Staff Incentives: How to drop an ineffective program
November 30, 2005
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Last week’s tip focused on staff incentive programs and my feelings that they often become ineffective
and may be taken for granted by employees. This week I’ll cover how to dump a program that’s not
performing the way you want it to. Even if you like the concept of incentive programs, it’s pretty
easy to end up with one that’s not working as well as you hoped. But ending any type of compensation
will receive a chilly reception from employees and can cause a serious morale problem.
Changing the rules
It’s understandable that employees will look at any change in their total compensation with some worry.
This is one of the reasons I don’t like the programs in the first place. If you simply want to change
the rules of the incentive or bonus system, staff will worry that they won’t be able to earn as much.
They’ll worry it will be more difficult to track or more difficult to reach the goals. Employees will
often have to wait until they receive a few bonus checks before they can really determine if a change in
the incentive rules was good for them. In reality, it’s hard for the practice CEO to predict if a change
will result in more or less bonus money.
The irony is that if you don’t continually change the program, the enthusiasm and motivation wanes and it
becomes less effective. It’s common to see a program produce great sales for a few months and then things
slide back to normal levels as people do what is comfortable.
That’s why I prefer to just pay good wages and benefits and offer raises for good performance. Giving an
unexpected and undefined cash bonus also works well as a reward for great work.
Buy out a bad plan
If you’re ready to move away from an incentive program, the fair way out is to calculate the average dollar
amount that was actually paid to employees in bonuses over the past six months (or whatever period is
appropriate), convert that to an hourly amount and give everyone a raise. Effectively, you will buy everyone
out of the plan. That may sound drastic, but it really is simply keeping everyone even. You should not see
an increase in your costs, since you’re just continuing with the average you’re already paying. Depending on
your bonus system, you might figure each person’s average bonus buyout individually, or if you divide a pool
equally, you could give everyone the same increase in wages. I’d do whatever is most fair to the employees.
A buyout of a poor bonus program should be pretty well accepted by staff if they can confirm that the hourly
increase they receive was accurately determined. It may even boost morale since they got a raise that removes
some uncertainty in their pay, and they can just focus on good patient care and patient education.