August 25, 2015

Why Your Incentive Program Isn’t Working—and How to Fix It

Why Your Incentive Program Isn’t Working—and How to Fix It

By Kit Dickinson on August 25, 2015

Some of the most discontented days of the year are incentive payout days.

Employee bonuses or other incentive programs are supposed to motivate workers with the promise of a larger paycheck. But incentive programs are often overgrown with confusing rules and manual processes—so your employees never know what to expect until they see the check. Often, the numbers don’t match expectations.

The disappointment and confusion can lead to mistrust and a suspicion that they’re not being paid what they are owed.

If you’re managing incentive pay through one person (such as the payroll administrator), your employees are probably apprehensive that the rates may be inaccurate or that some people are shown favoritism. Managing your policies in spreadsheets or on paper can add to the distrust, since there is no audit trail and those methods are highly susceptible to error.

As a result, employees may turn to cheating in order to game the system to compensate for perceived unfairness. You could also face higher turnover, poor employee relations, and even litigation. At the very least, disillusionment could turn your best workers into low performers.

Don’t Give Up on Incentive Pay

Incentive programs can be successful when your employees are confident that the system is reliable and fair. To bolster morale and boost trust in your bonus program, apply this two-pronged approach.

Implement the Right System

Don’t rely on human data entry and manual calculations, and don’t keep your policy management behind closed doors. Implement a robust time-and-attendance system or an electronic time card application that will run your calculations and enter the data, eliminating the possibility of human error and favoritism.

Educate Your Employees

Once your new system is in place, give a live demo to your workers that shows how the system will calculate bonuses in an objective, consistent manner. Train every employee to use the new system, which can help boost job performance and efficiency and reduce the time spent auditing and questioning results.

Help employees understand their own performance. Provide each person with a detailed, system-generated report on their productivity to show accountability and transparency. Also, make sure pay stubs show detailed examples of different incentive earnings so your employees can see how their performance affected their paycheck.

By establishing accountability and educating your employees, you’ll set the elements in place for a successful employee bonus program that increases productivity and raises morale.

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