One of the early lessons of small business ownership is the power of incentives. We have prepared an incentive program for the leaders and we have tried to keep “easy” 2-3 goals. They were all very attainable and a “stretch” goal. The idea was to reinforce the routine (quality and quantity) with simple goals and have a goal that we really want to achieve, knowing that a little extra effort will be fun. My personal assumption was that everyone’s work style was like mine, leave no incentives on the table. For many leaders, 3 out of 4 was enough and they didn’t care about making more money. A lot of work!!!
We examine what went wrong and ways to create incentives and reduce negative emotions. The incentives became incentives for the owners as we were spending money on bonuses and not seeing the business results. We look at the reasons behind good incentives, the expected results, and how to create motivational rewards. More details on the three areas:
1) why – Step one is not encouraging work that is part of the main job role and expectations. Anything that is part of normal expectations is just what is required of the job. By adding more incentives, it creates the expectation to just do the “day job” – plus compensation is now expected. Anytime the amount is reduced or lost, it creates dissatisfaction and low productivity. If it’s an expected part of a regular role and they’re already compensated for that job, no extra incentive is needed. If not, move on to targeted outcomes to define “above and beyond” expectations.
2) Target results – In commission roles, it is a little easier to describe. Account Exec has quota. If they are overpowered, they can offer a multiplier of over 100%. Other roles may have a more MBO, management by objective, measurement type. They are established to target important expected results. What results do you need to drive your business? Is it more sales performance, better trained employees, employee retention? The metrics are clear and the results can be achieved at a certain scale and outside the normal scope of work, so go for the initiative? If not, rethink your “why.”
3) Motivation – Is the incentive or reward commensurate with the level of effort required to achieve it? Is the reward motivating? Remember, rewards don’t just have to be cash. It could be a vacation, a paid long weekend trip, gift cards for people’s extracurricular activities. In any case, it must be meaningful to the intended recipient, otherwise it will not create the necessary internal motivation.
think about
Are your incentives aligned with the tasks involved or just a participation trophy? Are you creating incentives that can be added or removed as needed to drive the results the business needs, or a fixed right of view? Incentives can never replace fair compensation for the work someone does. They should not be used as a reward for doing the “day’s work”. They should focus on motivation and more work on achievable tasks and on what is important to the business. Be clear about how long the incentives will last or they will become part of expected compensation and be considered a one-time incentive.
About the author:
Gregory Woloszczuk is an entrepreneur and experienced technology executive who helps small business owners grow their top and bottom lines. Gregory believes in direct speech and helping others see things they want to see, but may not want to focus on taking responsibility for one’s own work. He and his wife Maureen started GMW Carolina in 2006.
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