Incentive program Best Practices

30 Mistakes Companies Make When Using Incentive Programs to Change Behavior

Setting Objectives

• Set objectives that are based on what management wants to see, not what is realistic to achieve
• Set objectives without receiving input from departments that may be impacted by the incentive program activity
• Set objectives that are designed to create short term changes only
• Set objectives that conflict with other company goals and objectives

Establishing Program Rules

• Establish rules that are not feasible for the entire incentive participant audience to achieve
• Establish rules that are not flexible over the life of the program
• Establish rules that are limited to financial aspects only
• Establish rules that are too hard to understand
• Establish rules that create havoc for other departments
• Establish rules without regard for individual/regional demographics
• Establish rules that create entitlement programs (80% repeat participants)

Creating Incentive Budgets

• Create budgets based on what they think they can afford to spend
• Create budgets based on what they spent last year
• Create budgets without regard for incremental expenses from both incentive and non-incentive related departments
• Create budgets without forecasting incremental revenue from both incentive and non-incentive related departments
• Create budgets and truly believe they can negotiate better prices for the same value as a higher budget would cost
• Create budgets based on saving rather than investing

Selecting Awards

• Select awards based on individual (buyer) feelings
• Select awards based on what their peers do
• Select awards without target audience demographic profiling
• Select awards based on price rather than perceived value
• Select awards based on distress or leverage pricing

Program Measures

• Measure only high level financial results
• Measure only financial results
• Measure impact of incentive target group only
• Measure overall results only
• Don’t measure any program results
• Don’t establish measures at start of the program

Program Participants

• Call the individuals who succeed “winners”
• Only pay attention to the “winners” at the conclusion of the program

Ten Changes That Can Increase the ROI of Incentive/Motivation Programs

• Create a baseline set of measures from historical data of both revenue and expense, from the same time period as the proposed incentive program dates, with any one time instances removed.


• Determine the incentive year baseline measures, for both revenue and expense, without consideration of the incentive program.


• Determine the incremental revenue and expense projections as a result of the incentive program, without consideration of the incentive program costs.


• Determine individual contribution of incremental revenue and expense for the incentive target audience to achieve overall incentive program projections


• Determine the feasibility of individual effort to achieve the incremental incentive program revenue and expense projections.


• Determine the incentive award required to motivate the target audience to achieve the incentive revenue and expense projections.


• Calculate the incentive award investment required against the incremental net improvement of the incentive projections.


• Create a level playing field rules structure.


• Measure program results monthly; adjust rules to suit investment posture.


• Analyze final results for all incentive participants; take required action based on movement against objective for all, not just those who earned the award.

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