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Four things you must avoid when you incentivise your employee's performance

by , 13 February 2013
After winning the African Cup of Nations on Sunday, Nigeria's Super Eagles can look forward to an extra $12,500 for the 25 shots they scored on target during the tournament, said Cadbury's Corporate Affairs Manager for West Africa, Kufre Ekanem on Monday. It's just one way the team's being rewarded for their performance during the tournament. Managing employee performance is always a grey area - especially in the workplace. Many managers believe performance rewards are unnecessary. Employees receive a salary for what they do, what more could they want? Read on to discover why employee performance incentives are so important and four things you need to avoid when rewarding employees.

'If you want to retain your employees and have happy and committed workers, you need to recognise their contribution in a significant way, over and above giving them their salary,' writes HR practitioner Desrae Connold in the Practical Guide to Human Resources. 'You also need to incentivise employees to perform beyond what's expected so they don't only deliver 'what they're paid for'.'
But to ensure your employee incentive programme is fair, you need to make sure you don't make these four common mistakes, says the Practical Guide to Human Resources.
Don't make these four mistakes when incentivising employee performance
  1. Don't let it be up to managers to decide who should receive a performance incentive: Your employee's performance must be rewarded against defined job objectives to ensure rewards aren't unfairly given to a manager's favourites.
  1. Don't offer group performance incentives at the expense of the company strategy: 'Companies have often offered incentives where the winning staff member or team is given a holiday or a special bonus. This spirit of competition may motivate employees to achieve, but at the expense of the wider company role,' explains Connold.
If you do offer a group performance incentive, make sure it supports strategy and team work. For example, if the company goal is to increase sales, the performance incentive should be based on the joint achievement of both the marketing and the sales team as a whole. It should also reward support staff who ensure that sales are expedited and delivered.
  1. Don't make all your performance incentives cash based: 'Employees are often motivated by non-cash based rewards and appreciate them more, particularly if they're spontaneous and reward particular effort,' says the Practical Guide to Human Resources. Make sure you review your company's reward system annually to ensure it remains a motivating influence. Employee rewards can be as simple as a thank you letter from the MD or a day off work to reward an employee for good performance.
  1. Don't use negative performance incentives. Many companies structure bonuses based on productivity criteria. For example, the bonus starts off at R2 500, but every time employees produce poor quality work, deliver the incorrect product or make an error, they lose R250 from their bonus. This type of system feels like punishment and demotivates employees. Instead, make sure your performance incentive programme is positive and rewards employees when they've reached a specific target.
Bottom line: Incentive programmes can make a huge difference to your company. Studies show they can improve employee performance anywhere from 25% to 45%, as well as decrease turnover, increase customer satisfaction and enhance the public's awareness of your brand. Put a performance incentive programme together for your employees today and you're sure to see a positive change in your workforce.

You're obliged to do performance reviews. That's why you need an extremely easy to use, highly efficient system.
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