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Do you have a rewards and incentives plan to reward superior staff performance? You should have such a scheme. If you have one, here is a method that can power 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 does not have to be in cash. But it should be of substantial value to employees.
Employees, not managers
The Perfection Bonus rewards employees when they meet or exceed all individual and team performance standards. It is not a reward for making a profit in the 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 Australia’s largest retail hardware chains. They had reward and incentive schemes for store managers. These were based on earnings. The plans for the 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 rewards and incentives 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 managed 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 individual and team performance. To increase the overall reward, management consulted employees. Everyone agreed that all future rewards should be team-based. Employees would be better rewarded this way.
Invisible consequence
For no apparent reason, small errors appeared in areas that had previously attracted individual incentives. These errors affected only about 20% of all operators. But they affected the value of rewards and incentives for all operators.
Apparently some operators interpreted the shift to team-based total rewards as meaning that work that had previously attracted individual rewards was now less important.
In both examples, a Perfection Bonus could have been helpful.
Rules of the game
You cannot enter a Perfection Bonus unless your rewards / incentives system is already working well. It is an advantage to reward “perfect” performance, not just “good” performance. That is the basis.
You must have instead …
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Measurable performance standards for each employee and team
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Effective performance systems that enable employees to meet performance objectives.
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Systems that allow employees to measure their own performance at least once a week and preferably every day.
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Special rewards specific to each employee who meets the performance standards.
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System for periodic review of the system by employees and a system for implementing and measuring changes initiated by employees.
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An absolute emphasis on meeting performance standards – Rewards and incentives are the positive consequence of meeting standards.
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A system that makes performance progress available for free.
In other words, you need a rewards and incentives scheme based on successful and effective performance before considering a Perfection Bonus.
What “perfection”?
Achieve “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 the achievement of that goal.
And it’s another way to keep employees and managers focused on performance rather than behavior.
Conclution
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 while maintaining and reinforcing the emphasis and importance of effective measurement in job performance.