Two words reveal the secret of successful employee incentive programs: feedback and reinforcement. These are two of the four core tenets driving behaviors that affect KPIs.
As a child and young adult you learned that continuous feedback guided you in your pursuit of learning. You received regular grades for homework, tests, reports. and the dreaded final exams, thus conditioning you to expect continuous feedback. Once out of school and into the workplace, continuous feedback abruptly stopped and changed to quarterly goals, management by objectives (MBOs), and annual reviews that often have very little relevance to your daily tasks and challenges. Now you’re a manager; you need to motivate and incentivize your team to improve a myriad of KPIs that could make or break your career and company. You may have been doing this for awhile or perhaps you’re new at it. How do you do it or improve what you’re already doing?
The First Word: Feedback. You and your team were conditioned for continuous positive feedback through your educational processes; feedback is craved because it’s emotionally rewarding. I injected the word “positive” because a note from your teacher praising your work was more desirable and elicited more renewed efforts than a negative one. Just because you’re out of school doesn’t mean that continuous positive feedback is no longer a powerful motivator to you or your staff. In fact, look at the continuous positive feedback received by those who play games either online or with a specialized gaming system such as a PlayStation, Xbox. or Wii. They generate and receive positive feedback multiple times per minute — talk about “continuous,” wow! Because anything that provides positive feedback will be repeated, it’s no surprise that employee incentive programs running longer than six months produce nearly twice the results of shorter duration programs. Successful incentive programs do not have an end-date, although they should be frequently evaluated and updated. Lesson number one is to use “continuous positive feedback.” It’s the emotion that gets activities started. Take large activities and break them down into their precedent or smallest measurable components. Then, reward those activities continuously, as they occur. Doing so will capitalize on the motivational affects that we’ve learned during the first 20 years (or so) of our lives. Depending upon the tasks and number of employees this may be laborious but the bottom line results are well worth the effort. An added bonus is that morale follows performance.
The Second Word: Reinforcement. Did you know that more than 85% of the revenue earned by Las Vegas comes from slot machines? Imagine if your HR department tasked you to write a job description for a slot machine operator. Here is what you might write “You will sit before a machine, drop a piece of metal into a slot, and pull a lever over and over and over again. The wages are that you will slowly lose all of the money you brought to work.” Let me expand on the term “reinforcement” and precede it with the term “random intermittent.” The magic of Las Vegas is “random intermittent reinforcement.” It’s one of the most powerful motivators in existence when you realize the amount of money that is taken TO Las Vegas and stays there. I’m not suggesting that your incentive program include gambling. It’s a losing proposition and I do not recommend offering lottery tickets in an employee incentive program. However you have witnessed the power of “random intermittent reinforcement” when you have a reward that depends on spin-the-wheel, take a ticket from a fish bowl, or select a sealed envelope. Lesson number two is to use random intermittent reinforcement. This is the emotion that keeps activities going. It should be utilized in every employee incentive program for every activity, not just at special times or for special events. Injecting a game with a random but controlled result in the reward process also gives additional reinforcement to the activity. Yes, your traditional top performers will remain the top earners. The primary benefit will be to improve those who are not at the top and to insure that the new-hires are successful and do not become discouraged (you know where that slippery slope leads).
The Other Two Tenets. Pay incentives immediately and separately from payroll. The more closely you tie the reward with the activity, the greater the reinforcement. The fourth tenet is to provide a choice of desirable rewards. Believe it or not, one third of incentive programs produce negative results. A sure-fire way to kill an incentive program is to offer merchandise that the employee sees as overpriced. While not overtly saying so, they ask why your company wasted the incentive reward they earned on something that could have been purchased on the Internet for 30% to 50% less. Our most recent survey of reward redemptions showed that 88% of the values of our client’s employee’s redemptions were to put funds onto a Visa or MasterCard debit card. Not surprisingly, many of the employees waited until October, November, and December to spend the funds they had accumulated on their cards.
An Advisory: Home Agents. Having agents working from home is now the norm (long overdue in my opinion). While this is good news overall, there is one major loss. You lose the highly motivating power of being part of a team and the feeling of camaraderie. You must be extra diligent about following the advice above with home agents.
How Much to Spend. So what is the right amount? Somewhere there must be the magic number that is not too much and not too little. I call it the “goldilocks” amount because it’s just right to elicit the optimum performance improvement for the money. Whether your agents are inbound, outbound, blended, customer service, or sales, we would all like to improve major contact center metrics: schedule adherence, attendance, tardiness, sales per hour, dollars collected, first call resolution, quality scores, better data accuracy, reduced early-stage turnover, and others. Yet we face the conundrum of spending too much or too little. When an incentive program is properly designed and administered, we have seen that KPIs can easily be improved by a minimum of 20% when spending two hours worth of labor cost per FTE per month. We have also seen that spending more than 3% of payroll does not generate incremental effort. Therefore, my rule of thumb (works with all currencies) is the “two hour” rule. If spending $12 per hour for labor, plan on spending around $24 per month for each FTE. To me, that’s an excellent ROI which even the most tight-fisted CFO should heartily endorse.