April 1, 2007
Column | labor pool

Watch those carrots and sticks

Incentive programs can do more harm than good, however, if the goals aren't reachable and the rules aren't completely clear.

By Donald Jacobson and Shelley Safian

A pat on the back is likely to work better than a kick in the pants, but both are incentives to improve performance. Many companies are turning to incentive programs as a way to keep employees motivated and productive. These programs can do more harm than good, however, if the goals aren't reachable and the rules aren't completely clear. When drawing up an incentive plan, pay particular attention to the following details:

  1. Expectations. After you decide on your program's goals, spell out what workers must accomplish to qualify for the rewards. A minimum of 20 days accident-free? A reduction in late deliveries by at least 10 percent over the same month last year? Perfect attendance for 30 days? Your choices are wide open, but whatever you decide, put it in writing.
  2. Eligibility. Decide in advance who qualifies for participation in the plan. Are managers eligible? What about part-timers? The night shift? The swing shift? Individuals or teams and departments only? Be clear about this. Think of the resentment you'll create if people knock themselves out to achieve the goal and then discover they aren't eligible for the reward.
  3. Rewards. Whether they're positive (carrots) or negative (sticks), rewards can be divided into the following types of actions:
    1. Giving something good. Reward workers who achieve the goal by giving them something appealing. It might be money, a gift (like a jacket with the company's logo), a day off with pay, or a pizza party. Just make sure it has value to everyone. Offering a month's free day care isn't much of an incentive to workers who don't have children.
    2. Taking away something bad. Though people often don't think of it this way, a reward can also be the removal of something objectionable. This might be a promise of no overtime for a week or an exemption from having to participate in the inventory count next weekend.
    3. Giving something bad. In other words, let workers know that there will be unpleasant consequences if they miss their goals. These might include written job warnings, having to work overtime, or even being fired.
    4. Taking away something good. This is the kind of "negative" reward parents often use—like taking away cell phone privileges from a teen who stays out after curfew.
  4. Dates. When drafting an incentive plan, pay particular attention to these two dates:
    1. Eligibility dates. Specify the time period during which performance will be measured—the month of May, for example, or the first quarter—and be clear about the start and end dates. That sounds simple enough, but many companies realize too late that policies they thought were clear are actually open to interpretation. If there's a chance that might happen, decide how you'll handle each "gray area" situation before you announce your plan. For example, say you've set up an incentive program that offers rewards to truck drivers who go through the month of April without a single late complaint. How would you handle a complaint over late service on Friday, April 27, that isn't lodged until May 1? Does that ruin the driver's perfect record for the month of April? Or does he still qualify since the complaint fell outside the calendar month?
    2. Award date. Commit to a specific date for the awards (whether carrots or sticks) and stick to it. You'll do more harm than good if you promise a day off with pay and then six months later, you still haven't approved that time off. Likewise, if you had threatened to fire anyone who was absent more than four times in one quarter and you still have an offender on the payroll six months later, you've sent the wrong message—to everyone on the staff.

Don Jacobson is the president of Optimum Supply Chain Recruiters, a recruiting organization that specializes in the placement of management personnel in the logistics field on a nationwide basis. You can reach him by calling Optimum SCR at (800) 300-7609 or by visiting the firm's Web site, www.OptimumSCR.com.

More articles by Donald Jacobson

Shelley Safian is vice president of marketing for Optimum Supply Chain Recruiters, a recruiting organization that specializes in the placement of management personnel in the logistics field on a nationwide basis. You can reach her by calling Optimum SCR at (800) 300-7609 or by visiting the firm's Web site, www.OptimumSCR.com.
More articles by Shelley Safian

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.


Subscribe to DC Velocity


Feedback: What did you think of this article? We'd like to hear from you. DC VELOCITY is committed to accuracy and clarity in the delivery of important and useful logistics and supply chain news and information. If you find anything in DC VELOCITY you feel is inaccurate or warrants further explanation, please ?Subject=Feedback - : watch those carrots and sticks">contact Editorial Director Peter Bradley. All comments are eligible for publication in the letters section of DC VELOCITY magazine. Please include you name and the name of the company or organization your work for.