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Keep incentives from becoming entitlements

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Many managers are hesitant to use incentives in the workplace because of a fear of what it may lead to in the way of increased expectations on the part of employees.

The logic goes: “If I give them something extra for doing what I expect them to do, I will have to keep giving them more and more in the future to simply maintain what they are doing now.”

Such managers are afraid that the use of incentives in general – money or otherwise – is basically a slippery slope that once begun can never be contained.

This line of reasoning is unfortunate in that such managers are abandoning one of the most powerful forms of human motivation known to mankind. They will never experience the benefits that result in increased morale and productivity and return to the bottom line from a well-run incentive program.

It is similar to a person who refuses to drive a car because the brakes might fail or because they read that a significant number of people are killed each year while driving their vehicles.

The fact is, with certain cautions, it can be relatively easy to obtain highly desirable results from the use of incentives in the workplace while at the same time minimizing the risks to the organization.

Here are a few guidelines that can help to keep your use of incentives in check.

• Link incentives to performance. This makes incentives less likely to come across as largesse that is equally distributed to all members of the company whether individuals performed well or not, and it more closely ties incentives to the success of the organization.

Recognizing such things as birthdays, anniversaries, attendance, years of service or passing out turkeys to all employees at Christmas all are examples of programs that are rewarding presence rather than performance. Yet, these are some of the most common incentive programs that exist in this country.

According to recent research from Harvard Business School:

“Research shows that tenure awards have little or no impact on the outcomes which organizations care about most, such as employee engagement, productivity and turnover. Awards programs that exist in about 87 percent of organizations are frequently viewed by employees as an entitlement, not recognition.”

Therefore, it is much more beneficial to get employees focusing on behavior and results that can make a difference in the competitive advantage of the organization. Doing so will help break down the notion of the organization as a paternal caretaker of employees rather than employees being recognized for the contribution they have made – and earned – for the organization.

• Use variety in your choice of incentives. Not only will having different incentives keep them fresh, but individual incentives will be less likely to become entitlements.

For example, if each quarter the company made its revenue goals the company gave a half-day off to all employees, by the second or third time, employees will come to expect this incentive as an ongoing benefit for no other reason than it has been done repeatedly.

If, on the other hand, the first quarter you gave all employees a half-day off, the second quarter you did nothing and the third quarter you held an ice cream party, the variety not only adds fun to the workplace, it minimizes the expectations that can arise from the repeated use of the same incentive.

The same logic holds true for incentive programs. Change them when they start to become stale or lose their effectiveness.

• Emphasize nonmonetary incentives. Studies have shown that you can obtain a greater increase in productivity through the use of nonmonetary recognition items (merchandise, plaques, lifestyle items, etc.) on a dollar-per-dollar basis than by using only cash to increase productivity.

Many other studies have shown that employees find the most meaningful incentives to be things that have no cost at all, starting with a personal thanks from one’s manager for doing a good job.

Raise the level of awareness and skill on the part of your managers to make a more frequent use of such no-cost, low-cost incentives within their work groups and within individual jobs.

Autonomy, flexibility, visibility, involvement in decision-making, interesting job assignments and extensive information and communication all can be used with great success to help obtain extraordinary performance from ordinary people.

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