An incentive program can be a great way to motivate employees and help the organization achieve its goals. But it doesn’t come without potential pitfalls.
For example, tying an incentive to reaching specific sales or profit goals means that the company will have to be candid with employees about those figures—which may be uncomfortable if it’s not something that has been done in the past.
“In order for it to have great incentive value, or to enhance its motivational value, it’s important to share information with employees,” Terry Pasteris, president of TLMP Consulting Group, advised during a recent BLR webinar (BLR is CER’s parent company). “Sharing information may or may not be something that your organization is used to doing.”
Incentive Schemes and Data Transparency
In thinking about setting your goals and sharing information, it’s important to consider which information is okay to disclose. Many times, financial information in private organizations tends to be closely held and not shared with employees.
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When considering implementing an incentive program, be sure to know what you’ll need to disclose for the incentive program to work. Employees need performance feedback. The employees will need to understand how they’re doing compared to the goals and will need information along the way.
“If you’re not willing to disclose something, you probably can’t measure performance against it,” Pasteris warned. In those cases, you may not want to have an incentive program with specific financial goals and targets because it will require sharing information the company may not be comfortable disclosing to everyone.
In these cases, organizations often go for bonus programs that are more generic. For example, they may pay a discretionary bonus given out after a “good year” instead of after specific revenue or profit goals are met.
On the other hand, the desire to have an incentive program that motivates specific behaviors can be the catalyst that prompts greater data transparency. It may not be the first step, but it can get the company moving in that direction.
“I do not think that you want to lead the way, in terms of disclosure, with an incentive program,” Pasteris noted.
“However, if you do want to become a more transparent organization—and indeed, employees often do expect this—then by all means, start doing it. Consider the company history of transparency and review how situations have been handled in the past before proceeding.”
Tomorrow, we’ll look at a case study that reveals the real value of Value-Based Benefits Design (VBBD).
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Any thoughts on relevant data that nonetheless should never be shared with employees?