The Incentive Program for HPO’s

Bonuses are a tried-and-true way to motivate employees to meet and exceed performance goals. What are the most successful ways to compensate employees for high performance yields? According to a recent article from Talent contributor Andre de Waal, there are 12 characteristics that prosperous companies keep in mind when they give a little extra to their workers.

There are two sides to bonuses – some say the practice can increase productivity and performance while others say it leads to higher pay inequality. Regardless of what side your organization favors, you need to address the importance of bonuses as a sustained organizational success method. Bonuses can help your business become a high-performance organization (HPO).

You might be wondering what exactly an HPO is:

An HPO achieves financial and non-financial results that are significantly better than those of its peer group for five years or more by disciplined focus on what really matters to the organization.

A 2003 study from the HPO Center pinpointed characteristics of high performance and was published¬† last year in What Makes a High Performance Organization: Five Validated Factors of Competitive Advantage That Apply Worldwide by de Waal. The study was distributed worldwide and nearly 2,400 respondents from 1,475 organizations in 50 countries filled in the questionnaire. This in turn provided the 12 characteristics that are common among the most successful bonus-oriented organizations. Here’s a preview of the first four:

Fair reward and incentive structure: Employees must see that reward systems pay out a fair compensation, and the reward system should value the employees.

Reinforce core values and strategy: The best organizations devise and implement reward systems that reinforce their core values and strategies. Companies should make sure all policies always are congruent with their strategy, even when they use different types of pay policies.

Link pay and incentives to long-term performance: Aligning employee incentives to an organization’s long-term performance has a positive link to productivity. Many companies have found success creating a reward system that contains short-term performance indicators and long-term performance indicators.

Rewards based on relative performance: Success should be rewarded based on relative performance, not just competition.

Other characteristics include things like group compensation and pay-for-performance. What kind of bonuses do you offer to your employees? Rewards based on results are most common among the studied HPO’s, not tenure- or seniority-based incentives.

It’s important to note that the research does not indicate that having a successful incentives program will directly correlate with a successful business. Having a well-operating bonus program can help increase performance rates, helping to create an HPO. It may not have to be a big rewards program, but any program at all is better than nothing – and there’s research to prove it! You can find out more by clicking here to read the full article.

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