How to Create Incentive Plans
Your business operates at peak efficiency when your customers are happy and when your employees are happy. You can probably make your customers happy at the expense of overworking your employees; but your business would suffer due to lack of morale. Finding a balance between happy customers and happy employees can be a struggle. Creating an incentive plan for your employees is a way to improve morale and motivation. Incentive plans set forth specific goals; when those goals are met, a reward is provided. The reward could be cash, stock options, or something else.
Other People Are Reading
Instructions
-
-
1
Determine the type of incentive plan you want to institute. Many options exist: profit-sharing plans offer employees a small percentage of the business' pre-tax profitability; stock options reward employees with company stock; cash incentives simply provide a cash bonus when certain objectives are met. Review all options based on your company's structure, resources, and goals.
-
2
Open a new document in your word processor. Title the document "Incentive Plan."
-
-
3
Create a section called "Summary." Hit a few hard-returns to create some space under this section; you will complete this section once the document is complete. Essentially, it will summarize the sections below it.
-
4
Describe the purpose of the plan. Be concise. Lay out why the plan is being implement (for motivation, for competition, for advancement-purposes, etc).
-
5
Explain who is eligible for the incentives. Think of this section as the "rules" of your incentive plan. Describe which employees will be eligible for incentives. For example sales staff may be eligible for certain incentives while all full-time employees are eligible for a percentage of profit-sharing based on salary.
-
6
Explain the incentives. Here is the meat of your incentive plan. Use this section to describe your incentive plan. Spell out what must happen for the employees to earn the incentive. This can be done in paragraph form, in a bulleted list, or in a combination.
-
7
List how employees will be evaluated (such as by a committee or based on sales numbers) and how the plan will affect any other plans in place (such as benefit plans or pension plans). Finally, describe the process by which the employees will be judged. Be as specific as possible.
-
8
Make copies and provide them to your employees who will be eligible for incentives.
-
1
Tips & Warnings
A template may be useful in crafting your executive plan. A copy of Coca-Cola's executive incentive plan is available in the Resources section below.
Remember that an incentive plan is a means to boost morale while improving the bottom line.
