How to Use Workforce Analytics to Determine the Value of Incentives
This article was updated on Sept. 17, 2018.
Organizations can use workforce analytics to determine the value of incentives for managers who have high performing employees. Using workforce analytics could be an essential element for creating the best incentives to motivate employees.
Finding the Unique Keys to Motivation
Like any other business process, organizations should establish metrics to determine the ROI of their incentive offerings. Many workers are motivated by more than just finances, and recent studies have even questioned the impact of merit pay. For example, according to Fortune, performance bonuses and merit pay don't always work. "The biggest reason incentive pay so often doesn't deliver results, it seems, is that individual managers don't stick with the program," Fortune reports.
Many workers now look beyond financial incentives and are motivated by things like vacation, flexible schedules, employee development training and wellness programs. To find the right mix, financial leaders should rely on their HR counterparts to dig into the data to locate the incentives that will motivate your workforce. Leveraging your workforce analytics provides organizations with a way to observe and dissect performance without interference and subsequently discount compensation approaches that don't work. Employers can then use that data to create more effective incentives.
Individual Incentives and Improvement
Chicago Booth Review says using workforce analytics to determine value can help create individual compensation models for each worker. These models are based on an algorithm that uses past data to predict a response. "Though it's complex, the algorithm can take data that already exist and run in the background of day-to-day operations," according to Chicago Booth Review.
Organizations should gather and review actionable data that correlates with an individual's contribution. Exploiting small differences across the organization could result in major change. For example, marketing staff could be measured by their individual contribution to campaigns that produced a targeted ROI. And salespeople might be measured on not just total sales volume, but conversion rates and value added to relationships. With that data, employers can then strive to create customized incentives to boost performance.
Giving Employees Clear Insight
Incentives should also be clearly communicated to employees with specific goals that drive organizational value. There should be a clear vision of how their actions impact those metrics and how those metrics impact their incentives. According to the Society for Human Resource Management (SHRM), it is important to ask employees what incentives they are interested in, explain how incentives work, regularly monitor incentive satisfaction and ensure upper-level management remains in the loop.
Truly incentivizing employees requires financial leadership to fully understand the value of each individual's performance. By using workforce analytics to determine the value of employees, organizations can harness that intelligence to build out incentives that will drive employees to new heights of engagement and productivity.
