STEP 4 - DEVELOP PROGRAM STRUCTURE
A program structure is designed to achieve your objectives and budget parameters. It's an outline of rules and conditions telling the participants what you want them to do and what they will earn for doing it. It's the "Do this. Get that."
What's Right For You?
Keep in mind rule structuring is a creative process. There are no right or wrong answers. As mentioned in Budget Builder, there are basically two types of structures: Closed-end (Fixed) and Open-end (Variable). You may find that combining both open and closed formats achieve the best of both worlds.
- Review the advantages and disadvantages provided in this section.
- Play "what ifs" with different ideas until you arrive at something you're comfortable with. While this may take some time, your program will be more successful for having gone through the process.
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SAMPLE RULE STRUCTURES
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Closed-end (Fixed) Structures
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Open-end (Variable) Structures
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Definition
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Allow only a certain number of participants to earn awards
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Allow anyone who attains the objective to earn the award
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Example
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Top 20 sales reps earn an award
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Participants earn an award every time the desired behavior occurs.
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Advantages
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- Allocates a limited amount of resources across an entire audience
- Controls financial exposure
- Typically easier to administer
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- Based on performance
- Financial exposure increased in direct proportion to results
- Motivational impact maximized; greater participation as all participants perceive an opportunity to earn
- Unlimited earnings potential; encourages participants to exceed objectives
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Disadvantages
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- Less motivating
- Not all participants perceive an opportunity to earn if they are competing against each other for the top slots
- Participants may reduce efforts after maximum award is earned or objective is achieved
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- Uncertainty of final program cost
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Enhancements and Bonus Opportunities
Whether closed or open, keep the program fresh and exciting for participants by adding some spice to the core rule structure:
Program Launch
- Enrollment:Extra points for enrolling by a specific day (distributor/retailer programs).
- Fast Start: Extra points on all performance measures during the first weeks/month of the activity.
- Leader Bonus: Top performer(s) in first weeks/month earn extra points.
Ongoing Program Operation
- Product Push: Extra points for the sale of certain products or services.
- Spurt Activity: Increase award potential for a specified period (double points for a slow month).
- Peak Performer or Leader Bonus:. Each month/quarter, an employee, sales rep or manager is recognized for performance and earns bonus points and featured in company communications.
- On-time Reporting Bonus: Extra points per participant or manager for reporting individual/group results on time.
Program End
- Fast Finish: Extra points for achievements in the last weeks/month of the program.
- Define participants, program dates, criteria, required performance levels and awards.
- Tie criteria directly into the established goals.
- Always strive to reward each individual for each occurrence of the behavior (sale, service call, etc.) you wish to improve or increase.
- Always put yourself in the participant's shoes. Does it seem like a good deal?
- The easiest way to evaluate your structure is to ask a few representative participants for feedback before you roll-out to the entire organization. You may learn something.
- Even though you strive to structure a fair program, some inequities will occur. Trying to accommodate all circumstances will weaken your program. Just make sure that it is equitable for the majority of the participants and you'll be in good shape.
Next step - STEP 5: Designate Program Administrator
Previous step - STEP 3: Build Your Budget
Back to Back to 10-Step Incentive Process
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