Published: Jun 21, 2024
Time to read: 8mins
Category: Compensation

How to Implement New Incentive Strategies (Plus 6 Challenges to Prepare For)

An evolving workforce means changing motivators, and organizations need to adapt their compensation programs to keep up with workers’ expectations. This blog post examines what it takes to create a modern incentive program and how to prepare for potential implementation challenges.

Monetary incentives tied to performance metrics are no longer a sure-fire way to increase workforce productivity and performance. You need to adapt your incentive strategies to meet your employees’ evolving expectations. Now’s the time to implement your new incentive programs. According to our recent poll, 39% of companies are currently reviewing or updating their incentive programs, and 17% want to make changes within the next two years.

Poll: When did your organization last review/update its incentive strategy?  Results:  17%: Looking to make changes in the next year or two  39%: Currently in review  24%: 2-3 years ago  7%: 4-5 years ago  13%: Over 5 years ago  Source: PeopleFluent

5 Key Principles of Modern Incentive Strategies

The sooner you’re able to adopt a modern incentive program, the faster you’ll be able to connect with your workforce and meet their needs. Successfully implementing your new or updated program means understanding the following five principles of modern incentive strategies.

1) Alignment

Your incentive strategy must consider your organization’s overall objectives and goals, not just short-term productivity or performance milestones. When planning employee incentives, focus on your organization’s long-term goals and the outcomes your workforce will need to achieve together to get there.

The rate at which employees earn incentives should also match the pace of your organization. Whether you’re in a rapid or steady growth phase should inform which incentives you offer and how quickly your employees can earn them. You need to ensure that your incentive programs are sustainable. Going over budget with incentives could lead to substantial negative impacts for your business, so be mindful of your current and projected growth when planning your incentive strategy.

2) Flexibility

Not every incentive will resonate with your employees. A modern incentive program should include options that appeal to the many needs of a diverse workforce. It’s rare that you’ll be able to make every single person happy, but being flexible in your offerings will make it more likely that you’ll satisfy and motivate the majority of your workforce.

“Giving your employees choices will do more to increase productivity and performance than awarding everyone the same incentive that might not be useful to some contributors.”

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3) Personalization

Everyone has different motivators. The more you can personalize incentives for your employees, the more likely it is that your program will be effective. Look for opportunities to allow your employees to choose rewards that benefit them the most. A team can collectively work toward a common goal, but personalizing their individual incentives can help each contributor increase their productivity and performance.

An employee with a young family might choose a PTO benefit so they can be home more often with their children, while another employee may elect student loan repayment assistance. They could both be on a team working toward the same goal, yet their motivators are very different. Giving your employees choices will do more to increase productivity and performance than awarding everyone the same incentive that might not be useful to some contributors.

4) Transparency and Simplicity

Even with flexibility and personalization, there’s no reason to over-complicate your incentive programs. Keep your strategy simple and make it easy to understand with clearly defined incentive options, performance expectations, and any applicable metrics related to earning rewards. Communicate the plan to your employees through multiple channels to ensure everyone is aware of how they can earn incentives. Email, webinars, and in-person announcements are a few ways you can share the plan with your employees. Be sure to also keep your incentive strategy easily accessible for people to go back to and review when they have questions.

5) Feedback and Recognition

Frequent feedback is crucial to modern incentive strategies. Give employees actionable feedback on their performance as they’re working toward incentive goals so they can make necessary adjustments with enough time to still earn their rewards. Sharing feedback is an opportunity to highlight the performance metrics your organization values and the hard work your employees do to reach their goals.

“Don’t be afraid to be a trailblazer. Ultimately, plan your incentive strategy with the goal of benefiting your employees and your organization.”

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Start Your Incentive Strategy Evolution

Modernizing your incentive strategy will involve a lot of planning, collaboration, and communication between your leadership teams, but you don’t have to start from scratch. The first step is to review your existing programs to determine whether they support your current organizational goals. You also need to assess whether your current incentive program is helping to increase desired performance and productivity outcomes.

