Friday, February 19, 2010
Regardless of who sponsors an incentive plan, any form of incentive, reward, bonus or variable compensation must have the buy-in of senior management and fulfill a demonstrated business and competitive need within the organization’s overall total rewards strategy. As with all total rewards programs, each program must be cost effective if the overarching goals and objectives are to be achieved and maintained.
Someone, internally or externally has to look at the targeted functions and determine what changes are needed and what the desired outcomes are and will an incentive program have some likelihood of achieving success. Increasing sales is great, unless the sales are unprofitable or at the loss of current long-term clients. You may not be able to anticipate every unintended outcome of an incentive program. Modeling the program though simulations or on a pilot basis will uncover most hidden issues.
Consider customer or client services employees. How that customer or client service employee interacts with the customer or client affects whether business is relatained or lost. True, customer or client service employees may not be able to change organizational pricing policies, but how they respond to that upset customer will influence the customer’s perception of “service”. Monitoring service levels via post contact surveys analyzed down to the representative level allows for measurement of individual performance levels. Combined with the proper initial selection, training, and coaching techniques, customer feedback provide for an objective basis for incentive program rewards.
Safety programs for short and long haul truck drivers are common features in the trucking industry. How can anyone argue that fewer accidents are not a desirable outcome? However, consider fuel use, idle time, normal wear and tear, damaged cargo, unhappy shipping and receiving staffs, angry motorists, and the general cleanliness of the trucks. Even short haul drivers spend 8-10 hours a day in their trucks and most know every odd sound made by their trucks, preventative maintenance is far less expensive than towing a truck to the shop. While the use of GPS to map delivery routes has done much to minimize fuel use and cargo tracking, many trucks idle unnecessarily (at idle, fuel consummation is about 1 gal/hr) at delivery stops. Reduction in idle time, along with other measures could make up an effective incentive program. That motorist your driver cut-off yesterday may have been a customer or the spouse or child of a customer. How much goodwill did that action cost your organization?
While not every job in your organization leans itself to some form of incentive pay, but many that are not incented today could be with a small amount of effort. The best approach is to start small with the low hanging fruit and as your skill grows, expand your vision. Referring back to the opening sentence, get your management team’s buy-in and get a department head to allow you to use their area as a demonstration pilot.
Regardless of who sponsors an incentive plan, any form of incentive, reward, bonus or variable compensation must have the buy-in of senior management and fulfill a demonstrated business and competitive need within the organization’s overall total rewards strategy. As with all total rewards programs, each program must be cost effective if the overarching goals and objectives are to be achieved and maintained.
Someone, internally or externally has to look at the targeted functions and determine what changes are needed and what the desired outcomes are and will an incentive program have some likelihood of achieving success. Increasing sales is great, unless the sales are unprofitable or at the loss of current long-term clients. You may not be able to anticipate every unintended outcome of an incentive program. Modeling the program though simulations or on a pilot basis will uncover most hidden issues.
Consider customer or client services employees. How that customer or client service employee interacts with the customer or client affects whether business is relatained or lost. True, customer or client service employees may not be able to change organizational pricing policies, but how they respond to that upset customer will influence the customer’s perception of “service”. Monitoring service levels via post contact surveys analyzed down to the representative level allows for measurement of individual performance levels. Combined with the proper initial selection, training, and coaching techniques, customer feedback provide for an objective basis for incentive program rewards.
Safety programs for short and long haul truck drivers are common features in the trucking industry. How can anyone argue that fewer accidents are not a desirable outcome? However, consider fuel use, idle time, normal wear and tear, damaged cargo, unhappy shipping and receiving staffs, angry motorists, and the general cleanliness of the trucks. Even short haul drivers spend 8-10 hours a day in their trucks and most know every odd sound made by their trucks, preventative maintenance is far less expensive than towing a truck to the shop. While the use of GPS to map delivery routes has done much to minimize fuel use and cargo tracking, many trucks idle unnecessarily (at idle, fuel consummation is about 1 gal/hr) at delivery stops. Reduction in idle time, along with other measures could make up an effective incentive program. That motorist your driver cut-off yesterday may have been a customer or the spouse or child of a customer. How much goodwill did that action cost your organization?
While not every job in your organization leans itself to some form of incentive pay, but many that are not incented today could be with a small amount of effort. The best approach is to start small with the low hanging fruit and as your skill grows, expand your vision. Referring back to the opening sentence, get your management team’s buy-in and get a department head to allow you to use their area as a demonstration pilot.
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