Top 10 Ways to Make Incentives More Effective

Getting your head around the most effective way to use incentives is no easy task. To achieve the maximum impact on the performance of your incentive program while also keeping it meaningful to the players involved requires skill, strategy and systematic trial and error. It requires a combination of both behavioral science and pure economics.

To better understand how to get the most out of your incentive program, we've compiled 10 ways to make them stronger. An effective incentive program has a clearly defined goal, establishes rules, makes rewards visible, focuses on goal commitment, embraces competition and leverages risk, among other aspects. Following, we further explain the top 10 ways to make incentives more effective.


1. Consider the Desired Outcome

With incentives, you have to be very clear about what it is you want people to be able to do or accomplish. Clearly spell out the details of exactly what it is that participants should do to meet goals so that there are no questions. People will always try to "play" or skew the incentive game if results are ill defined.


2. Use Incremental Incentives

If individuals do not believe the incentive program's goals are realistic or that they are personally far from being able to come out on top at the end of the program, they are less likely they are less likely to be motivated to participate. Thus, it would benefit the incentive planner to both incorporate input from the participants about the design of the program being offered.

Any incentive planner should also consider using incremental incentives to achieve incremental improvement targets as well as shooting for the end result. Throughout a program, consider:

- Checking in with employees to gauge their satisfaction with the program
- Keep participants adept of how the program is performing


3. Make Incentives Visible

When using monetary incentives remember that the money-board, so to speak, really depends upon a great deal of visibility. Think about national lotteries and the power behind those dollar amounts. Present your reward as another badge of honor to hold up. At the end of the program, don't forget to communicate the results with your audience. Share how the program impacted company performance and celebrate both individual and team achievements.

Support from top management and program organizers is critical, so make sure company leaders are involved in presentations. If you have remote workers, consider web events or other ways in which to involve all participants in the celebration.


4. Consider 'Status Power'

Draw upon the power of a positional status change upon winning an incentive, whether that be an enhanced job title, promotion to a new position or purely an elite award that elevates the prestige of the individual in the eyes of his or her peers and the company. Criteria and that evaluation processes to obtain that status power must clearly be transparent and fair for all incentive program participants.


5. Focus on Goal Commitment

For any incentive program to have any drive and purpose to it, the target goal must be meaningful and motivational to the majority of individuals involved. Strive for a collaborative process where possible in defining performance goals so full commitment is gained. As previously mentioned, be sure to get participant input when possible during the design process so that the goals and thus, commitments, are equally distributed. 


6. Make Competition Part of Your Program

Interactive aspects of peer pressure and competition are vital elements with designing incentive programs that achieve success. You need to ensure performance targets are challenging enough and that the incentives offered are desired by the majority of people.


7. Establish Rules of Conduct

An all-or-nothing scenario for earning incentives creates a human possibility for gaming or manipulating the system. Establish ethical standards and rules that are meticulously enforced to ensure appropriate practices and correct behavior for everyone involved.


8. Create Multiple Program Levels

To eliminate the all-or-nothing situation outlined above, consider multiple levels of incentives for various levels of performance. A higher the goal level requires a higher level of reward. Also ensure clear communication is delivered about what the minimum performance must be.


9. Use Non-Financial Measures

With the obvious need for financial outcomes and key performance metrics it is essential for strategic and cultural alignment to utilize non-financial measures. Building in customer satisfaction and other qualitative variables helps focus on long term results versus short term fixes.


10. Leverage Risk

When people are more risk averse for sales or performance targets, increase the number of winners and spread out the incentive budget distribution. If risk tolerance is neutral, go with a winner-takes-all approach. And when risk tolerance is high, reduce the number of winners and increase the value of incentives.

Incentive columnist Roy Saunderson is the author of Practicing Recognition. He is also a recognition strategist and the Chief Learning Officer at Rideau Inc. Saunderson provides consulting, learning and thought-leadership services, focused on helping leaders and managers give real recognition the right way. He can be reached at [email protected] and followed on Twitter and at his blog.