An incentive system has three basic goals: to retain, stimulate, and attract. First, it must retain present personnel. Second, it should stimulate useful and profitable effort for the current and future benefit of the business. Third, it should attract needed new staff.  How well does your firm's incentive plan work?

It seems  that are no “perfect” bonus plan appears to exist in the design industry, as many variations are in place, and many firms express concern that their plans do not result in the level of motivation necessary to influence staff behavior.

Among its key findings, PSMJ's 2015 A/E Bonus & Benefits Benchmark Survey  Report determined that only about one-third of the firms surveyed (39%) believe that their overall bonus programs really motivate their staff. 

Following is a list of suggestions on how to make performance-based incentive programs more effective. A viable incentive compensation plan must do these things:

1. The reward system must be understood. An employee must realize that certain levels of performance will result in no additional compensation whereas other, higher levels of performance will.

2. To determine the amount of reward, performance evaluations must be as objective as possible. For architectural and engineering firms, development of goals and objectives between employee and supervisor is the best framework for fair evaluations.

3. The employee must want the reward. This requires variety in the development of incentive plans to match different needs of staff members.

4. In addition to objective performance appraisals, other direct links must be provided between actual performance and reward. Be sure to separate cash payments for rewards from job holding and other membership payments.

5. Management should create enough opportunities for advancement to greater responsibilities. Motivation can be killed by lack of such opportunities. Reward systems should encourage self‑development and greater responsibility.Participants in the plan should be key individuals who have control over parts of the business with substantial impact on profitability or growth.

How does your firm stack up ? Benchmarking against industry peers is one way to find out.