Incent Which Employees First?
Six Questions to Help You Pick
by Rob Marchalonis
Anyone who has even considered employee incentive compensation plans asks the question, “With which employees should we start?” My strong belief is that incentive plans are best deployed by functional team or “workgroup”. Most small to mid-sized organizations can conveniently group their employees into a relatively few (4 – 6) workgroups. Larger organizations might have dozens of workgroups. In general, I advise fewer (rather than more) workgroups for simplicity and ease of plan implementation.
Consider the top roles and desired outcomes of different functional teams to help you group them. If a team’s roles are significantly distinct and disconnected, that would give good reason to identify them as a separate workgroup. For example, in a small service company you might logically have four primary workgroups: 1) service technicians, 2) office administration, 3) sales and marketing, and 4) senior leadership. Other employees, in roles beyond these primary functions, could be combined as a fifth workgroup or conveniently associated with one of the original four.
Begin with just one workgroup
It’s much easier to develop employee incentive plans progressively, one workgroup at a time. This simple approach will let you focus on optimizing each group’s incentive plan, linked to their specific results and organization deliverables. As you make progress with the first group, you will gain experience and be in a better position to start working on a second and subsequent workgroups. Don’t be surprised to find that with each workgroup the process gets easier, and faster.
How to pick a workgroup to start
When designing and implementing employee incentive plans, use the questions below to help you decide which functional team to select first:
- Which group has the most issues or problems, possibly needing immediate attention?
• Are there significant problems or a current crisis with the group, or current incentive plan?
• Is there a significant lack of motivation within any groups?
• Has any group been “promised” plans or changes that have elevated their expectations?
- Which has the highest employee count, implying the most employee impact?
• High count = opportunity to impact bigger outcomes, results, morale, payroll, etc.
• 80:20 Rule applies here.
- Which group has the most strategic impact, such as top tier leaders or those closest to your customers?
• C-Suite or executives?
• Senior leaders?
• Peak performing specialists? IT, HR, Marketing, etc.?
• Sales / new business development?
- Which workgroup would most respond to new, better, or bigger incentives?
• Top tier leaders?
• High demand professions?
- Which has the most supportive or strongest leader, to help you design and implement a plan?
• Have any leaders been extra vocal about incentive ideas, suggestions, or changes?
• What leaders have had a successful incentive experience elsewhere?
• Which leaders are more skilled in communication or innovation?
- Which functional team would be easiest, to give you a quick victory and build momentum?
• A smaller workgroup?
• A group with a relatively simple agenda?
• A team with a strong leader?
What do you want most from the workgroup?
After you select a workgroup, your next task will be to identify and prioritize which of their performance results should be linked to incentives. Are some results more important than others, such as financial performance, productivity, or stakeholder satisfaction measures? Can any result indicators be linked, grouped, or bundled? For example, with a manufacturing workgroup how is “production” measured? Remember the 80:20 rule and what 20% of all possible measures could have an 80% impact? Asked differently, among the top 10 measures for a workgroup, what 2 are most significant?
Keep simplicity in mind
The best employee incentive plans are “Sophisticated enough to work (accomplish your top objectives) and simple enough to be understood (employees know what they need to do each day to get results for the organization and rewards for themselves).” How well do your team members understand their current results metrics, and incentive plan if you have one? Does each person on the team understand their role and impact on the organization? A little communication and simple “scoreboard” could go a long way to raise each employee’s awareness of what “I personally need to do, so all of us can win.”
Pick a group and get started
In summary, think in terms of workgroups, rather than individual employees or the entire organization, when creating or improving your employee incentive plans. Pick one group to start, based on the questions above, to narrow your focus and gain good reason to work through the incentive planning details. Create incentive plans for other workgroups as you learn and gain experience. Link incentive rewards to top outcomes, and keep the plan as simple as possible.
With better incentive plans in place, watch how your workgroups increase their productivity, lift their spirits, and enjoy their well-deserved rewards.
Rob Marchalonis (Rob@LSP123.com) helps business owners and leaders increase employee productivity with better incentive plans and proven leadership, strategy, and process solutions. Connect with Rob by email or on LinkedIn.