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Good intentions can easily backfire when it comes to rewarding staff for their performance. Rewards or incentives can anger and frustrate people as much as they can help to motivate and retain them. Here are half a dozen ways in which business can plan an effective incentive scheme:

* Emphasise the importance of the scheme by allocating awards at annual intervals. The more frequent the award, the less reactive the response - a monthly or quarterly award will quickly lose its coveted status.

* Simplify the assessment process by setting specific categories for measuring performance. These could range from areas of increased productivity to efforts on special projects and expatriate or hardship bonuses.

* Identify key skills to decide who is eligible. Do not discriminate against permanent, part-time, temporary or administrative staff. They may have contributed as much as any other worker.

* Set benchmarks to track how people are performing. There are various software packages available that allow staff to check their own performance from their desktop PCs. These systems reduce the antagonism that can be caused when human judgement is involved.

* Work out the best way to announce the reward. What is its purpose - to educate others about what constitutes exceptional performance or to incentivise one person? If awareness of the reward will create discontent among other employees, it is better to thank the winner in private. If you want to motivate others, thank the winner publicly.

* Responses to personalised awards can vary, and for this reason they are better avoided. Offering a generic award, such as equity payments, lump-sum bonuses or extra holiday, will result in a more predictable response.

Source: Steve Carter, managing director, Robert Half - CIMA

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