In many companies, especially in industries such as sales and IT, finding the right way to incentivize employees has always been quite a struggle. Human resources usually follow very simple, cursory—and oftentimes outdated—compensation models, strategies, and performance evaluation systems.

The problem with these traditional methods is that they are unable to accurately capture what’s going on in the organization in terms of employee behavior and motivation, and what the specific problem areas are that need to be focused on.

And the problem does not end there. Actual implementation and operationalization of compensation, rewards, and benefits are another area that needs to be hurdled. Oftentimes, complex calculations and human error lead to inaccurate, delayed payouts.

Technology solutions

While management may seek to proactively plan and strategize compensation and rewards, data is usually unavailable real-time and thus, analysis is equally slow. Management decisions are therefore not genuinely responsive and adaptive.

Fortunately these days, high-tech tools such as incentive compensation management solutions make it so much easier for businesses and enterprises to fix and enhance their systems for bonuses, rewards, and even noncash payouts and promotions. These kinds of solutions address all the problems that companies have traditionally faced when it comes to compensation, rewards, and incentives.

However, management should delve deeper into talent management and human resources issues as well. Is the company structured in the right way to drive the right motivation for employees? Are the company goals ultimately in line with the objectives set for individuals, groups, and teams? Most importantly, are the organizational values expressed and substantiated in day-to-day work and operations?

Human solutions

Any type of technological solution will not work unless the right systems are in place that makes proper use of human behavior and motivation. Compensation, rewards, and incentives may even be driving the wrong type of attitude and behavior among employees.

IT personnel, for instance, who are paid by the hour may take longer to solve problems or be driven to demand overtime because they obviously want to earn more by clocking in more hours. One-time fees, on the other hand, do not inspire workers to cultivate long-term relationships with customers, which is more valuable for the company in terms of stable, recurring income.

Sales is also often viewed as a numbers game, where an increasing number of contracts snagged is seen as impressive. But beyond the surface, this race toward success may come at the price of not being able to genuinely assess client needs and provide the effective solution. Sellers may also benefit from commissions, but these contracts may be of little value to the enterprise.

Right employee behavior

There are many ways to strike a happy balance that brings profitability for the business owners, as well as personal and financial satisfaction for employees. Old methods need to be re-thought, and psychology needs to be put into play in the proper manner in order to attain a win-win situation for everybody. Consider the following tips and strategies:

1. Reward based on metrics

Remember the SMART rule—Specific, Measurable, Attainable, Relevant and Time-Bound. Set specific metrics for individuals as well as groups for their incentives. Instead of just looking at projects or tasks, measure aspects such as time to completion, number of issues resolved in a day, and so on.

2. Look at overall performance

Those aspects mentioned earlier all lead to one thing, and that is customer satisfaction. Qualitative measure is also very important in instituting rightful rewards and incentives. Customer feedback mechanisms should be in place in order to truly recognize employees that excel.

3. Compensate sales based on recurring income

This further reinforces focus on customer satisfaction through long-term relationship building, rather than singular or opportunistic transactions. Most often, maintaining and expanding current contracts and clients is less costly for enterprises rather than exploring and snagging new ones.

Utilizing compensation and incentive solutions is not enough, if the right employee behavior is not present. Business owners need to be careful that they are not rewarding unwanted behavior—and that they are not punishing desired behavior as well.