The Importance of Incentives in Business

Incentives can mean many things to many people. They can vary from an incentive to increase sales (e.g. Buy 1 get 1 free), build loyalty (e.g. collect 10 stamps for a free coffee) or even take the form of personal incentives, usually promising a reward (e.g. cake) for good behaviour (e.g. going to the gym). If you think about it, in one way or another we’re all using and consuming incentives in our daily lives. To be so widely used they must be effective, right? I don’t want to delve into the psychological aspects surrounding incentivised behaviour but I want to underline the merits that we can bring to our businesses by using them effectively. I’m not going to discuss the obvious “Sales incentive”, which you probably already use in one way or another to promote your products (e.g. Free delivery on orders over £xx.xx). I instead want to focus on incentives to boost productivity and morale of employees, an area I believe it often overlooked and undervalued as a “quick win” to loyal and productive staff. I believe the most important thing to remember when incentivising staff, is to ensure you create “corporate” targets that all staff members can contribute towards achieving. This encourages co-operation within the team and often support and guidance from stronger members of the team to the less productive co-workers, enhancing their training and capIncentives via Competitionsabilities. The result is more productivity, team spirit and ultimately corporate growth by reaching the incentivised target faster. Creating incentive programmes which create competition between employees will often result in segregation of the workforce into polar opposites (the winners and the losers) and the gaps only ever get bigger until your team is divided. You must also be careful not to create conflicting incentives between different management teams. For example, targeting the manufacturing department to increase product output whilst targeting the logistics department to reduce stock inventory to free up cash capital. Once you’ve set your corporate target you’ll need to decide on the incentive. The great thing about incentives is they don’t always have to be extra cash. In fact, I’d always recommend the opposite. Use your imagination and make it fun. Your staff are already being monetarily incentivised to work for their salary so think of something desirable that everybody considers a “treat”. Cakes Yummy! It doesn’t have to cost the earth if you’re on a tight budget and if it’s a corporate target met, then there’s no rule to say the directors can’t join in with the incentive reward too! Here at we all work towards hitting our next round figure in £10k increments and have incentivised this in many ways from free parcel delivery, office parties, clay pigeon shooting, meals out and go-karting! We’re looking for an incentive for our next £100k target so please share and comment below to tell us about your ideas, if we use your idea, we’ll send you a personal invite! Always ensure you record expenditure and consult a qualified accountant before starting your incentive plan.

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