Not Satisfying Promised Incentives Is A Management Error

I frequently have to fight hard to have an incentive-based plan implemented in a business, however, I recently succeeded. How do I know it worked well? Because we eliminated overtime, and the men were still wanting to do another job at 10:00 in the evening. They were wanting to work Saturdays, even Sundays, inspired by a huge incentive check. As designed, achieving the incentive bonus not only required extra work, but also required the men to follow the rules and do the other duties expected of them such as reporting accurately, filing in the appropriate paperwork and handing it in on time.

In this particular situation, after a while the owners look at the incentive checks and nearly had a heart attack. Incentive checks are frequently larger than the normal paycheck, and the owners were wondering why they were giving this money to employees, forgetting that it represented extra work accomplished and remembering they built in the expenses as well as whatever percentage of the “extra revenue” they decided to keep for themselves (at least 50%). This is what made the program and incentive checks extremely fair and a terrific deal for everyone. That is, until management stopped paying them.

Why? Because the men were not doing their paperwork and rather than correct the situation by taking a leadership position and training the men effectively, the owners figured they now had a reason not to pay the incentives. The incentive plan just became the self-destruction plan. Now, it’s open warfare. The men are angry and planning their exit strategies for certain, believing that the owners are ripping them off by not paying the incentives as promised. They are not working harder or faster anymore, the owners are not getting the paperwork and are letting this happen, destroying any respect for any of the rules as they figure they would rather not pay the incentive anyway. The whole program is going to drive the employees out rather than keep them on for the long-term.

What went wrong? Loss of the vision, lack of belief in the incentive program, and greed. I would also bet they are not tracking the incentive payables so it has become the 800-pound gorilla in the room that no one is talking about. There, but invisible. So, what to do? Admit the error to the men, train them, help them produce the paper flow as required, pay them current on the incentive and pray the damage is not irreversible.

This does not happen all the time but it happens enough to merit warning. Owners tend to forget the value of the incentive system and workers have to be constantly trained, reminded and resold. The cash helps a lot but is not enough by itself without supporting service and input from management. Solve the real problem which is the owners’ neglect in properly administering the program. Take responsibility for the program’s success and do not use the men’s failure–in this case the paper flow–and remain committed to your plan or be prepared to take real losses. Candid discussion, employee reviews, and career path training are all initiatives that would preempt this problem and afford ample opportunity to cure the issue effectively and immediately.

We all err from time to time. How we handle it remains the true mark of a good manager or owner.