The importance of incentives Why do incentives matter? Simply, incentives affect every business and if you work with people you need to get under the
The importance of incentives
Why do incentives matter? Simply, incentives affect every business and if you work with people you need to get under the skin of why people stay, stick around and make sales. Everyone is influenced by an incentive. Everyone has motivation. Here are some of the reasons that paying better attention to what you do and say to inspire people can have a massive impact and ignite your business for the better.
- Productivity is everything
It might seem a bit out of fashion to say that you want productive staff. Surely, everyone wants to be the ‘laid back’ start up with a pool table and free beers? Well, like it or not, productivity drives business, and that in turn drives GDP – usually at a percentage of 2% a year. If we see a dip, we are all affected, on a national scale. Wage stagnation is a huge issue, and it concerns the government. In the March 2017 budget there was a real interest in growing growth, and in turn productivity. You can’t rely on expansion to increase GDP and filled jobs and a great employment rate doesn’t mean that our GDP is firing on all cylinders. So, why aren’t we productive? It’s many things at a macro level. It’s sector led. After the financial crisis, the financial sector was down to minus 3% a year productivity vs 4% pre crisis. It’s political. It’s everything – but it’s also simple. Great companies get more out of great people.For instance, matching the productivity of the US would raise GDP by 31 per cent, equating to around £21,000 per annum for every household in the UK (Gov.co.uk). We should all have a vested interest in improving how people work and incentives are a way to do this. They might be an incentive in how your office culture is, or how you reward great work – but incentives that drive sales, outcomes and maximise effort will have a huge impact.
2. Rewarded employers work harder and stay longer
There is a saying by Gary Vaynerchuk that every business professional needs to have stamped on them somewhere – to paraphrase – ‘tell me the ROI of your Mother’. In other words – not everything can be boiled down to a financial calculation or a funnel, where something goes in, does it’s thing, and produces a perfect line on the P&L.
Rewarding employees absolutely fits the bill of something that seems to detract from your productivity, your profits and your purpose, but absolutely makes sense. You could ask a child of 7 years old if they would stay longer and work harder for someone who was really really mean… or someone who was really, really nice. That’s as difficult as your calculation for being a decent business needs to be, but it doesn’t work like that – and that’s because there is a key question that makes people squirm.
Why are you in business?
Why does your business exist? You either think this is purpose – or profit. Perhaps your purpose is to make profit, or your purpose is to provide something great – but after your profits have come in. Do you squeeze employees for maximum short term value risking burnout – but getting increased productivity, or do you play the long game?
Could you honestly say that for you, making profit would be a by product of the end goal, which was improving people’s lives and being a great employer?
If you do – it might have great results. Employees who are paid better stay longer. They have lower attrition levels and low sickness and absence. They are engaged in transforming your business and more likely to innovate. Incentives are the best way to harness great intentions and to show employees you are serious about doing right by them. It’s not just ‘stuff’ either. Volunteering days. Experiences. Events. Time spent as a unit, team or one on one. Incentives and incredibly powerful.
3. Engagement is not the same as motivation
Engagement and motivation are tied together, but employee engagement is not the new word for motivation. Motivation can be influenced by factors like salary, at least in the short term. On the flip side, engagement is much closer to quantitative benefit factors such as the pride they have in their work, how much they are trusted and trust colleagues, how their skills and values are aligned with the businesses, and the culture and camaraderie they feel. Employee engagement is a broad church, and you need to be batting on all the fields, from the hygiene factors of satisfaction and fulfillments, right through to the pinnacles and ‘cherries on top’ – the rewards and perks and incentives. Incentivising by understanding where you are in your business stage, and what your company needs will have massive benefits.