Once you understand your current situation, it’s time to gather feedback from your workforce. Survey your employees to learn how they feel about your current programs. You want to find out whether they value the current incentives your organization offers. You also need to know what kinds of benefits your employees would like to receive in the future. This feedback should inform your planning as you move forward with modernizing your program.

Research what other organizations in your industry offer as incentives in addition to gathering employee feedback. This is a great way to see what’s working for other companies that could potentially translate well to your workforce.

You may discover that other organizations aren’t doing unique things with their incentive programs, and that’s okay. Don’t be afraid to be a trailblazer. Ultimately, you must plan your incentive strategy with the goal of benefiting your employees and your organization. Implementing a unique incentive strategy that resonates with your workforce could bolster your reputation as a great employer and possibly attract new talent to your company in the future.

6 Potential Implementation Challenges

There’s a lot to consider when updating your incentive strategy. Be sure to account for the following potential challenges as you finalize your incentive plan.

1) Budgetary Impact

While it’s great to offer perks like gym memberships, public transportation fares, and free access to wellness apps, these incentives will still incur costs for the organization. For every incentive you plan to make available, you need to understand how it will impact your bottom line. Offering too many incentives (or incentives that your company can’t afford) will do more harm than good, so pay close attention to your budget and plan accordingly.

2) Metrics and Evaluation

At some point, you’ll need to measure the success of your new incentive plan so you can see what’s working, what’s not, and make any necessary adjustments. Before you implement your new modern strategy, make sure you know how your organization defines success and how you’ll measure the impact of your programs.

3) Cultural Alignment

As you update your incentives, you’ll need to consider how the rewards will align with your organization’s existing culture. Some incentives might not lend themselves to your organization as easily as others, so it’s pertinent to do a culture check before you make any final decisions. You also need to assess your workforce population and consider the potential impact that new incentives might have on culturally diverse groups. It’s best to identify any potential barriers or areas of friction as soon as possible in the planning process so you can make any necessary adjustments.

“Some jobs cannot be done with the same level of flexibility as others, and you’ll need to address this in your incentive planning strategy.

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4) Equity and Fairness

Similar to cultural alignment, adding and adjusting employee incentives must be done through an equity and fairness lens. While this applies to all incentives, it’s likely to be most prominent when you consider flexible work options. Some jobs cannot be done with the same level of flexibility as others, and you’ll need to address this in your incentive planning strategy. If employees can’t work a flexible schedule due to the constraints of their position, consider comparable alternative incentives for those workers to maintain as much fairness as possible.

5) Administrative Burden

While it’s great to give your employees more incentive options, you need to also consider how you will limit the administrative burden for those responsible for maintaining these programs. The last thing you want is to incentivize some employees while making others’ jobs more challenging. Have a plan to decrease the administrative burden for departments that are most likely to be impacted by the new incentive programs.

6) Change Management

You could offer the most jaw-dropping incentives of any organization in your industry, and you’d still find some employees resistant to the change. Change is inherently challenging for most people, so be ready and willing to respond to any frustrations that may arise while you’re implementing your new programs. Although unlikely, you may need to make adjustments after the initial implementation if there’s a great deal of upset from your workforce. Be ready with a contingency plan just in case.

Though it might feel daunting, adapting your employee reward strategies is essential for keeping people engaged at work. Embracing personalization, flexibility, and program transparency can help you foster a culture of intrinsic motivation and success at your organization. Evolving your strategies will be challenging, but leveraging technology tools will make the transition easier.

Invest in a Compensation Planning Solution That Will Help You Modernize Your Incentive Strategies

Want more insights into enhancing your employee incentive strategies? Download our ebook, ‘How to Evolve Your Incentive Strategies With the Changing Workforce,’ or request a PeopleFluent demo today to see first-class compensation management software in action.

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