The Incentive Formula: How To Get The Most Out Of Your Incentive Programme

By Chris Parnham.

We all remember from school days one or two key equations. Perhaps the most memorable being e = mc2, Einstein’s theory of relativity, or the Pythagorean Theorem a2 + b2 = c2. This one lays out the special relationship between each side of a right triangle: the squares of two shorter sides of a right triangle add up to the square of the third side.

Now, in the world of events, I’d like to suggest the adoption of a new formula, the theory of incentives. This theory can be used to prove the effectiveness of incentives and if applied correctly can guarantee that your incentive programme will more than double performance, productivity and profits.

m + i + t = p ²

Meaningful reward + Investment + Time = Performance squared

The first element of the equation is ‘meaningful reward’ (m). The key word here is meaningful. An incentive prize has to be meaningful and therefore valuable to the audience it is aimed to incentivise. You may know your audience well enough to know what motivates them, but if you don’t, then some research will be required.

For example, an audience of young working mums are unlikely to be motivated by a long haul trip without their families, but they may step up a gear to earn the reward of a year’s paid child care, or a family fun day.

A mature sales team might well be motivated by a traditional long haul incentive trip packed with champagne and unrepeatable wows, but Generation-Z hi-tech programmers may prefer a flexible first class airline ticket to the destination of their choice.

‘m’ is the reward that means something to the potential winner, and thereby encourages them to change their behaviour in order to achieve it.

m + i + t = p ²

The next element in the equation is Investment (i). Massive performance growth doesn’t come cheap, but ‘i’ is always less than p², the effect on performance. So whatever you invest, you get more back as a direct multiple.

Providing you get the other elements right, you can’t lose.

A good starting point is a months salary. A meaningful reward that is worth an extra month’s salary is certain to change behaviours and attitudes, and get you well on the way to more than doubling someone’s contribution to profits.

m + i + t = p ²

Time (t) is the final element of the equation, and this relates to the timing of the incentive programme as well as the timing of the reward. Awarding an incentive or reward to someone as a surprise thank you after exceptional work, will do no more than encourage this same person to repeat their exceptional performance. The timing is wrong.

Telling a whole team about the reward that will come in 12 or 18 months’ time positively effects everyone’s performance as they strive for the prize. Also, the timing of the reward itself is key. Don’t reward a team with a trip during your busiest time, as winners will end up feeling guilty, or worse still, taking work with them.

So as the latest entrant to the world of mathematics, this equation can be applied faithfully to deliver double digit growth in performance, profits and commitment.

m + i + t = p ²

Meaningful reward + Investment + Time = Performance squared

· Make sure your reward is meaningful and thereby something the potential winners really want.

· Don’t be cheap. Good Investments pay dividends, whereas coins in a fountain only deliver unrequited dreams.

· It’s all about the timing. Get it right or miss the boat.

It doesn’t take an Einstein or Pythagoras to create a good incentive, but it takes a winning formula to make one that actually makes your business better.