How Incentive Programs Affect Teams

Incentive programs are challenging for many small businesses. Although they are necessary in some fields, staff do not always consider them fair. Implementing an incentive program can create issues that lead to conflict.

Conflict for the business arises at the “do or don’t” stage of implementing, moving forward, or retracting an incentive program. Conflict can also arise between staff and management when incentive programs are not inclusive. Let me give you an example.

Imagine you have an incentive program set up for the Office Manager/ Marketer.  That person is responsible for production, revenue goals, or keeping production costs down. Say she/he makes 5% for reaching $30,000, which would amount to $1,500 a month. The rest of your team gets nothing.

The problem here is the staff who produce those goods or services are being driven harder and expected to increase output within the same eight-hour workday at the same rate of pay. A circumstance like this can be very disruptive to the harmony of the team. Team harmony is a fundamental to teamwork. Any conflicts that occur can affect the smooth running of your business and have a negative effect on the bottom line.

Conflict causes employee turnover, increases gossip, disrupts the quality of service, and ultimately has a negative effect on your business. This is what I have observed managing healthcare team(s) for 15 years. I suggest following these simple guidelines:

  • Determine why conflict exist when incentives are offered.
  • Identify incentive gaps that relate to subgroups.
  • Weigh the implications of incentives.
  • Review determining factors of incentives.
  • Review group contributions against conflict and incentives.

It’s important that owners and managers understand incentives; in how they can create conflict and how they can have a meaningful effect on teamwork. Owners and managers must recognize and understand the relationship between incentives and conflict so they can make informed decisions as to what is best for their teams.

The right incentive structure can and will turn your employees into advocates for you.  Employees will have a vested interest in working harder, in giving better customer service, and in producing a better product when incentives are considered fair. Harold Stolovich, Ph.D. from the Incentive Research Foundation, suggests that incentive programs can boost performance by anywhere from 25-44 percent. The biggest gains for an incentive program will come from the buy-in; that is, the incentive program implemented must appeal to your staff. Be creative; offer time-off, mini vacations, supplemented child care, or anything that might appeal to your staff.

Is your business ready for an Incentive program?

When introducing an incentive program we have to ask ourselves a few questions:

  1. Is the timing right?
  2. Do I have the right policies (guidelines/systems) in place to start an incentive program?
  3. Do we currently have a history of success?
  4. Do I have the right training and people I need to succeed?

The time to consider an incentive program is when you can say yes to these basic questions.

I look forward to hearing your creative thoughts on how bonuses should or should not be incorporated and if so what creative way was it implemented.


Image courtesy of Nick Youngson CC BY-SA 3.0 Alpha Stock Images

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