Tuesday, June 7, 2011

How to develop a system of incentives for staff?


Many companies will sooner or later face the need to develop or revise the existing system of incentives for staff. This is because previously such a system is either absent altogether or present only nominally, but in fact "not working", ie not significantly affect the behavior of workers and even ignore them. Practice shows that this situation usually occurs for the following reasons:
Service functions and criteria for evaluation of staff are not clearly formulated or communicated to workers who can not represent or understand what their requirements makes the company's management.
Staff organizations do not have the necessary skills and abilities to carry out performance standards and requirements of managers. In this case, people should be taught.
The proposed incentives do not correspond to the internal motives of workers, ie incentive program does not account for the overall structure of motivation of staff. In particular, this can result in incorrect use of monetary incentives as well as in the rejection of non-monetary incentives (natural, moral, institutional, etc.) that affect the motivation and loyalty of employees.

In the system of incentives for staff is dominated by negative stimuli, which has impact on people and causes them to resist. 
The organization is not debugged flexible and responsive system of staff appraisal. In this case, reduces the quality of employees and managers do not receive adequate information on the performance of their subordinates.
Incentive program contradicts the prevailing organizational culture of the company, ie This program does not account for the established values, traditions, rules and norms of human behavior in organizations.
The proposed incentives have little meaning for people. For example, we show that monetary incentives (bonuses and penalties) affect motivation only if their size is at least 20% of permanent salaries.
To avoid these and other errors, the process of developing a system of incentives should not be a voluntarist and reflect the views of only one or two managers responsible for this work. Develop incentive systems personnel should be conducted with the help of special methods and based on objective analysis of the situation within the organization and the labor market. To this end, we propose the following sequence of actions.
Firstly, the first useful to conduct a training seminar for leaders of companies dedicated to the issues of motivation, incentive and remuneration of staff. Creating a high motivation among employees to achieve company goals - a challenge for all managers, not just the CEO or HR manager. Therefore, the leaders of the organization must be familiar with basic theoretical concepts and practical approaches to motivate staff to consciously apply them in their daily activities. At such a seminar could be considered the following issues: to lassicheskie and modern theories of motivation, diagnostic methods of motivation, types and forms of labor incentives as necessary to pay the employee, the principles and methods of forming the fixed and variable parts of salaries, the development of a social package, motivating personnel evaluation and others. The main objective of the seminar - to mobilize and set up a management team for active and fruitful work. Without the direct involvement of all managers to develop and implement a new motivational system will be extremely painful and inefficient.
Secondly, it is necessary to diagnose the existing incentive system in the organization. This step is performed in order to clarify the situation within the organization and analysis of the real causes of low employee motivation on execution of his duties and requirements of managers. During the diagnostic analysis of related areas, such as features of the organizational culture of the company, especially jobs and working conditions. The main methods of diagnosis: working with documents, interviews with managers and staff. It is better to invite a management consultant who can perform an independent and qualified analysis of issues related to motivation and stimulation of labor.
Thirdly, it is necessary to diagnose and analyze the structure of motivation of staff of the company. At this stage of a written survey of workers using a special questionnaire with subsequent processing of information received. The survey we have data on the types of motivation for each individual worker and the general picture across the organization (unit). Without it, you can not develop optimum types and forms of incentives that would be really forced people to work in new ways and comply with guidelines. From long practice of personnel management and results of special studies are known various types of employee motivation, which in a given ratio are present in every person. Knowledge of these types need to pick up to each person or group of special incentives and forms of stimulation, orienting their best to comply with performance standards and goals of the company.
Fourthly, it is necessary to examine features of the existing remuneration system in the organization. At this stage, an analysis of all available information to determine the optimal wage workers. This takes into account existing practices, the company's capabilities, the prices of the regional labor market needs of workers, social scale wages. For the decision to wage an analysis of characteristics of workers (their skills and work motivation) analysis of the features of work (types of work performed, service functions and responsibilities, indicators and standards, working conditions).
Fifth, the place to develop and support a permanent part of wages. At this stage, are determined or adjusted the scale of salaries, statutory performance indicators are defined qualification allowances and extra payments for special working conditions. To develop salary scales may use different methods such as ranking and classification work, pofaktornoe comparison score the points (rating).
Sixth, the development is carried out the variable part of salaries. At this stage, analyzed the possibility of using the organization of different types of bonuses, such as the premium for individual results, the prize for his contribution to the work unit, the target premium, the premium on the overall results of the company. For each prize being developed formulas, or techniques specific to existing practices and bonuses in the company. They also review the possibility of introducing other pay systems, such as tariff-free system, lump-sum systems, management by objectives.
Seventh, we performed an analysis and justification of the benefits package. At this stage, produced by the principles of distribution of the social package (surge, according to seniority, hierarchical), determined by its composition and its monetary valuation for the various categories of employees.
Eighth, the developed non-cash types and forms of stimulation. At this stage, produced a variety of stimuli (natural, moral, institutional, paternalistic, and others) with a specific organization, the requirements of its leaders, especially of workers and jobs, the organizational culture of the company, the experience of other organizations. Develop incentives "tied" to specific official positions, personnel categories, individual employees and applied in various forms (advanced and supportive, collective and individual, positive and negative, direct, current and future, common, standard and competitive). Without the use and implementation of non-monetary incentives, any incentive program for staff will be lopsided and ineffective.

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