How to Run Successful Incentive Schemes: A Manager’s Guide

Citation

Mann, S. (2001), "How to Run Successful Incentive Schemes: A Manager’s Guide", Leadership & Organization Development Journal, Vol. 22 No. 3, pp. 139-142. https://doi.org/10.1108/lodj.2001.22.3.139.4

How many employees ever reach their potential? Most people, claims the author in the opening sections to this book, have the capacity to perform better and it is the shrewd manager who recognises that performance improvement programmes should be part of any long‐term business plan. Such programmes, should, according to Fisher, include motivational schemes or use of incentives. So far, so predictable, but can this text really offer anything that most managers don’t already know? The answer is probably yes – certainly this text goes way further than merely advising us to offer performance related pay (PRP) or the odd travel perk to boost work motivation.

The book is divided into a healthy 13 chapters, which take the reader through a logical journey from initial audit to a vision of incentives of the future. The book starts with a chapter on “The human audit” which includes the wise words that “a performance improvement programme cannot be built on the basis of a few chance conversations”. Instead, says Fisher, as a consultant specialising in employee incentives, “you need to consider in great detail whom you are trying to motivate, how they operate … and what practical measures can be put into place to monitor performance”. Six guidelines are provided to help you conduct this human audit before looking at these functions (such as absenteeism, grievances and morale check) in more detail. Once the audit has been completed, the actual programme can be designed (and I was pleasantly surprised to see this topic beginning very early in the book thus cutting out too much lengthy and tedious preamble). In this chapter, a number of individual incentive techniques are discussed, including the leaguing system, “commit‐to‐win”, “all or nothing”, sweepstakes and weighted performance. All are discussed, with pros and cons, in appropriate detail, before a discussion on lengths of incentive programmes gets under way.

Chapter 4 leads the reader into the rather less exciting, but just as important area of budgeting. The concept of incremental profit is discussed as well as fixed costs, variable admin costs and variable reward costs. Now that the business problem has been identified, a structure and budget decided on, Chapter 5 devotes itself to laying one ghost to rest – that of cash incentives. Offering people more money is often the starting point for many incentives by providers, and this chapter examines the limited efficiency of such an approach – whether the incentives are offered within salary, commission, PRP or stock options. Motivational theories are used to back up the notion that cash is a (surprisingly) poor incentive.

This leads the reader nicely into the idea of flexible benefits in Chapter 6. A flex plan means that employees can choose from a range of benefits such as pension, health care, dental insurance, annual leave or company cars. Incentives are thus tailored towards individual need and are thus likely to be more effective. Such schemes require careful administration and these aspects are dealt with in appropriate detail too. Incentive travel is everyone’s top reward, if only for the trophy value (you can boast about travel perks, but not how much you earn, to your neighbours) and the next chapter deals with this – even including a chart of the appeal ratings of conference destinations. The next three chapters cover, in similar detail, events, vouchers and merchandise as incentives.

Having discussed all the main incentive schemes available, the remaining chapters are concerned with measuring and monitoring such schemes and (briefly) with the future of incentive schemes.

How to Run Successful Incentive Schemes really does appear to cover everything and having read it cover to cover, I could not think of anything either missed out or not presented in enough detail. The book is thus ideal for managers who are really new to incentive schemes, as well as those with more experience. Those who have tried one or two schemes with limited success would benefit too, in seeing where they have gone wrong. The book is very easy reading, with plenty of real case studies thrown in, and is ideal to either read from start to finish, or to dip into those chapters of particular interest.