Take, for example, a company with four crews, and imagine that these crews compete against each other each week to see who can finish the week most efficiently under budget. Each crew is rated on how well it performs compared to its budgeted time. The results are shared in percentages; for example, 100 percent means they met budget, 90 percent means they beat budget by 10 percent, and 105 percent means they were over budget by 5 percent. Whichever crew ends the week with the lowest percentage, wins.
In fact, when a company is setting up a monetary-based incentive program for the first time, it may make sense to do a dry run and execute it with no money attached. This will allow you to work the bugs out of the system, and then later, if you wish, to add a monetary reward.
If you do create an incentive based on money, it should be self-funding. The incentive should be paid out based on incremental profits earned by the company based on the incremental results achieved. When incentives are self-funding, everyone wins.
Jeffrey Scott, MBA, Consultant, author, grew his landscape company into a successful $10 million enterprise and is now devoted to helping others achieve similar success. He facilitates PEER GROUP for landscape business owners who want to profitably grow their businesses. In their first year his members achieved 27% profit growth. To learn more visit GetTheLeadersEdge.com.