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When Staff Incentives Turn Bad

Often as business owners we are looking for ways to motivate and engage our team to perform better. However without thinking through an incentive properly you could be encouraging the wrong type of behaviour resulting in more damage being done than good.

Examples Include:

A restaurant focusing only on wages to revenue to measure staff productivity.  This resulted in the manager constantly rostering on less and less waiters, the wages to revenue looked great for a short while, but because of the poor service people stopped coming to the restaurant.  In other words it  looked good in the first couple of weeks, but the results of poor service only showed up a few weeks or even months later. The solution, a much broader approach with more key performance indicators focusing on the client’s experience.

A mechanical workshop that offered a bonus to the mechanic with the most billable hours each week.  This resulted in the mechanics arguing over who got what jobs, creating tension among the team as well as encouraging the culture of overcharging.  The solution, a team goal of “billable hours” and also tracking an “allowable” time on each job to prevent over charging.

A shed company that paid their sales people a commission based on a percentage of the sale.  This resulted in the sales people heavily discounting the prices to get the sale.  The solution, the sales people were paid a higher percentage of the sale but on the “Gross Profit” of the sale. 

This week – Invest some time to think about what incentives you offer and whether they are creating more harm than good. 

A simple incentive like a bonus can work very well as long as the person receiving the bonus has a direct influence over the results that the incentive is based on AND how the bonus is calculated is SIMPLE!!!!

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