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Incentive program Best Practices

30 Mistakes Companies Make When Using Incentive Programs to Change Behavior

Setting Objectives

  • Set objectives that are based on what management wants to see, not what is realistic to achieve
  • Set objectives without receiving input from departments that may be impacted by the incentive program activity
  • Set objectives that are designed to create short term changes only
  • Set objectives that conflict with other company goals and objectives

Establishing Program Rules

  • Establish rules that are not feasible for the entire incentive participant audience to achieve
  • Establish rules that are not flexible over the life of the program
  • Establish rules that are limited to financial aspects only
  • Establish rules that are too hard to understand
  • Establish rules that create havoc for other departments
  • Establish rules without regard for individual/regional demographics
  • Establish rules that create entitlement programs (80% repeat participants)

Creating Incentive Budgets

  • Create budgets based on what they think they can afford to spend
  • Create budgets based on what they spent last year
  • Create budgets without regard for incremental expenses from both incentive and non-incentive related departments
  • Create budgets without forecasting incremental revenue from both incentive and non-incentive related departments
  • Create budgets and truly believe they can negotiate better prices for the same value as a higher budget would cost
  • Create budgets based on saving rather than investing

Selecting Awards

  • Select awards based on individual (buyer) feelings
  • Select awards based on what their peers do
  • Select awards without target audience demographic profiling
  • Select awards based on price rather than perceived value
  • Select awards based on distress or leverage pricing

Program Measures

  • Measure only high level financial results
  • Measure only financial results
  • Measure impact of incentive target group only
  • Measure overall results only
  • Don’t measure any program results
  • Don’t establish measures at start of the program

Program Participants

  • Call the individuals who succeed “winners”
  • Only pay attention to the “winners” at the conclusion of the program

Ten Changes That Can Increase the ROI of Incentive/Motivation Programs

Create a baseline set of measures from historical data of both revenue and expense, from the same time period as the proposed incentive program dates, with any one time instances removed.

Determine the incentive year baseline measures, for both revenue and expense, without consideration of the incentive program.

Determine the incremental revenue and expense projections as a result of the incentive program, without consideration of the incentive program costs.

Determine individual contribution of incremental revenue and expense for the incentive target audience to achieve overall incentive program projections.

Determine the feasibility of individual effort to achieve the incremental incentive program revenue and expense projections.

Determine the incentive award required to motivate the target audience to achieve the incentive revenue and expense projections.

Calculate the incentive award investment required against the incremental net improvement of the incentive projections.

Create a level playing field rules structure.
Measure program results monthly; adjust rules to suit investment posture.

Analyze final results for all incentive participants; take required action based on movement against objective for all, not just those who earned the award.


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