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Creating a Solid Employee Incentive Plan

Posted by HomeWork Solutions on 6/13/19 10:00 AM
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Employee incentive plans are a great way to motivate staff and help foster overall organizational growth. Sometimes they are pretty simple, but they can get complex and troublesome quickly. Here are some things to think about to start from a solid foundation.

3 Aspects

A sustainable incentive plan will have three clear parts:

  1. Why? Outside of the obvious employee motivation, you should have another set reason like increasing sales or building brand awareness in specific ways.
  2. Who? There is no particular legal standard for eligibility in an incentive plan. You are free to tailor the plan to particular teams or departments. You should have some sort of eligibility standard clearly communicated though.
  3. What? As in, what is the incentive? Is it dollars, PTO, a gold watch? Whatever you decide make sure it is also clearly communicated and consistent. If you choose an object be careful about its value as it could have tax implications.


Plans can range in formality from a simple handshake to a section of your employment handbook. Smaller businesses can often get away with a simple communication of the plan, like an email or memo. For larger organizations though it makes sense to have a more formal written agreement as part of an employee’s contract. It may also be a good idea to have a lawyer take a look just to be on the safe side.

Topics: nanny, agency, senior, CPA

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