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In Focus Consumer Credit

Incentives and bonuses: good or bad?

The recent bad press surrounding bonuses has meant that companies need to introduce more sophisticated ways to incentivise their staff towards improving results for the company

Gabriele Orsini MCICM (Grad) Credit professional

In recent years, bonuses have received bad press because they have been seen as drivers of greed, irresponsibility, and short-sighted behaviour. In today’s highly competitive marketplace

it can be difficult to make a sale, and just as difficult to get paid for it, as we are living in a world where some businesses will use any excuse to delay payment – or not pay at all.

A valuable tool Incentives and bonuses are a valuable tool for helping companies and managers achieve their targets and company goals. In my experience, incentive schemes work, and not just in credit control. Pay a bonus based on sales and you will sell more, pay one based on profits and you will improve your profitability, pay one based on cost savings and your costs will fall. In your business, your employees will be

your most valuable asset and, therefore, one of the most important things for any business is the performance of its staff. It is vital to recruit the right people with the right personality and attitude, but once they are on board you have to ensure they are happy and motivated to provide the best possible service and results at all times. Collecting money is getting tougher and,

therefore, bonuses and incentives are now being used more often, and I have found that a well-structured bonus scheme which is fair, transparent and achievable, can improve performance and profits for the business.


Influencing behaviours We know that bonuses are likely to influence behaviour, however behaviour can be good and bad and that is why you should design an incentive scheme that only rewards the actual behaviours that you wish to incentivise – such as teamwork, quality and achievement – because it is so easy to emphasise the wrong behaviours; often unknowingly. For example, if you set individual targets

and individual incentives to staff, you can virtually guarantee that your staff will not work together. Alternatively, set a team target and a team incentive and your staff will support each other by picking up and following up on each other’s calls, sharing

ideas and best methods, working as a team to hit targets and, therefore, create a positive workplace environment. You want to create a right atmosphere

and environment in which employees feel that recognition and incentives are available for good work, such as when they have gone above and beyond what is expected. In my experience, linking remuneration

and pay to the performance of the department makes people work that much harder to hit their own personal targets. If you create a bonus culture where pay is linked to performance and quality, then it stands to reason that people are going to work harder and go the extra mile to earn their bonus. If not, then you must investigate

October 2015

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