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Effective incentives

Bonus schemes need to be carefully targeted to be beneficial, says Tony Groom

You are introducing an incentive scheme for your staff, but what exactly is it that you want to reward, and is the bonus being paid to those who are producing the results?

At main board level most finan-cial incentives are linked to the company’s overall results, but even at that level non-financial measures are increasingly being used.

What about site managers and project directors? It rarely makes sense to link their bonus payments to how well the company is performing relative to other construction companies - it is too remote from their day-to-day site responsibilities.

So what can they influence?

 The delivery of a construction job; on-time and on-budget.

 The health and safety of all site workers.

 The ongoing development of themselves and their staff.

 Co-operation within their business to increase the value of the company as a whole.

 Building long-lasting successful relationship with suppliers and other contractors.

If their bonus totally depends on the delivery of one individual project, why should they co-operate with the release of resources from their project to help others within the organisation, even though success of other projects may be far more important to the company?

If you reward an exclusive focus on the success of one particular project don’t be surprised if the employees disregard the bigger picture.

Focusing on the matters directly within their control, and with a large bonus at stake, does indeed ‘focus the mind’.

In brief, do you reward what is done, or do you reward how it is done? The answer is increasingly both. This can be through a balanced measure of success, where an individual’s bonus is in part determined by their project delivery, but also depends on the broader contribution.

An alternative is to have a qualification hurdle that must be cleared before a payment is made.

If the employee has behaved in a way which is counter-productive, or unsafe, then no bonus will be paid even if the project is ahead of schedule.

Certain matters are often non-negotiable, and in construction safety tops this list.

Tony Groom is a senior manager in the human resource services practice, PricewaterhouseCoopers

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