This blog is about marketing incentives
In fact, this discussion could reveal problems that an incentive plan might not solve or might even make worse. For example, if employees are underperforming because of a skill or training deficiency or poor management, an incentive plan could simply exacerbate the situation as employees grow frustrated with their inability to earn a payout.
Moreover, not all individuals respond well to incentives and having a portion of their pay at risk. "Even when there is upside earning potential, the plan could end up demotivating employees who are afraid they will not earn enough money," says Avelino. "If you are going to have pay at risk, make sure your employees will respond favorably to that."
* Find the right incentive payout. If employees do have an appetite for incentives and pay at risk, companies need to ensure that the size of the incentive is appropriate and motivating. "The incentive itself must be meaningful enough to have the desired motivational effect," , vice president of human resources based Thomson Learning, which provides education, training, reference and assessment solutions to organizations and higher education institutions.
The right amount for an incentive is likely to vary by situation. According to research conducted, a former professor at Stanford University's Graduate School of Business, supervisors and product development managers in the United States and Europe responded best to bonuses of about 30 percent of their annual salary. However, in situations where a product is complex and involves technological and market uncertainty, the study found that optimal bonuses for this group were less than 30 percent of annual salary.
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