A good friend of mine told me last night that he had turned in his two weeks’ notice at his job. He’d been with the company for over two years, but had been getting steadily unhappier. The straw that broke the camel’s back though proved to be an incentive program.

Now, I’m big on incentive programs. I think they’re a great way to get people motivated, bought-in, and (best of all) to give cool stuff to your employees. Because everyone loves cool stuff. Do you ever wonder why it is companies give out bonuses? It’s because they like to incentivize performance, and the theory is that such incentives will drive better performance. So, the fact that this idea should be applied not just to management, upper-management, and executives, but should also filter down to the front line strikes me less as a “why would we do that?” kind of concept and more as a “duh” moment.

But they have to be good incentives. If you are offering something undesirable, it’s hardly a reason to perform, is it? Cool incentives include:

*Cash money!
*Giant plasma TVs. Heck, even normal-sized plasmas.
*Gift cards
*Paid time off

I think the other thing that a good incentive program should have is an achievable, measurable goal, with the emphasis on achievable. If you offer a week of vacation to the first front-line employee to save your company $100 million, odds are good you’re just being specious. [Not to mention shorting him just a little bit in terms of reward-to-accomplishment ratio.] If you offer an incentive for “awesomeness,” you are leaving a lot of room for the perception that your decision was based upon favoritism, rather than performance.

Good accomplishments to incentivize:

*Performance on reviews
*Sales
*Completion of landmarks [training, time with company, etc.]
*Consistently meeting clearly articulated standards [punctuality, dress code, etc.]

Let’s apply these two principles to the incentive plan that ended up sending my friend out the door. The reward offered was a 52″ plasma TV for an employee who had all of his training completed. We’ve got a cool reward and an easily measured goal that can be accomplished. So far, so good.

Then what was the problem? Certainly the plan worked: my friend got fired up and completed his training. Unfortunately, come the day that the prize was to be awarded, his managers announced that it would be going to the team member who had completed the most sales. Now, by itself, this wouldn’t be a problem, as it further rewards good performance. The problem was: my friend works in receiving. It’s not a sales position.

He felt tricked. Here, he had been told that he could potentially earn a great reward for accomplishing a task, but no matter how admirably he achieved it, he would never even be eligible for that reward. With that single twist, his managers managed to take what was obviously an effective incentive program (it did get him to complete his training) and turn it into an employee severance incentive. They lost a two-year employee because he felt that they had been dishonest.

The two fixes here are simple:

1. Be clear up front about conditions. If an incentive doesn’t apply to a certain group, let them know. You might even want to let them know why they aren’t eligible, too.

2. Broader eligibility for incentives is a good idea. Do you think that anyone else from the receiving department will care about completing their training next time?