Category Archives: Incentive Techniques

Designing an incentive compensation plan

I recently came across this excellent blog providing a simple overview about how to put together an incentive plan. Most businesses think that incentivising employees and developing an incentive plan needs to be complicated, but it doesn’t need to be!
The end goal of an incentive plan is aligning the business objectives with what is needed from your employees and striking a fine balance. As the employer you should know your strategic plans for success and growth, therefore it’s just a matter of finding out what matters to your employees.

Finding the right balance and ensuring that all measures are realistic will ensure a simple but effective incentive plan.

Checkout the full article at

Bad bonus practice…

A letter in People Management Magazine from Michael Rose commenting on “HR to have greater role in reformed City reward, 16 July 2009” stating that a guaranteed bonus is often agreed for the first year  of employment as part of negotiation with a prospective employee. Michael Rose of Rewards Consulting Limited then comments that it is thoroughly bad practice to have any guarantees after the first year and that it should not take a regulator to point this out. I completely agree with Michael Rose from an incentive view point. Bonuses are one of the main aspects of an incentive scheme’s and writing an “automatic” bonus in to an employee’s terms and conditions defeats the whole point of the scheme or potential scheme, which could very easily conclude in the business failing to reach several of the HR objectives. I don’t believe a financial bonus is always the best reward in an incentive scheme, much the opposite the reward should change along with an employee’s needs to be fully affective but a lot of bonuses and employees do prefer a financial award, therefore financial awards are regularly used and guaranteeing them to an employee will reduce the overall incentive scheme dramatically.

An example of a good incentive scheme

I believe that the best incentive schemes should be simple in practice, simple to understand and reward the employee. A key to a very successful incentive scheme is to design it to work at team, department, site and business level. Making sure multiple aspects of the business is working towards the same incentive scheme will drive team working and employee engagment.

The end result for the incentive scheme has to be an increase in profits for the business and rewards for the employee as seen fit.

An example coming soon!

The Perfect Incentive Scheme

Is there a Perfect Incentive Scheme?

I don’t think it would ever be possible to develop a perfect incentive scheme due to the changing environments and industries the incentive schemes have to work in. I believe it could be possible to develop a perfect incentive scheme model, from which the end result and scheme can be tailored to bring perfect results.

I have started to write a theory on incentive schemes – “Tri To Incentivise”, developing a model on which an incentive scheme can be built and believe the perfect model must follow two main paths“The Employees wants/aims” and “The Employers wants/aims”.

Please read my theory on incentive schemes called “Tri To Incentivise” for more information: