How to Structure an Incentive Plan

Source: CPA Practice Management Forum

Incentive programs can enhance:

• Recruiting and retention.
• Business development.
• Relationship development.
• Client service.
• Client loyalty.
• Employee morale.
• Communication and teamwork.

Incentive programs should be adapted to the firm’s culture. Survey employees to find out what they value and what motivates them. Cash isn’t always the best incentive. Recognition may make employees feel that their contributions are valuable to the firm, which in turn motivates them to buy in to the firm’s vision and goals. Recognition may include announcements at meetings, certificates, etc.

Cash incentives, on the other hand, may come to be perceived as part of compensation to which employees feel entitled regardless of their efforts.

Incentives should be awarded for specific achievements. But some firms set specific goals and base the incentive on something else. For example, if the goal is to create a marketing culture, don’t base the incentive on new business.

The incentive program must be marketed within the firm. Some examples:

• Create a theme and communicate it in a brochure. Themes can be centered on television programs, sporting events, etc.
• Create a kickoff event to generate enthusiasm.
• Develop guidelines and put them in writing.
• Send reports (or standings in the case of team-based incentive programs) to employees’ homes to get families involved.
• Use internal newsletters to communicate the program details and achievements.
• Make recognition announcements at firm-wide or department meetings.

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From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, October 2008, p. 12, “Incentive Plans: A Motivational Tool That Works.”