schemes to make sure they are helping the company achieve its core aims - which may have changed due to the global financial crisis.

"Right now I don't see any less demand for putting in an incentive scheme, in fact I'd say there are more today, they are on the increase," says Doughty.

"This type of scheme is aimed at retaining executives over the longer term as well as driving that longer term business strategy."

For the rest of us, carrot and stick incentive schemes can offer anything from cash to a foreign holiday. Shopping vouchers, theatre and cinema tickets add to the mix.

She says while incentive schemes are typically part and parcel of sales roles - where people are encouraged to meet specified targets - there are plenty of firms using them in other ways too.

"Incentives can be linked to individual performance apprai-sals," says Doughty. "These schemes are based on individual performance in combination with the company's performance. If all goes well everybody gets their share of whatever the reward may be - right down to the people on the shop floor."

Apart from adding buzz in the workplace, Doughty says a good scheme will help retain staff - although their effectiveness in helping a company keep good people can be limited.

"If you have a role in an organisation that is complex, or the results are hard to measure, then it can be very difficult to get that correlation between incentive and motivation, so an incentive scheme would have less impact on their retention.

"It can become even more complicated when that person feels their base pay is low. Then they will feel they are being underpaid and be less likely to be motivated by an incentive."

Doughty has a word of caution for managers about to gee up their staff with a juicy carrot.

"A good scheme is based on the specifics of the business, how managers intend to drive behaviour and what sort of things they want to achieve - and then design the scheme from there."

Watching from the sidelines Doughty has seen firms make big mistakes when trying to incentivise staff.

"One of the classics is when a company puts too many measures into a scheme so it becomes unachievable," she says.

"A good scheme should be specific and strategic. You want people to achieve a certain goal and the goal should be black or white. As soon as you start putting several measures in place - we recommend four or less - then it can become very difficult for people to be successful across all measures.

"Another common mistake is when companies put performance measures in place but do not have a system to measure it."

Sometimes incentive schemes can become too successful, in which case it is "buyer beware", she says.

"I don't think it should be a problem to change a scheme because of something such as the financial crisis," says Doughty.

"But if it changes because the management didn't do their homework, and the scheme costs more than planned, then you have to live with it."

Steve Hart is a freelance journalist at www.SteveHart.co.nz