Well-designed incentives can transform organisational performance however, poorly designed ones can quietly undermine strategy, culture, and results. In this episode of The People Agenda podcast host Chris Howard and LACE reward specialists, Julie Elder and Mike Aldred as they explore how organisations can design incentives that genuinely drive the behaviours they want. They discuss why incentives matter, the most common structures companies use, and how leaders can align reward programmes with business strategy to maximise impact.
Why do organisations design incentive programmes?
Organisations use incentives to help align employee behaviour with business strategy. When employees can clearly see how their performance connects to rewards, they are more likely to focus on the priorities that matter most to the organisation.
Well-designed incentive plans support strategic objectives and motivate employees to achieve measurable outcomes, such as increasing revenue, improving productivity, or supporting strategic change. They also encourage accountability by tying rewards directly to performance.
If organisations start to see a disconnect between performance goals and the rewards employees receive, they often review or redesign their incentive plans. In practice, the most effective programmes usually include a mix of short-term and long-term incentives to balance immediate results with long-term success.
What types of incentives do organisations typically use?
Short-term incentives are often used across broader employee populations, while long-term incentives are usually reserved for senior leaders or critical talent roles. Below are some incentives organisations typically use:
What makes an incentive plan effective?
Effective incentive plans work best when they are closely aligned with an organisation’s strategy and clearly understood by employees. The design should support the behaviours and outcomes that leadership wants to prioritise.
However, over time, incentive plans can gradually move away from their original strategic purpose, especially as business priorities change. Regular reviews help ensure that these plans continue to support the organisation’s evolving goals. This raises an important question: how can organisations make sure their incentive programmes remain effective?
Incentive design sits at the heart of an effective reward strategy. When done well, it aligns people, performance, and business outcomes in a powerful way. If you want to hear the full discussion and deeper insights from reward experts, listen to this episode of The People Agenda podcast for practical examples and real-world perspectives on designing incentives that work.
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