What if your team doesn’t win the Game?

Incentives. Games. Contests.

Most companies use games and contests to get employees fired up and to drive results. Who hasn’t run a sales contest or offered an award for perfect attendance?

At the Great Game of Business, we call these “Mini-Games.” They’re short term, intensely focused, rapid improvement campaigns that affect a change, correct a weakness or pursue an opportunity. Like any game or sport, there is a goal, a scoreboard and a reward for winning.

A well-designed business game can be energizing, fun, educational and exciting. But what if you get to the end and you miss the target?

A business owner I work with was recently in that very situation. His particular game had the goal of reducing utility costs over a 90 day period, which didn’t happen. To avoid his team’s disappointment, he desperately wanted to pay the reward anyway and asked me for advice. My feedback wasn’t necessarily what he wanted to hear but in the end he agreed with the advice, which follows:

I had to tell him that if you give the prize anyway you’re training the team that a miss is as good as a win, and to expect something every time you run a game regardless of the outcome.

It’s better to have a post-game meeting, review the results together and have a discussion about what went right and what went wrong (if anything – just because you didn’t win doesn’t mean something went wrong.) It is possible the target was too optimistic, and you can discuss that.

Did everyone really take the game seriously and do everything possible to reduce utilities? Did they encourage each other to turn off lights, close windows, etc.? If not, it should not be a surprise that we didn’t win.

If someone suggests “It’s not our fault we didn’t win so we should get the prize anyway”, that’s an opportunity to talk about the fact that it’s also not the company’s fault. But in reality, it’s not about “fault.” It’s about creating a win for the company AND a win for the employees. Let’s learn together from this experience and do another game, perhaps on another target or maybe go after utilities again.

My advice to him – and to all businesses embarking on using games and contests – is – with the first few games, pick easy targets to virtually ensure a Win. Don’t share that info with the folks, but do it to let them get the feel of a win under their belts and to show you’re serious about awarding the prizes when they win. Every time, do a post-game analysis with the team: What did we learn? What can we continue to do better going forward, even after the game is over? If everyone involved doesn’t learn something about business from the experience, you’re leaving money on the table.

Get your game on and improve your business!

Bonus Plan Best Practices

Well, it’s year-end bonus season again.

If you have a good year and want to share some of the fruits of your labor with your team, great. But to simply do so without a well planned and executed bonus plan is a wasted opportunity.

So, here’s a list of best bonus and incentive practices so you get the most bang for your bonus buck.

Plan Ahead

Get an early start on next year’s incentive program by creating it before the year starts. Then, share the numbers and generate excitement. Pick out the main numbers that drive your plan, and make them known. Create scoreboards. Encourage folks to pay attention to the progress. Talk about the plan at every opportunity. Start and finish strong.

Make the bonus “self-funding.”

This means it comes out of profits over and above your target. For instance, if you’d be tickled pink with $90,000 profit before tax, then make your bonus kick in for profit dollars above $90K. So, in this example you might consider putting 25-50% of all profits above $90k in the bonus pool.

Make the bonuses large enough to modify behavior.

The potential bonus needs to be significant enough to generate excitement, and actually get your people to help generate the profits that lead to bonuses.

Divvy up the bonuses in an equitable way.

Many companies divide the bonus pool according to base salary, so higher-paid people get a bigger percentage. You might use “shares”, just like the stock market. Make each $5,000 of base pay equal to one “share” in the pool. So, someone making $25K has 5 shares, and another making $30K has 6. If these are the only two employees in the bonus plan and the pool has $10,000 in it, there are now 11 shares total and each share is worth $909.09 ($10K/11 shares.) So employee #1 gets $4545.45 and #2 gets $5454.54. However you do this, keep it simple.

Make the first year an easy win.

Nothing will discourage your people more than starting a new bonus plan and then not earning a bonus. Set a fairly easy target in year one to show folks you are serious and to give them a taste of winning.

Consider paying the bonuses 30 days after the end of the quarter to help cash flow.

After all, your customers don’t pay you until after 30-45 days. Maybe more. So why not cut the bonus checks after that same amount of time? It’s a great real-life business lesson for your team.

Keep the bonus separate from regular pay.

I strongly recommend bonuses NOT be put on a regular paycheck (but of course you must take out payroll taxes.) Do a separate check run, so it isn’t perceived as pay. Make it clear that this is an additional reward for achieving a goal and is NOT an entitlement.

Your incentive plan can be a business drain or a business gain. Take the time to get it right.