Motivation by Remuneration

Motivating employees and influencing performance through incentives or profit share is increasingly common but frequently ineffective - not because incentives are a bad idea, but usually because businesses choose incentives which reward the wrong behaviours, according to DC Strategy franchise consultants.

Businesses are increasing focus on remuneration strategies in response to the near-full employment conditions in the Australian economy and the resultant increased pressure on fixed cost bases.  The opportunity created by incentives is simple in its philosophy: to grow the total size of the pie available and share it according to who created the outcomes. So why do so many businesses get it wrong?

• Many incentive schemes over or under reward employees. Either way, employees become disengaged from the direct effect of their actions on their own remuneration: the effort required is either too great or too little to be sustainable, and their actions no longer influence the size of the pie.
• Misidentification of the true value drivers of the business, and therefore motivating behaviours that don’t add value to the business.
• Aligning rewards with uncontrollable areas of the business. Remuneration should always be based on elements of the business employees can influence.

The true value of a well-structured incentive program is capturing incremental business growth by aligning employee efforts with business goals. In order to do this properly, businesses must think critically through the process: a well structured incentive program is invaluable for long term business growth.