Ann Bares, author of the blog Compensation Force, recently posted commentary on six best incentive program practices found in the article “Best Practice Incentives for Contact Centers and Distribution Centers: Driving Customer Satisfaction.” These practices provide useful information to any company planning on implementing or redesigning an incentive program and I would like to expand upon their importance and give some insight into their practical application.
(The italicized text is from Ann’s blog post with my comments below).
1. Agility in reward design. The companies remain willing to change any element of these incentive plans to respond to the customer, market, economics or strategy, or just because that element is not getting the job done. Compensation solutions must be aligned with business realities.
An incentive program’s design and capabilities are huge factors in the program’s potential. A successful program will be designed with the company’s business plan and goals in mind and be flexible enough to evolve as initial goals are met and new ones come into focus. A dedicated Program Administrator who knows the history of the program should have access to reporting capabilities and review the program’s progress on a regular basis to ensure the program is up to date and relevant to both the company and its employees.
2. Extension of the business. Incentives are viewed as business tools that communicate values and directions to specific workforces about goals and priorities these workforces can influence. Incentive design comes from a business case for change, and employees understand the role incentives play in the business process.
An incentive program will only be successful if its goals are measurable, understandable and attainable by program participants. When well designed and properly administered, incentive programs can motivate participants to perform a desired behavior. Every incentive program should reflect the company’s business goals and promote behavior that will ensure employees are working towards attaining them. The close focus on these important aspects of the company’s business plan dramatically increases the potential for an organization to reach its goals. Changes to the incentive program and its goals must be clearly communicated to employees to ensure that they always have the information they need to ensure goals are being met.
3. Creation of customer partnerships. Incentives are designed to make allies of employees and customers. Incentives do not reward performance from employees who are making decisions that are not in the customers' interests.
Customers and clients are important to any type of organization and it only makes sense that the goals of the company will reflect a positive impact on customer relations and service. Incentive programs are a perfect outlet to highlight the importance of the company-customer partnership and many companies award points for positive customer comments and feedback. This reinforcement and support of positive, “customer-friendly” behaviors encourages and improves customer relations.
4. Few metrics and frequent awards. These incentive plans use two to four metrics or goals consistent with the concept that everything worth working on and measuring does not belong in an incentive plan. Only those most important metrics are used for incentives. Too many metrics lose focus and may result in people working on easier, achievable, but less critical goals than the key stretch goals that drive the business. And the companies measure performance and grant awards frequently. The companies also give feedback, coach and make course corrections concurrently.
An incentive program should certainly focus on a short list of the company’s main goals that need special attention. However, many successful programs also highlight various short term goals as they become important aspects of the business plan. This provides the employees with a fresh focus every once in a while and keeps the program relevant and timely. As always, in order to ensure that employees are focusing on the correct goals, communication is a key ingredient in a successful incentive program and employees should be updated on any changes as they occur.
5. Awards "de-linked" from base pay. Incentive payments are not granted as a percentage of base pay. Rather they are the same-size awards for the same performance level without regard to an employee's base pay.
Awards are given to show recipients that they are valued by an organization and should not be used in any way that could undermine the employee/management relationship. Especially in the area of team awards, equal effort should always result in equal recognition and rewards. Unfair and unequal allotment of awards is one of the quickest ways to kill an incentive program and damage employee morale.
6. Transparency to customers and employees. Customers visit the work site of these employees. The incentive plan is a selling point to show customers that employees are paid for satisfying customers. Customers see posted incentive metrics and are asked to give feedback about the incentive plan metrics, often in the presence of employees.
Showcasing its attention to customer service and the way it rewards positive customer relations can only help a company. Encouraging feedback from customers and employees alike will often provide insight on new goals the organization and its incentive program should focus on. Seeing that their input is valued and makes a difference will create stronger employee and customer ties which boost both loyalty and morale.
While these best practice principles were specifically focused to Call and Distribution Centers, they provide a useful starting point for setting up a successful and relevant incentive program for any type of company.
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