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Changing Employee Behavior Starts By Getting the Incentives Right

Advisory Practice Leader

A number of factors determine business success -- but the most important by far is employee behavior. Employees are the backbone of every company, and every individual’s behavior impacts your company’s overall performance.

The Impact of Incentives on Changing Employee Behavior

Structured incentive programs are often an extremely effective way to align employee actions toward a common goal. A study by the Society of Incentive and Travel Executive found that when incentive programs are implemented, people increase their performance by an average of 27%.   If you structure your program right and match it closely with your company's needs, you can achieve even greater performance gains. 

An incentive program isn't just a matter of throwing money at people.  While employees might respond to this in the short term, it  won't have a long term impact on changing employee behavior.  Effective programs take careful design to be successful in rooting out the negative behaviors that hurt the company culture and morale.

Group incentives are an option to motivate teams within your business.  These can be sometimes be a great way to build morale and productivity, but can fail to call out individuals that needs to improve.  Some individual actions that impact the bottom line -- like health and wellness goals -- are difficult to address in a group setting.   If you endorse Pareto’s Principle that roughly 20% of your employees drive approximately 80% of your costs (health care or workers’ compensation), then adopting a system that addresses each of your employees behaviors is ideal. 

​How Are You Rewarding Employees?

Consider how you reward and recognize your employees right now and ask yourself the following questions:

  • Is the award or bonus based on improvement or just meeting the status quo?
  • Does the incentive feel like a benefit, or is it something that people have come to expect? 
  • Are there set guidelines on employee behavior, and are they enforced?
  • Does your program give recognition to high performers for their contributions and hold underperforming employees accountable?
  • Can the money you award to our employees now be applied to a more meaningful outcome for the company and the employee?

These are some of the things to think about when evaluating a current or potential program.

Starting An Incentive Program that Motivates Employees 

We call our approach to incentive programs the Behavior Bank Account.  It's a flexible system that has proven effective in changing employee behavior to drive increased profitability for the companies we've worked with.

The most important part of the process is the brainstorming that goes into the design. For any incentive program to succeed, your management team needs to agree on the employee issues that truly affect profit and loss.  What expenses do your employees contribute to, and how can you enlist their help in the battle to control costs?  

From there, solicit the input of the employees themselves.  Including people from all levels of the company when designing a program is key to getting buy-in for the finished product.

At this point, you will know who is invested in the company well-being and wants to be an active participant in the system. You will also notice those that do not. [Maybe you already know who they are.] This is a time to recognize and address the good and bad behaviors, and clearly define the goals for improvement and changing employee behavior.

How the Behavior Bank Account Works

With the Behavior Bank Account approach, a specific dollar amount is “deposited” into an account for each eligible employee at the beginning of each year.  The amount of money you "deposit" can vary, but many companies find that $500 is a meaningful amount.  The employee is guaranteed they will receive the whole dollar amount, given there are no "withdrawals".

A withdrawal is made from an account whenever there is an occurrence of unwanted behavior by the corresponding individual. Areas where there are frequent withdrawals highlight education and training needs, allowing you to adjust to your efforts to have the most impact.   This structure focuses on changing employee behavior where it's most needed, and puts employees in the driver seat of the whole process. They have the initiative to control their actions and contribute their individual value to the company’s success.

This incentive can also be fun way to build the company culture with a year-end meeting by publicly presenting the employees with their checks. This recognition allows others to see the performance of their peers and build motivation for the next year.

​Want to learn more?

To learn more about changing employee behavior with Behavior Bank Account and how you can use it successfully in your business, download the webinar recording from our recent HNI U event.

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Topics: HR / Employee Benefits