An incentive must support specific business goals or it is meaningless. From the beginning, it’s important to establish what the performance incentive program is designed to achieve and how those objectives tie in with the company’s overall growth strategy.
To design effective objectives arrange a brainstorming session with colleagues who will be involved. If possible, also include a few employees who will be participating in the final business incentive group.
This mix of people will provide valuable insight into changing market conditions or special characteristics of your customers.
Make a list of the company’s most pressing needs or issues, both sales and non-sales related. Some of these topics will pop up every year, others will be new. As your team works, keep the following questions in mind:
- What are the company, industry and overall economic climates?
- What factors may affect our business today and into next year?
- What are my competitors’ strengths and weaknesses?
- What are my product’s or service’s strengths and weaknesses?
Based on the answers to these questions and the list of specific corporate issues, you and your team will develop a clear picture of what business goals your company incentive will support. Make sure the objectives don’t contradict other company goals. For instance, if an objective could adversely affect safety or quality, you’re creating trouble. Overall, incentive program goals should be:
Simple and specific
Steer away from broad terms like “increase sales”. Rather, state “increase sales of computer systems 10 percent between June and December;’
Have an ambitious agenda, but don’t go overboard. Also, compare your goals to past history. If your company has never come close to its objective, make sure you can support why this time will be different.
If you can’t measure incentive performance in specific terms, it will be very difficult to prove to management the program was a success. Also, you want to be able to compare the incentive solutions against past and future initiatives.
Incentive promotion programs should be run when they will do the most good. For instance, a safety incentive award program should operate during peak rush periods. Also, adjust your objectives to suit fluctuations in the business cycle. A sales force incentive program aimed at increasing sales during a slow period won’t come close to peak-period numbers.