1) Separate. Keep incentives separate from regular pay or benefits. When incentives are issued with the regular pay, employees will eventually come to think they are entitled to it and the effects will be lost.
2) Individual. Keep the incentive on an individual level if possible. Group incentives can be useful in some situations, but you want every employee to work their individual best, so you should recognize them on an individual level.
3) Timely. Regular feedback should be provided. I recommend no less than weekly and if possible, daily. Waiting for a month or even two weeks causes employees interest in the incentive to fade.
The simplest form of incentive is recognition. Everyone likes to feel appreciated. A “Thank you for your hard work solving that problem,” or “Good job on handling that project” can go a long way. If you never use any other kind of incentive then you should be doing this. This can be formalized into a program such as “Employee of the Week/Month” or with special “Recognition Certificates” that they can hang at their desk or work area. Remember though; connect it to specific, high-quality work performance. You want the employee to understand that you are appreciative of their best work, not of less than their best.
The next form of incentive that can work is what I’ll call a give-away. This is something non-monetary that you give the employee for exceptional work in a specific area. Commonly, these can be things such as apparel with the company logo, gift certificates to local restaurants (make it a nice place and a large enough value for two people), consumer appliances like TVs or DVD players, or possibly an extra day off of work. These are usually one-time incentives that only motivate in the short term, but they are simple and can be effective.
More complex and typically more effective, incentive plans take more time to set-up and administer. For each position you have, you would need to look at the job, determine what is measurable about it and correlate the incentive to that task.
For example, many automotive technicians are paid for their work based on the book rate for the repair or job. If they finish in less time than the book says they should, they still earn the money for the time listed. This would seem to be an incentive on first glance, but I’d point you back to rule #1 for incentives that I listed above. The Technician will come to see this money as an entitlement. To them, it’s just part of their regular paycheck. And when you consider that if they don’t finish based on the book rate, then they can be -in essence- penalized, then you can see why this doesn’t motivate.
A new incentive plan could be created for the technician combined with the book rate system. For example, for every fifteen minutes that the Technician finishes under the listed rate, they earn an extra dollar. So if they finish a two hour job in only one hour, they would earn four extra dollars. That may not seem like much, but over the course of a week, that can add up to a considerable amount. Obviously, this assumes that they are performing high-quality work. If the work isn’t up to standards then you don’t want to reward them for it.
This may sound like a simple program, but it does add work for both the manager and the employee. Extra time and closer supervision will be necessary to insure the quality of the work and that the time being recorded is accurate. Looking back to rules #1 and #3, it will require an additional check or at the very least time to explain the bonus and require the manager’s regular and consistent administering of feedback to all of the employees. It can also affect work outside the department. Accounting or Personnel departments may need to be involved to make sure that the bonuses are administered properly. What seems like a simple program can create added work but the benefits of increased employee performance will often outweigh that.
While this example is for the service department, it could be applied equally throughout the dealership. For any measurable performance task, an incentive can be applied. It could be the number of titles processed correctly by the title clerk, the number of cars cleaned by the Detailer, the number of oil changes performed by a technician, the day financial statements are completed by the controller. All of these can be improved through employee incentives.
If you are interested in starting your own incentive programs always go back to the three rules to decide if it will be effective. Ask yourself, is it Separate, Individual, and Timely? If the answer to all three is “Yes” then you are on the right track to procuring the best performance from your employees.
Vol 2, Issue 7