Performance incentives or performance-linked incentives are a good idea but they can also be a double-edged sword sometimes. While in theory they could motivate employees, they could also lead to demotivation and jealousy. This is why it is necessary to have performance improvements that could actually work. Here is how you could do this:
Take a holistic view
Sometimes, employees might do well in one quarter and not so well in another. Or the employee could do well in one area and lag behind in others. Employees might not be giving you the results you want but they might be helping others in the team do better and get behind on their tasks. It is therefore not a good idea to reward or penalize them looking at it in the short-term.
Therefore, it is necessary to have a holistic view of things and take into account everything before making a decision. Make it a long-term operation.
More than just money
A few monetary gifts are not going to cut it always. Yes, money is a good incentive, but there are other things like work-life balance, stock options, and better work culture that employees might crave. It is necessary to look beyond monetary incentives and offer employees what they treasure.
Therefore, before designing the incentive plan, take into account what the employees need. You could run a survey to learn more about this. If employees are getting what they want instead of what you want to offer them, incentives work all the better.
Feedback from multiple sources
If you rely only on feedback from managers, you might not always get it right. There might be individual biases or human errors at play, and this could actually weaken the entire program.
Therefore, take feedback from multiple sources before making the incentive decision. Peers are always good sources for this.
For better performance management and in-depth analysis, use online HR software which provides you technological support in all your endeavors.
