Will Work for Incentives-A Review

According to a recent study by the Incentive Research Foundation, properly constructed incentive programs will increase performance from between 25% and 44%.  The study was done by polling business executives who use incentives. Key findings are as follows:
* When programs are first offered for completing a task, a 15% increase in performance occurs.
* When asked to continue toward a goal, performance soared to 27% due to the incentive just given out.
* The study found that incentive programs that ran for a year or more produced an average of 44% increase.
* A shorter program length didn’t produce as good a results, 6 months or less showed a 30% increase.
* There were five conditions under which incentive programs work:
    a. current performance is at least adequate
    b. the cause of current inadequate performance is deficiencies in motivation
    c. the desired performance level and type can be quantified
    d. the goal is challenging but achievable
    e. the goal does not conflict or override current daily organizational goals
* A model for the successful incentive program includes
    a. Assessment that studies the gap between the company’s goals and employee performance
    b. Program Selection that rewards employees on a quota based model are more successful because they give a clear understanding of the “benchmarks” needed for achievement
    c. Work Value is important to help employees decide what values they should assign to work goals in the hope they they will make a stronger commitment to achieve goals.
    d. Establish Training and Communication reminds all that the focus of training is identify barriers that impede performance
    e. Support is essential for success and must be offered to the employees to the level that they believe the organization will support their goals and award incentives fairly.  
    f. Emotional Appeal is crucial to the biggest performance gains because emotion after training is the one major factor in success.  The leader’s role is not only to get the employees to believe in the program but to get the management team supporting it as well.
   g. Measurement of the three outcomes is critical–
        active choice–choosing to do the work in the intended manner
        commitment–persistence over time
        mental effort–thinking clearly
    h. Analysis and Feedback of the efforts are key to long term improvement and always include costs versus benefits so adjustments can be made.

For further information see the website for the Incentive Research Foundation at www.theirf.org and a full copy of the study is available for $50.  

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