Incentive plans can be effective ways to get the most out of your employees. Among the different types of incentive plans are individual recognition plans and team-based rewards. One way to pay incentives is to offer a pay-for-performance incentive plan. This benefits the company because employees only get paid incentive compensation for generating additional revenue. You can use several types of pay-for-performance programs to motivate employees.
A sales bonus is a flat rate or percentage paid when a sales professional achieves numbers above and beyond the established goals. You can create monthly or quarterly sales bonus plans.Create a bonus schedule that the sales force can understand and easily apply towards their sales numbers. Give each sales associate access to her sales numbers at least once a week as an incentive for reaching bonus numbers.
To make a profit sharing plan a pay-for-performance plan, you need to quantitatively measure every person's performance. For example, accounts payable employees have to have a high accuracy rate on their purchase orders each month, and maintain that high level, to participate in the profit-sharing bonus plan. Review the profit sharing metrics annually to make sure they are keeping up with the development and growth of the company.
An individual incentive plan can be used for any employee in the company. The department manager creates the metrics and the human resources department issues the incentive pay schedule. For example, if a warehouse employee goes an entire quarter without a time lost accident, an incentive is paid. Metrics and the amount of incentive compensation can vary depending on an employee's seniority with the company and experience in his department. As an example, and employee with 10 years' experience in the warehouse can be paid a higher quarterly incentive than someone with a year or less of experience. This not only motivates newer employees to perform well, it is an added incentive to remain with the company and in that department.
A 401(k) incentive can be used on its own or as part of another pay-for-performance bonus plan. When you pay out a 401(k) bonus, the company puts additional funds into an employee's 401(k) retirement plan above and beyond what the company has already pledged to match. This incentive can be used, along with a profit-sharing plan, to help employees become profit-conscious.