In their article "Best Practice Incentives for Contact Centers and Distribution Centers: Driving Customer Satisfaction" (WorldatWork Journal, third quarter 2006), which I came across recently as part of some client research on call center incentives, authors Patricia Zingheim and Jay Schuster provide a list of six incentive principles. While these principles are a product of their study of companies selected for their success with contact center and distribution center incentives, I find that they offer timeless advice that applies to any incentive design situation. And so I present them here:
Agility in reward design. The companies remain willing to change any element of these incentive plans to respond to the customer, market, economics or strategy, or just because that element is not getting the job done. Compensation solutions must be aligned with business realities. <Ann's comment: Agreed. Incentive plans have a limited shelf life, and must be regularly reviewed and refreshed in order to remain relevant and value producing.>
Extension of the business. Incentives are viewed as business tools that communicate values and directions to specific workforces about goals and priorities these workforces can influence. Incentive design comes from a business case for change, and employees understand the role incentives play in the business process. <Ann's comment: I appreciate this point, that incentives are much more than pay delivery vehicles - they are important communication tools. The money just adds interest and emphasis to the message.>
Creation of customer partnerships. Incentives are designed to make allies of employees and customers. Incentives do not reward performance from employees who are making decisions that are not in the customers' interests. <Ann's comment: Absolutely important! Incentives that pit employees against customers - and these plans are out there, believe me - will have a destructive influence far beyond any short term gains they might generate.>
Few metrics and frequent awards. These incentive plans use two to four metrics or goals consistent with the concept that everything worth working on and measuring does not belong in an incentive plan. Only those most important metrics are used for incentives. Too many metrics lose focus and may result in people working on easier, achievable, but less critical goals than the key stretch goals that drive the business. And the companies measure performance and grant awards frequently. The companies also give feedback, coach and make course corrections concurrently. <Ann's comment: The enemy we often must fight in incentive plan design is the urge to have the plan address every single thing we want employees to do. Incentives are not a substitute for sound management.>
Awards "de-linked" from base pay. Incentive payments are not granted as a percentage of base pay. Rather they are the same-size awards for the same performance level without regard to an employee's base pay. <Ann's comment: Particularly at the level of hourly/non-exempt employees, I think there is value in considering "flat' awards rather than awards tied to the size of the employee's base salary. Especially with group awards at this level, this approach reinforces the notion of teamwork and the sense that everyone is in the game together.>
Transparency to customers and employees. Customers visit the work site of these employees. The incentive plan is a selling point to show customers that employees are paid for satisfying customers. Customers see posted incentive metrics and are asked to give feedback about the incentive plan metrics, often in the presence of employees. <Ann's comment: Shouldn't this be the 'acid test' for any incentive plan? If you wouldn't be pleased and proud to share it with your customers, perhaps you should re-think it.>
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