Financial Incentives That Work: Steps to Boost Performance (& Have Fun)

RCS Influencer Danny Kerr says that money is still number one when it comes to remuneration and incentives. 

When it comes to employee benefits, the Internet is saturated with stories about performance-based financial incentives being so, well, “OK Boomer.” If you were to believe the headlines, performance bonuses today should be all about more meaningful experiences, right? 

Let's be honest; that's just clickbait. 

If your roofing team doesn't have enough money to pay their bills, put food on the table, and gas in the car, then how is a mountain biking weekend in Utah going to help them, let alone incentivize them? 

That's not to undervalue the experience-based incentive programs...they definitely have their place. But, I will get into that later. 

Let's face it, money is still number one when it comes to remuneration and incentives. It's what draws most people to a job in the first place. 

But money only incentivizes to a point and when those incentives are well structured. 

Keep incentives simple 

A great TED Talk by career analyst Dan Pink talks about a study (that has been replicated around the world) that takes two groups of people who have to solve the same puzzle. One of the groups is offered financial incentives from an extremely complex incentive structure; the other group has a simple set of rules with a clear destination to get to (and no financial incentives). 

Guess which group solved the problem quicker? The group with the simple set of rules solved the problem on average almost four minutes faster. 

Why? Because complex incentive structures dull thinking and block creativity. 

If you have a structured incentive plan that is like a ladder with clear goals, objectives and timelines, it creates a healthy space that sparks ambition. It's achievable. 

It's also important not to waiver too much from it. (Yea, he's a nice guy, but nice doesn't stop a company from going under.) 

I don't increase people's base pay if they don't hit their goal. It's not how many years you've served, but how many years you've hit your goal. 

And those goals are based on actual deliverables. So, say you are a project manager, you will have a tangible ROI that your job is attached to – that will include dollars produced, gross profit made, and quality ratings from the customer. 

If you have a direct deliverable tied to the company's deliverable it's clear for everyone. Simple. 

And should incentives be a collaborative process? In their first couple of years, no. But with more experienced staff, definitely. The best question an employee can ask the employer is: “What do I need to do to make more ROI for your company so I can make more?” 

The financial incentive ceiling 

But, when it comes to financial incentives, there's a cap. 

In Dan Pink's TED Talk he refers to numerous science-based studies that found that the higher the incentive, or as he calls it, “the sweeter carrot,” the worse the performance. Yes, you read that right. 

It just so happens that when sufficient pay is in place, the additional performance boost from financial incentives is minimal. 

That's when the non-monetary incentives we spoke about earlier become far more effective motivators. AND, this is also where you start really fostering that performance culture in the business. 

People at this stage are seeking autonomy (to direct our own lives), mastery (to get better at something that matters), and purpose (to do what we do for the service of something larger than ourselves). 

I experienced this first hand at College Pro. They had a great structured incentive program, but what motivated me to work harder was not the bonus, but the annual awards. I wanted to achieve the Star Manager Award and be part of something great. It drove me far harder than the monetary bonus. 

Human motivation 

52% of employees surveyed would leave their job for one with the “right” benefits. 77% said that benefits are a “key part of their compensation”—that’s 10% more than 2020 – Prudential Insurance 

One of our BTA members, Condo KANDY, is exemplary when it comes to non-monetary benefits. And it starts from day one. 

In the final rounds of an interview the folks at Condo KANDY will ask the new recruit what they love that costs under $50. Then, on their first day, that one thing is either on their desk or in their truck. 

This goes a long way with new staff. They know how to motivate employees and it's why their retention is so high. 

But non-monetary incentives require integrity from leaders and a willingness to have an open conversation. Always go ground up rather than top down. First, chat with your team about what THEY think their goals should be and what the incentive should be (steer clear of gift cards, make it personal). Tell them what you want to improve and ask them how they think you can gamify that. 

Now for the timeline. Don't drag it out. 

A year-long incentive can disincentivize someone. Compress the timeframe and your team will act more urgently and you will see productivity soar. Remember, recognition delayed is recognition denied. 

Betting at work! 

We make bets at work? Yes, I make super fun bets (or deals) with my team and they really help drive performance. If a team member is inspired by something, they make a bet with me. 

Take Benji Carlson, BTA's Assessment Specialist. He came to me one day and bet me that he could hit this one crazy ROI goal. I said, OK, if you do, what's the deal? He wanted to go cat skiing. We shook on it. 

Sure enough, he smashed the goal and just a few months later was off fulfilling his dream of cat skiing. Win-win. 

Danny Kerr is the Director of Assessment of Breakthrough Academy. See his full bio here. 

Breakthrough Academy (BTA) helps roofers systemize their companies to grow. We inject contracting businesses with the infrastructure they need to scale, help them make more money, and help owners to work a lot less by implementing intelligent systems. During the first 12 months in the program, average Members see significant time savings, 21% increase in revenue, and 40% increase in net profit. BTA works with over 450 contractors across North America, managing over $1.3 billion worth of revenue, and was rated Canada’s 213th fastest growing company by The Globe and Mail’s Report on Business in 2021; the fourth consecutive year on a national growth list for the brand.