9 SMART Ways to Effective Employee Incentive Schemes

Staff Incentive Schemes are useful for a range of purposes such as gathering new ideas and ways to improve your business right through to achieving sales targets. Where better to get that information from then the ‘nuts and bolts’ of any business – your employees. Employee motivation is essential to obtaining relevant, accurate information.

How do you overcome the feeling that Staff Incentive Schemes are nothing more than extra work with little employee recognition or reward for their efforts?

With communication. Help your employees to understand the value of an Employee Incentive Scheme by communicating what you want to achieve, why you want to achieve it, how you plan to achieve it and by demonstrating how they can play a part in the success of your business. Involve them. Get them to ‘buy into’ the purpose behind the Employee Incentive Scheme and then reward them accordingly.

Below is an overview of how to make Staff Incentive Schemes work.

1. Know Your Objectives

Before establishing a Staff Incentive Scheme, you need to know what the business objective is. What aspect of your business are you trying to improve? Maybe you’re trying to reduce costs, improve customer satisfaction, increase sales or gross profit margin. Then establish how the incentive scheme is going to achieve the desired business objectives. If it’s an exercise in gathering necessary information than make sure to ask the right questions.

You need to understand the value and benefits that will come from implementing the Staff Incentive Scheme so that you know how much you are prepared to invest to achieve your business objectives. Often the value derived from such a scheme can be underestimated which means the reward or incentive is weak and inappropriate. If the reward is worthwhile people will strive to achieve the goals set out in the Staff Incentive Scheme.

Ensure your business objectives are:





and within a Timeframe

Having SMART objectives increases the success rate.

2. Obtain Senior Management Support

It is advisable to seek Senior Management support before proceeding with any Staff Incentive Schemes. If you have a strong business case with specific financial benefits, it will not be difficult to prove your case.

3. Communicate Goals and Objectives

Key to the success of any Employment Incentive Scheme is to communicate what you are endeavouring to achieve, why and what the rewards are for achieving those goals. Team members will need to understand the link between the two or they will not strive to achieve the objective.

Keep the team involved. Inform them of progress made and remind them of their objectives. This will ensure they remain focussed and motivated.

4. Identify Potential Challenges

Forewarned is forearmed. Identifying possible barriers to achieving desired results before they happen, will help you overcome those challenges should they arise or prevent them all together. Skills, knowledge, attitude and networks will determine the capability of individuals and team to achieving the objective

5. Type of Reward

Involving team members from the beginning increases the level of ‘buy-in’. Get them to take ownership of the outcome. Sadly, Staff Incentive Schemes fail dismally if the reward is not valuable to the employee. So how do you find out if the rewards are valuable to them? Ask them. Understanding what motivates your team members is an important component of business success.

Not all team members will be motivated by the same things however there will be common motivators you can use. Ensure the reward is appropriate, clear and one you can provide – then deliver it!

6. Identifying Participants

It is important to identify whether you are going to offer individual, team, departmental or company-wide rewards and you need to be aware of the consequences of your choices. For example in some situations, rewarding individuals can create a ‘silo effect’, which restricts the sharing of knowledge and harms productivity. Foresee the type of culture these decisions will promote and make appropriate amendments if necessary.

7. Measure Success and Feedback

Have you achieved the desired business objectives? If not, why not? Good feedback and analysis will provide information so you can plan to meet those objectives in the future. Win/win outcomes are always desirable.

Promoting a culture where you can openly discuss the outcomes, good or not so good is powerful in building a capable team and competitive advantage.

8. Link Effort, Performance and Reward

Stress the strong link between effort, performance and reward. This will promote and encourage the level of performance required to achieve the objective. Rewards need to be provided as close to the achievement of the objective as is possible. Once again involving the team and reporting on progress will keep individuals and teams focussed and promote a high performing culture.

9. Review Opportunities for Improvement

Review progress to date and involve team members in that process. Discussing what improvements need to be made and how to implement them is a powerful way of increasing their and your understanding of what is needed to achieve future business objectives, building business capability. Then act on it!


Employee Motivation + Employee Recognition = Business Objectives Achieved