Incentive How-To
Free guide gives step-by-step help with bonus andincentive programs.
According to safety and human resource experts, a well-designed incentive program can produce considerable cost savings in reduced accidents and increased productivity.
So what's a "well-designed" program? Following are some guidelines from "How to Implement Incentive Programs for Safety and Productivity. Guidelines for Transport Fleets," prepared by the Canada Safety Council for the Transport Canada and the U.S. Federal Motor Carrier Safety Administration.
• Start at the top. "A strong commitment from the owners and top management is absolutely critical," the guide says. That commitment should be "obvious and ongoing."
Top management should show its support by personally recognizing employee achievements, and by investing resources for equipment, training and program administration.
• Identify problems to be addressed and goals you hope to attain, then decide what incentives you'll offer and how performance will be measured. The reward should be desirable. Cash bonuses are common, but recognition awards (pins, rings, etc.) and/or merchandise can also work. When investigating possible rewards, don't forget to consider tax consequences for you and your drivers.
• Goals should be clear, the system must be fair and rewards must be attainable. All drivers should feel they have a chance of achieving the stated goal and the reward should be given to everyone who meets it. Rewards shouldn't be given to those who don't deserve them. Performance measurements should be consistent and clearly defined. For instance if your safety award is based on the absence of preventable accidents, you need to set up a standard way to determine preventability.
• A graduated system, where the size of the award increases with performance, is often better than an "all or nothing" plan. Incentives should increase with long-term performance. For instance, a driver with 10 accident-free years should earn a larger reward than a driver with one accident-free year.
• Budget for the program. Management should sign off on the cost of the program, including development and implementation as well as the awards themselves. Along with projected costs, the budget should include projected savings or other benefits to the company if objectives are met.
• Appoint a coordinator. A knowledgeable, dependable member of the management team should be in charge of coordinating all aspects of the incentive program. The person selected should have expertise in the targeted area and must be committed to improvement through positive feedback. The coordinator's role and responsibilities should be clearly defined.
• Recognize everyone's contribution. "A driver incentive program obviously rewards drivers for their performance," the council advises, "but remember that supervisors and middle managers have a direct impact on the drivers' work. Every link in the chain is part of the end result and should be eligible for an award: dock worker, foreman, supervisor, middle manager, and even the top decision maker."
• Form an incentive advisory team. The team should represent all areas of the company, including drivers, dispatch, maintenance and management. It should meet regularly to identify problems, suggest solutions and develop action plans. At least once a year it should meet with top management to report on achievements and present goals and achievements for the coming year or six months.
• Expect the program to evolve. Successful programs require a willingness to experiment and learn by trial and error. Very few programs are implemented without significant changes and adjustments. Programs should be evaluated regularly and should be revitalized over time. Otherwise they lose their effectiveness.
• Never use incentives in a crisis. Incentive programs aren't "quick fix" solutions to crisis situations. They take time to develop and to implement properly. It may require several cycles of bonus payment before the full benefits of the program are realized.
• Communicate. Make sure that every employee understands how the program works. Meet with them individually and collectively when you launch the program. Maintain interest and keep employees informed through newsletters, letters to their homes, bulletin boards or other communications. Review program basics, update employees on new developments, address problems and corrective measures. Hold special events to recognize employees and present awards in the presence of their families.
• Be prepared for negative feedback. At least in the beginning, discussions among drivers are likely to include stories of failed incentive programs at other companies or comments like "This is just another way to exploit us." To counter negativity, the council suggests frequent group and individual meetings to clarify details and discuss concerns.
The guide includes worksheets, evaluation forms, case studies and other program aids. It's free at www.safety-council.org/incentives.
