Research on effectiveness of incentive scheme operated by major UK retailer
To boost sales of insurance products a major UK retailer introduced an incentive scheme. Although the scheme helped to raise sales, it had a negative effect on teamwork and demotivated some store staff, according to an evaluation of the scheme published in a recent issue of IRS Employment Review.
The evaluation, led by Malcolm Higgs, professor of organisation behaviour at Henley Management College and Hamish Renton, customer project leader for Tesco's UK food business, drew on in-depth interviews with employees and a survey questionnaire completed by participants in the incentive scheme.
The researchers discovered that the incentive scheme, while successful in increasing sales by 20% and motivating a minority of store managers and staff, undermined teamworking and ignored the role of recognition. What's more, the levels of reward for staff (around 20p to 80p per sale) were considered to be "too low to change behaviour".
Criteria for success
From the tranche of data emerging from the study, Higgs and Renton concluded, "store mangers' attitudes and their ability to motivate staff were the primary determinants of store sales success". Other key drivers were "effective communication, a spirit of healthy competition, belief in the product features, the price at which the product was offered to customers and the reward level on offer".
The authors conclude with their golden rules for successfully designing and implementing incentives. Distilled down, Higgs and Renton advise that schemes benefit from wide-ranging employee input, have clear objectives, be pilot tested, include a team element and be clearly communicated.
A final word
"Organisations should not rely on financial incentive schemes alone to deliver the desired behaviour. Rather incentivisation should form part of an integrated and strategic approach to reward. Effort is more likely to be exerted throughout the scheme if the financial rewards are mixed with recognition from managers and if staff are involved in the design of the scheme." -- Malcolm Higgs and Hamish Renton, IRS Employment Review 781/Employment Trends, 1 August 2003.
Want to know more?
Title: "Recognition and rewards", by Malcolm Higgs and Hamish Renton, IRS Employment Review 781/Employment Trends, 1 August 2003.
Methodology: Survey of 49 organisations in both the public and private sectors.
Availability: Contact the IRS customer services, tel: 020 8662 2000. For more information about IRS Employment Review visit www.irsemploymentreview.com
Posted 1 September 2003