by Roy Saunderson | July 08, 2013
Getting your head around using incentives the best way possible is no easy task. To achieve the maximum impact on performance while keeping incentives meaningful to the players involved requires skill, strategy, and systematic trial and error. It is a combination of both behavioral science and pure economics. Here are 10 ways to make your incentives more effective.

1. Consider the Final Outcome
With incentives you have to be very clear about what it is you want people to be able to do or accomplish. Spell out exactly what participants should do to meet goals so there is no question. People will always try to "play" the incentive game if results are ill defined.

2. Use Incremental Incentives
When individuals are far from meeting targets or know they are ranked low amongst peers they are less likely to be motivated to strive for incentives. Make sure to use incentives for achieving incremental improvement targets as well as shooting for the end result.

3. Make Incentives Visible
When using monetary incentives remember that the money-board, so to speak, really depends upon a great deal of visibility. Think about national lotteries and the power behind those dollar amounts. Present your reward as another badge of honor to hold up.


4. Consider 'Status Power'
Draw upon the power of positional status whether an enhanced job title or promotion to a new position, or purely an elite award that elevates the prestige of the individual in the eyes of her peers and the company. Criteria and evaluation processes must clearly be transparent and fair.

5. Focus on Goal Commitment
For any incentive program to have any drive and purpose to it, the target goal must be meaningful and motivational to the majority of individuals involved. Strive for a collaborative process where possible in defining performance goals so full commitment is gained.

6. Make Competition Part of Your Program
Interactive aspects of peer pressure and competition are vital elements with designing incentive programs that achieve success. You need to ensure performance targets are challenging enough and that the incentives offered are desired by the majority of people.

7. Establish Rules of Conduct
An all-or-nothing scenario for earning incentives creates a human possibility for gaming or manipulating the system. Establish ethical standards and rules that are meticulously enforced to ensure appropriate practices and correct behavior for everyone involved.

8. Create Multiple Program Levels
To eliminate the all-or-nothing situation outlined above, consider multiple levels of incentives for various levels of performance. A higher the goal level requires a higher level of reward. Also ensure clear communication is delivered about what the minimum performance must be.

9. Use Nonfinancial Measures
With the obvious need for financial outcomes and key performance metrics it is essential for strategic and cultural alignment to utilize nonfinancial measures. Building in customer satisfaction and other qualitative variables helps focus on long term results versus short term fixes.

10. Leverage Risk
When people are more risk averse for sales or performance targets, increase the number of winners and spread out the incentive budget distribution. If risk tolerance is neutral, go with a winner-takes-all approach. And when risk tolerance is high, reduce the number of winners and increase the value of incentives.

Incentive columnist Roy Saunderson is author of Giving the Real Recognition Way and Chief Learning Officer of the Recognition Management Institute, a consulting a training company which helps leaders and managers get recognition right. He can be reached at roysaunderson@rideau.com. Also, tune in every Tuesday to his radio show Real Recognition Radio.