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Lessons from GSA scandal: Incentives require proper management

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in Centerpiece,Employee Benefits Program,Human Resources

by Dave Peer


perks and incentives signIf we’ve learned anything from the recent General Services Administration (GSA) scandal involving a lavish Las Vegas convention and expensive gifts to employees, it’s that not every kind of incentive program is justifiable.

The GSA reportedly spent more than $438,000 on MP3 players, digital cameras and other costly employee incentives, a practice that violated its own policy of limiting such gifts to $99. The behavior in the GSA case was the result of poor management and oversight of the program.

An outlandish incentive program like that one is the exception. It wasn’t representative of the tens of thousands of appropriate and effective incentive programs organizations use all over the world.

What good incentives look like

Properly designed and managed, employee incentive programs are extremely effective. In fact, research shows that on-the-job performance can improve by as much as 27% as the result of a well-run incentive program.

Follow these eight steps to create an incentive program that appropriately promotes your performance goals:

1. Establish objectives. Know what your organization is trying to accomplish through incentives. Examples: healthier employee behavior, improved attendance, a safer workplace or employee recognition. Design your program so it is simple, specific and has attainable objectives.

2. Outline a strategy. Know who your program is trying to reach. Decide if individual or team rewards will be more effective.

3. Measure performance. Employees should know exactly what they have to do to earn rewards—and those requirements should be attainable.

4. Establish a budget. Base it on the number of participants, the length of the program and the expected results. The budget can be fixed—with a ceiling for spending—or open-ended, with an estimate of costs. Plan to spend 80% of the budget on awards, 10% on communication and promotion, 5% on administration and 5% on training and research.

5. Select the awards. Not every reward is equally motivating for every employee. The most effective programs offer a wide variety of award options, as different employees are driven and excited by different rewards. Your best buy-in will come from offering an assortment.

6. Administer the program. Incentive programs don’t run themselves. Look into online systems that allow participants to view the points they’ve earned and redeem them on­­line. Can’t do it in-house? Professional incentive companies offer a variety of tools to make program administration easier.

7. Analyze your success. At the end of every incentive program—whether it’s a contest among the sales staff for the most deals or a time period for employees to sign up for health assessments—determine whether it met its objectives and whether participants changed their behavior.

8. Plan the next program. Any one incentive program provides only a short-term gain. Follow-up, ongoing programs are important for sustained success. Start planning the next one right away.

Seek expertise, run a reality check

To make your program the best it can be, start by soliciting guidance from someone with experience. Ask colleagues at other organizations for referrals to incentive professionals. Hire only reputable suppliers that can show credentials and a good track record. You can find incentive professionals through associations like the Society for Human Resource Management and the Incentive Marketing Association.

Use common sense. Clearly that was missing when GSA officials spent more than $6,000 on commemorative coins to hand out to attendees of an $823,000 Las Vegas conference for just 300 employees. Realize that the GSA program caused a scandal because it wasn’t properly managed. It wasn’t typical of the incentives industry—or of the way that a program at your organization would play out.

Final note: Don’t rule out an incentive program just because your organization is small. Even a modest incentive program can help your organization reach its performance-improvement goals.

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Dave Peer is president of the Incentive Marketing Association and president of Hinda Incentives in Chicago. Contact him at dpeer@hinda.com.

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