Summary
Do you have a reward and incentive scheme to reward superior staff performance? You should have that schematic. If you have one, here is a method that can boost even the most successful system.
The perfection bonus
The Perfection Bonus is exactly that: a bonus for perfect employee performance. It must be available to all employees. It doesn’t have to be in cash. But it should be of substantial value to employees.
Non-managing employees
The Perfection Bonus rewards employees when they meet or exceed all individual and team performance standards. It is not a reward for profit in business. Profit is a management responsibility.
Case Study 1: Travel to China
About 25 years ago I did a lot of consulting work for one of the largest hardware retail chains in Australia. They had reward and incentive schemes for store managers. These were profit based. The plans for store employees were based on sales. Both schemes were very successful. Employees could win trips to China for themselves and their partners.
One day the Director of Human Resources asked me to visit him. When I sat down, he said, “We have a problem with our sales incentives and rewards plan. What can I do for employees who have already been to China twice?” Outstanding employees won trips to China for themselves and their partners. It was a difficult reward to improve.
Case study 2: another consequence of success
This scheme involved factory workers in an assembly line operation. The plan had been successful for both the company and the operators. They had been able to reduce operating costs by approximately 33% and improve quality by more than 25%. They also reduced the number of operators by 20%.
Rewards were based on both individual and team performance. To increase the overall reward, the management consulted the employees. Everyone agreed that all future rewards should be gear based. Employees would be better rewarded this way.
unseen consequence
For no apparent reason, small bugs appeared in areas that had previously attracted individual incentives. These bugs affected only about 20% of all carriers. But they affected the value of rewards and incentives for all operators.
It seemed that some operators interpreted the move to total team-based rewards to mean that work that previously attracted individual rewards was now less important.
In both examples, a perfection bonus could have been useful.
Rules of the game
You cannot enter a perfection bonus unless your reward/incentive system is already working well. It is an advantage to reward “perfect” performance and not just “good” performance. That is the basis.
You should have instead…
- Measurable performance standards for each employee and team
- Effective performance systems that enable employees to meet performance targets
- Systems that allow employees to measure their own performance at least weekly and preferably daily
- Specific special rewards for each employee who meets performance standards
- System for regular employee review of the system and a system for implementing and measuring employee-initiated changes
- An absolute emphasis on meeting performance standards: Rewards and incentives are the positive consequence of meeting standards.
- A system that makes performance progress freely available.
In other words, you need a successful and effective performance-based rewards and incentives scheme before you consider a perfection bonus.
What “Perfection”?
You reach “perfection” of performance when each the individual and team involved meet all established performance standards.
It is not intended to replace rewards for meeting standards. It is an incentive to encourage employees to meet all performance standards and a way to reward achievement of that goal.
And it’s yet another way to keep employees and managers focused on performance rather than behavior.
conclusion
Even the most successful incentive and reward schemes can lose all their power over time. The Perfection Bonus is a method to revitalize your system maintaining and reinforcing the emphasis and importance of effective job performance measurement.
