Tag Archives: Achievable

How Do You Incentivize Employees to Document SOPs? Six Observations

Situation: The CEO of a specialty component company wants to standardize documentation of company procedures covering sales, production and ISO documentation. This will take time and effort, and employees are concerned about accountability for poor results. How do you incentivize employees to document SOPs?

Advice from the CEOs:

  • Are employees are being asked for accountability without being empowered or rewarded for performance? Currently, there is nothing about employee performance that is directly tied to:
    • Longevity,
    • Dollars in raise, or
    • Share of the bonus pool.
    • Everything is determined at the CEO’s discretion.
    • Why would anyone want more accountability if they feel that they have little control over their jobs or future at the company?
  • To increase accountability and drive, employees must be given control over the factors tied to retention, pay and bonuses.
  • To create an effective system for employees to document standardized SOPs they need:
    • Incentives that are under their control to achieve the objective – creating standardized SOPs.
    • Objectives that are achievable with clearly stated rewards for performance.
    • Performance evaluations tied to clearly stated objectives, discussed with and agreed to by each employee, which drive raises, bonuses and rewards.
    • The messaging about these changes must be delivered with energy and passion. Employees must feel excited by this opportunity.
  • Understand that this may cost 10-15% in increased overhead but will boost the value of the company way beyond the cost.
  • Employees need to know the vision for the company and must be empowered to achieve the results to fulfill this vision.
    • The why behind the desire for standardized SOPs is just as important as the incentives created to achieve them.
    • The why must be clear, simple, and must be understood by the employees for everything to work.
  • To further motivate the team, involve them in designing the incentive program.
    • Ask what they want. Maybe it’s something as simple as a fun day with the team.
    • If they aren’t asked, the danger is that they will not respond to the incentive offered. Money is not the only, and in many cases is not the most effective incentive.

Are Negative Incentives Effective? Four Perspectives

Situation: A company has been struggling to meet objectives. Financials aren’t completed on schedule, limiting the ability of the CEO to manage by the numbers. Milestones are behind schedule. The CEO was advised to consider stringent measures, including financial penalties, to force compliance to performance goals. In your experience, are negative incentives effective?

Advice from the CEOs:

  • There are at least three potential roots of this problem. Have your hired people who lack the skills to perform their functions? Is there a clear plan and set of priorities in place? Or are you as the CEO being consistent in your demands of the team? You need all three to meet your objectives.
  • Be sure to set SMART objectives: specific, measurable, achievable, realistic and time-bound. In addition, make sure that everyone understands how their performance impacts not only the plans of the company, but their salary and benefits as an employee. Be sure that everyone has the resources to complete what is expected of them.
  • Be careful if you are considering financial penalties, and negative incentives.
    • Many studies have shown that positive reinforcement is more effective than negative reinforcement.
    • If an employee is chronically behind on deliverables, ask what is happening and why they are not getting the job done.
    • If the response is not satisfactory, and performance doesn’t improve, you are better off terminating the employee than using negative incentives.
  • Often the question is not one of motivation but one of focus. Focus has to start at the top, and has to be maintained through departmental and team leadership. Make sure that there is proper training in setting and monitoring achievement of objectives throughout your leadership team. It helps if everyone clearly understands what the company is trying to achieve.

Key Words: Objectives, Achievement, Failure, Schedule, Manage, Numbers, Penalties, Compliance, Positive, Negative, Incentive, SMART, Resources, Achievable, Motivation, Focus, Training, Great Game of Business, Jack Stack, Understand