5 Ways to Make Your Incentive System Work Better

A Sign That Reads Incentive - Kathbern Management Toronto Recruiting Agency

In our role as a Toronto-based recruiting firm, we deal with compensation as a key element of any search project. An important part of the discussion with potential candidates is the possibility of an incentive above and beyond any salary that may be offered.

An Owner Dangling an Incentive In Front of An Employee - Kathbern Management Toronto Recruiting AgencyCompanies use all kinds of incentives to motivate their employees. Whether it’s extra vacation days, an education spending account, gym memberships, or commissions, bonuses or stock options, incentives are a great way to energize and reward your team.

While there is no wrong answer to which incentives are best, industry experts tend to favor a money-based incentive program as the biggest motivator for employees. The bottom line is that everyone values money; it’s just like giving someone cash as a birthday gift! You know that the individual will spend the money how they want to or need to, therefore money-based incentives are relevant to all employees and most agree they’re the most effective incentives as well.

Money is a motivator for part-time employees all the way up to C-Suite executives. At the end of the day, we all like to have some extra money in the bank. So, how do you create an incentive program based around money? Let’s look at some tips and tricks to having a successful incentive program.

       1.  Keep it Simple

Think of the incentive program like a game – if it’s too hard to play and people don’t understand the rules, they lose interest. You want to make sure that your employees understand how they can earn their incentives and meet their goals. In order for the process to be motivating, employees need to know what to do to earn their maximum potential reward.

A Game of X's and O's - Kathbern Management Toronto Recruiting AgencyMany companies directly correlate goal setting with yearly, quarterly or monthly bonuses or incentives. A great way to do this is to set goals at the beginning of the year and do check-ins with your team to see how they’re progressing. Another method is to use regular performance reviews to determine a percentage of the incentive. Part of the evaluation can be based on feedback about the employee (either from co-workers, vendors, clients – it really depends on the job).

If you’re offering stock options, make sure employees understand the value of them and what they really mean. A lot of people may not be familiar with stock options, how they can be exercised and what the income tax effect might be. Host an info session and have documentation to educate your employees if stock options are an incentive element that you are utilizing.

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       2.  Have It Directly Correlate To The Employee’s Work

Having monetary incentives directly tied to the performance of your employees and teams is key to motivating them to do a great job. This method works from the top of the organization all the way to front-line employees. Everyone from the janitor to the cashiers, to the delivery guys, middle management, supervisors, and executives can be measured on performance.

A Start Outlining The Different Employee Incentives - Kathbern Management Toronto Recruiting AgencyAs you move up to supervisors and management, you can rate their performance based on their team’s feedback and also their team’s performance.  A manager with employees who are underperforming must be held accountable for that result; it’s that simple. Relating incentives to the performance of an overall team can encourage coaching, mentoring, collaboration, and good leadership.

Ensure that, if you have a performance-based incentive program, the targets are realistically achievable and that you provide frequent feedback to your teams and have the means of seeking feedback where performance is not up to par. Getting your employees familiar with setting goals and knowing what performance indicators management is looking for will be key to ensuring the success of the program.

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        3.  Align Individual Goals With Company-Wide Goals

Now that you have your employees working on goals, it’s time to ensure they are also tied into company goals. You want to do this to make sure that your employees are all working towards the goals your company has in mind for the year. For example, if your company is hoping to reduce operating costs for 2018, you want to ensure that your frontline employees and management are thinking of ways to spend more effectively, manage their time better, and reduce costs company-wide.

Archery Targets With Arrows In Them - Kathbern Management Toronto Recruiting AgencyThe best way to do this is to have your company’s goals visible for employees to have access to when they’re writing their goals. As well, host team meetings to communicate what these goals mean so everyone is on the same page.

Once your employees write their goals, host a calibration session with your management team and double-check that everyone is aligned and ready to tackle the year. For the actual incentive program, a percentage of the employee’s compensation can be tied to overall company performance. Make sure this percentage is visible, and be sure to properly communicate company results and updates on goals.

       4.  Pay Out The Right Amount At The Right Time

A lot of companies decide to correlate bonuses with a percentage of an employee’s salary. For example, an employee may be eligible to earn 5% of their salary A Scale Balancing the Incentive of Time Vs Money - Kathbern Management Toronto Recruiting Agencydepending on how many goals are met, how the company is performing overall, and their performance rating. This is a way to ensure incentives are properly balanced with the level of an individual employee. Paying a blanket $1,000 may not work when you have minimum wage team members and senior managers on the same program!

Some companies decide to pay out bonuses monthly, quarterly, halfway through the year, or simply at year end.  A lot of employees enjoy getting their bonus at year end, but you may find that the long time frame does not encourage motivation throughout the year.

       5.  Communication is Key

An incentive program is only as good as it is understood. Effective communication to employees about the incentive program is what will make it a success. Whether People Receiving Feedback From a Source - Kathbern Management Toronto Recruiting Agencyyou’re hosting info sessions, or have a site on your HR platform, be sure that regular communication is an element of your program. Your employees need to know how to earn their incentives in order for them to feel motivated, so once you iron out the details, get moving on the communication plan and you’ll have a great incentive program up and running.


Kathbern Management is a Toronto-based executive recruiter focused on working with organizations who are seeking to find and hire the key people who are critical for their success.  

Contact us today for a free consultation about your key person search.

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