Question

How does an incentive system work in an organization? Please explain how incentives can influence employee performance.

The Return on Investment (ROI) is a key metric that's used to measure performance. How does it help company leaders make decisions?

Answer 1

We would agree that motivated, productive employees are crucial for organizational success, regardless of company size, industry, or corporate strategy. Offering employees performance-based incentive pay is one common approach, and it usually takes one of two forms: bonuses are offered to individuals based on assessments of their performance, or bonuses are offered as organization-wide incentives, such as profit-related pay or share ownership. There are numerous advantages:

1)Motivation

2)Increased Earnings

3)Loyalty

4)Reduced Turnover

5)Collaborative Efforts

6)longevity in the professional relationship

ROI as a perfomance Measure :-

Before you can effectively measure success, you must define what your key performance metrics will be, and agree upon the definition of success. The definition of success is not only unique to an organization, but often to each stakeholder.

1. Sales – is there a measureable way of determining a sales uplift from this channel or activity? If not what proxies can we use from other studies. If not what role is it playing, and how does that role eventually make money?
2. Brand tracking – This has been and always will be our number 2 measure for performance. The reason being it gives consistency in our approach. Fundamentally when this activity was happening did a measureable change in top of mind awareness happen for the brand? Did it drive key equities that are researched and evidenced to show increases in sales?
3. Quality metrics – This is where you start getting into channel specific data, so for instance on facebook it would be % of completed views for a video. This tells us how interesting our marketing is to our audience and gives us a clue as to whether to look at brand tracking. If the facebook video with 5 million views only has a 1% view through rate then it is very unlikely to have moved brand tracking. Any sales lift will be a correlation, not causation.
4. Quantity of quality metrics – Bit of a tongue twister but essentially this is to say how many of a proven quality engagement have you had? For instance in our facebook example how many % views have you had?
5. ROI proxies – This is the key element. For each channel there should be a reason you are doing it for. Using a proven study as a proxy is a good way of ensuring you are planning your media plans correctly.

So these are our key five, as you can see a simple approach which we’ve found works well to make decisions .