7 Ways to Get the Most Out of Your Incentive Program

Incentive pay programs are becoming an increasingly popular supply chain initiatives to increase productivity without the need for large capital improvements. These programs motivate employees to perform to the best of their ability every day, even during stretches of long workdays and difficult tasks. The problem is that an incentive program can hold an adverse effect if it’s not properly planned and executed. Employees can feel that the incentives they desire are out of reach no matter how hard they try, or that other colleagues are better suited for success based on incentive parameters. Keep these seven guidelines in mind so your incentive program offers the largest impact for your business:

1. Understand the need for the incentive. Consider the who, what, where, when, why, and how. Understanding the responses to these questions will help align the behaviors you wish to reward as you develop the incentive program details. Having clear answers ensures your program is set up to make optimal impact on your employees and the work they perform.

2. Get the employees involved. It’s important to understand the employee’s perspective and interest level when developing the framework for an incentive plan. Additional pay, paid time-off, and rewards are the three most common types of incentives used. The use of focus groups and questionnaires will identify which type of incentive, if any, will motivate the employees to perform above normal expectations.

3. Keep the program simple. When developing the plan’s framework, make sure employees easily understand it. This will result in a higher implementation success rate. Incentive plans that are too complex will not achieve the desired results. Make sure the plan is communicated clearly to employees. A good time to introduce it is during project kick-off meetings or at the start of a new quarter or year.

4. Include all employees. Avoid segmenting out certain employee workgroups when developing the incentive plan. Incentive plans that focus on a small subset of the overall employee staff will lead to jealousy and resentment within the organization. Be creative with individual and team incentives and don’t forget to include supervisors.

5. Use work methods and labor standards to evaluate employee performance. An incentive plan needs a solid foundation based on preferred work methods and engineered labor standards. An employee observation program should be established so each employee is reviewed on a frequent basis, to ensure the employee is reaching his or her goals.

6. Offer rewards for direct work. Reward work that supports movement of goods in the facility (receiving, transport, putaway, replenishment, picking, packing, shipping, etc.). Indirect work, such as cleaning, meetings, or prep activities, should not be part of the incentive plan as this promotes a lack of motivation to get required work done in a timely manner.

7. Utilize existing systems to track rewards. Avoid having employees fill out daily production cards. Instead, utilize existing systems, such as the Warehouse Management System (WMS) and Time and Attendance systems for data capture. Export the data to the in-house payroll system for monetary based incentive programs.

Once your rewards program is in place and employees are working toward incentives, don’t wait to provide them. Waiting too long will cause motivation to wane. Align the reward with your normal compensation schedule or consider a separate pay check if monetary rewards are used. Reassess your rewards program on an annual basis to ensure goals are still obtainable, yet challenging.

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