How to be strategic about financial incentives

A high-profile rewards expert discloses the “best practice” strategies for keeping employees motivated in meeting business targets

How to be strategic about financial incentives
60% of global employers find financial incentives to be “very” or “extremely” effective in motivating employees, according to a recent McKinsey Quarterly survey. 
 
When implemented well, financial incentives encourage workers to achieve well-defined business goals and serve as a valuable tool for retention.  When executed without strategy, however, they can actually negatively impact performance by causing employees to take shortcuts or become singularly focused on the incentivized targets. 
 
In order to maximize performance through a well-defined incentive program, Trevor Warder, Hays’ head of reward strategies, recommends that monetary bonuses be used for the following:
 
  • Customer service and quality-focused issues
  • Encouraging collaboration and commitment
  • Rewarding efficiency
  • Realizing short-term objectives
  • Recognizing past performance
 
However, other HR imperatives require non-financial incentives as a means to stimulate employees.  For example, to boost confidence and foster competence in junior staff, he advises leaders to invest in coaching and mentoring programs.
 
In addition, executives and senior leaders should be offered financial incentives that are linked to company-wide performance, and all staff members should be provided such features as profit sharing, stock options and recognition.
 
No matter what the reward structure, though, it’s critical that employers follow through in a transparent and fair manner.
 
“Trust is a critical issues here: if people don’t trust your plan or the way you run it, they won’t be happy, no matter how much it pays,” said Warder.
 
For more, click here.
 
More like this:

The downside of financial incentives

Four financial incentives to educate and empower workers

The trap of overpaying ‘elite’ workers
 

Free newsletter

Our daily newsletter is FREE and keeps you up-to-date with the world of HR. Please complete the form below and click on subscribe for daily newsletters from HRD Canada.

Recent articles & video

The benefits and pitfalls of a 'four-day work week'

McDonald’s taps Snapchat-loving job hunters with 'Snapplications'

Most employers willing to hire 'underqualified' candidates

Mental wellness: why C-suite should lead the discussion

Most Read Articles

Should HR ban workplace dress codes?

Is your workplace culture toxic?

How can HR build resilience in the workplace?