Bonus vs Incentive
Updated: Dec 4, 2020
In a recent sales meeting with a CEO, I was told that their company would not be interested in an incentive program because they acknowledged and rewarded employee achievements with commissions alone.
My response was so do a lot of other companies, what sets you apart? He just ended up saying that was good enough. Well may be they were good, but why be good when you can be great? Why would an employee not leave that company for another company that offers commissions and also an incentive sales program with a retreat?
Another CEO said that they give Cash Bonuses and without polling or asking the employees, he said they like the cash, they would not be interested in an incentive travel program. Incentive programs can really be so much more than travel, but for now let’s talk about the differences between a bonus and an incentive.
The purpose of an incentive program as it concerns the company’s bottom line is tied to larger business goals. The business goals can range from increasing sales & revenue, to growing your customer base and/or increased productivity whatever the purpose, it should be measured, maintained and monitored.
If you want different results than you always gotten, then you need to do something different than you’ve always done.
Many companies give out cash bonuses which over time tend to become expected and function as though they are part of their salary and overall compensation. Oftentimes the cash is pre -spent and accounted for by the time it even hits an employee’s account.
If not, it’s quickly consumed by unexpected expenses, used to pay bills or debt and overall is non-memorable and effective. The Cash is King model is outdated because it does not produce memorable experiences and the experience industry is alive and well and what drives millennials.
Since a cash bonus is seen as part of income, an employee is more likely to leave for another company that exceeds his salary and bonuses combined. While bonuses tend to reward past actions, incentives aim to encourage future results.
A bonus usually involves doing a good job and getting along with everyone. While an Incentive plan, focuses on a near term goal that everybody understands and perhaps participated in creating.
When looking for employment, people don’t look at the money alone, but also all the other perks and benefits, they respond to and are lured in by incentives—and they want to take on the challenge of the program.
Millennials and people in general tend to leave jobs where they are no longer challenged. Incentive programs should lead the way in creating bigger and better challenges each year.
There are so many moving elements that we at Premier incorporate into an incentive program with the actual accompanying sales retreat.
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