by Roy Saunderson | April 16, 2012
1. Back your incentive programs with sound strategy. Any incentive plan must be aligned with the corporate business strategy to be effective. Ensure the goals and direction being rewarded are truly synchronized with the current business objectives.

2. Let top performers pull everyone up. Establish performance targets to be reached by looking to your top performers as guides for the rest of the employees. You'll naturally be setting even more adventurous goals for the high performers.

3. Be sure everyone knows what their goals are. This will differ up the job ladder but everyone should know the desired goal in simple, straightforward and clear language. A well understood goal helps focus everyone on the end result and on the daily actions required.

4. Spell out what will be measured. Define metrics very carefully for people: is it a specific number you're looking for, a percentage of sales or profits? What is the timeframe? Determine who will impact the bottom-line results and who is eligible for incentives.

5. Acknowledge discretionary effort. Put in a percentage weighting of total target bonus/ incentive based upon demonstration of certain qualitative behaviors clearly communicated to all involved. Incentivize behaviors and results.

6. Make sure you're incentivizing the right behaviors. Is it number of accident-free days or good safe practices? One company we saw rewarded all staff in a division with gift cards for safety reports with zero accidents. Unfortunately, small accidents were happening but unreported so the goal of “accident-free reports” could be rewarded. 

7. Meet both organizational and individual needs. Both targeting behaviors and end results must clearly be within the employees’ control to be effective. In addition, the incentive rewards must be meaningful to the employees if you intend to elevate performance.

8. Use a mix of incentives. Depending on individual or organizational plans, having both financial and non-financial incentives can become an attractive motivator when merchandise, gift cards, and travel or events are part of the overall package along with cash.

9. Establish the frequency of incentive distribution. Incentives should be paid or distributed as frequently as is practical, and often quarterly. Rewards need to be given immediately upon communication of results or they’ll lose their effectiveness. 
10. Bottom line, keep incentive programs simple. Employees have to understand and assist in developing the incentive plan. Ensure the plan is clearly communicated and is fairly and consistently administered. Keep the plan in everyone's line of sight and report results regularly.