Developing a staff incentive program helps small business owners reward employees for a job well done. Incentive programs can help increase productivity, improve staff morale and help staffers feel they have control over their earning potential. If incentive plans are based on production, it can also help a small business save money because nothing is paid out until financial objectives are achieved.

Incentive Plan Parameters

Develop a policy for how your company’s incentive plans will work. This will ensure everyone is on the same page about expectations and performance outcomes. For example, your incentive plan policy should specify who is eligible for the program, how goals will be established and measured and how and when incentive rewards will be distributed. In a small business, it's imperative that incentives are available to all staffers, or it can lead to infighting and resentment.

Set Achievable Goals

Creating far-reaching, lofty goals that staffers are unlikely to meet will only result in frustration and resentment, not make the staffers work harder. Instead, set achievable goals. Consider a policy for establishing individual as well as group incentive plans. High-performing staffers may be frustrated if they find themselves doing the bulk of the team's work in an effort to reach a goal, only to find the reward distributed in equal portions to the entire unit.

Short-Term Incentives

Short-term incentives may prove more effective than long-term plans. Drawn-out incentive plans can lose steam, and employees may have a difficult time seeing the light at the end of the tunnel. Short-term goals give staffers immediate objectives to focus on and move toward and can help generate a more continuous cash flow for your small operation.

Make Incentives Worthwhile

Incentives have to be worthwhile for employees to extend the time, effort and energy working to achieve them. Even though it might be difficult from a budgetary standpoint for a small business to offer cash incentives, make every effort to ensure the incentives you do offer are something the employees are interested in.

Involve Staffers

Invite employees to help you develop incentive plan policies and procedures. This encourages buy-in and makes employees feel involved in the process. You can also ask employees what kinds of rewards would motivate them best. While cash is always a strong motivator, some staffers may be interested in paid time off or flexible work schedules instead.