Annual Incentive Plan: Is Yours the Right Fit for Your Practice?
As you and your practice continue to face economic challenges, your annual incentive plan has become hot news.
It may have been a nicety before, something you offered to attract new talent. Now, it’s become more complicated as companies and practices alike vie to entice employees to return to the office. As you continue to ramp up your practice, you may be wondering how your annual incentive plan should work, how you can make sure it’s fair, and how you can use it to benefit your practice — whether you’re working in the dental, optometry, physical therapy, or veterinary industry.
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How Does an Annual Incentive Plan Work?
Your annual incentive plan might vary widely, but your employees may expect you to include some key incentives. A recent Blackhawk survey found that employees are looking for money, but 42% of employees wanted paid time off. So, what should your annual incentive plan include?
• Your annual incentive plan should reward your high-performing employees when they go above and beyond what you expect.
• You also need to retain and motivate your best employees while syncing with your practice’s priorities.
• Focus on incentivizing behavior that will help you better run your practice today, build your practice, and support your growth.
You probably refer to your annual incentive plan as your “bonus plan” or “bonus policy.” You may offer a nondiscretionary bonus as part of your standard payroll processing to encourage your employees to meet certain benchmarks or performance metrics. As you consider what to include in your annual incentive plan, make it part of a straightforward review process to ensure it’s fair and effective.
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How to Make Your Annual Incentive Plan Effective and Fair
As you create your annual incentive plan, start with careful planning. Consider what you’ve offered for incentives and bonuses in the past and what you’re willing to offer to your employees in your current plan. Take a strategic approach as you determine the best ways to reward and motivate your employees. Here are a few tips.
• Provide clear communication to your employees about the details of the plan and how it affects them.
• Offer clear and concise guidelines on what is required for your employees to earn a bonus or incentive.
• If there are differences in the bonus or incentive you’re offering to your employees, clearly explain why certain employee positions are eligible, what they need to do, and why you’re offering those specific rewards.
The goal of your annual incentive plan is to incentivize and motivate your employees. Avoid situations where miscommunication creates issues and misunderstandings. Encourage open and honest communication about your annual incentive plan. Clearly communicate what you’re looking for and what they can expect. Don’t let office policies prevent you from getting the answers you need — reach out to an HR specialist for advice.
Is It Working to Improve Employee Performance in Your Practice?
Your annual incentive plan is not “free money.” Your goal is to improve performance, so be sure to tie your bonus or incentive to the tangible results you’ve tracked. Avoid relying on a sticky note to document the performance metrics you’re encouraging.
Instead, use HR for Health’s Performance Management, Violations, and Notes features to carefully track your results. Our HR software features help you track where and when your employees meet your incentive goals. It’s an important opportunity to demonstrate your transparency by sharing the specifics of which employees have earned an incentive, what they did, and how other employees can achieve the same results.
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Things to Look Out for When You Implement a New Annual Incentive Plan
Your annual incentive plan is a great way to motivate and reward the performance of your employees, but you may be disappointed with the results if you’re not specific enough with your goals. Use “SMART” goals to be as direct as possible with your expectations. What does that mean?
Rely on the expertise from HR for Health to get the tips and ideas you need to create and implement your annual incentive plan. Then, integrate your comprehensive incentive solution into your custom employee handbook for your practice.
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Key Examples of Incentives for Employees at Your Practice
Incentive plans are not supposed to be convoluted or hard to manage. They also shouldn’t break the bank. That’s part of why you’re using SMART goals and being direct as possible. Still, what you offer as an incentive will make all the difference in the success or failure of your incentive plan. Here are a few ideas of the types of incentives you can use for your employees.
• Monetary: It could be in the form of a bonus, profit sharing, commission payout, additional time off (PTO), or even a raise.
• Recognition: This incentive could involve friendly competition that increases productivity but also helps your employees feel valued.
•Rewards: This type can be something like preferred parking, a gift card for a favorite restaurant, or a gift basket.
• Experiences: You could incentivize your team with a group lunch or an outing to a favorite local event. This incentive has the dual purpose of encouraging team-building.
If you’re still not sure which options will work best for your employees, you can survey them to ask which incentives they would value most. Of course, you can also reach out to HR for Health for more ideas on incentives that work great. We’ll walk you through the entire process and work with you to ensure your incentive program’s success.
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How HR for Health Can Help
HR for Health is an all-in-one HR software solution with support for your dental, optometry, physical therapy, and veterinary practice. Our human resources platform includes features that will help you create and implement the right annual incentive plan for your practice.
HR for Health has comprehensive and reliable solutions to fit your budget and functional requirements no matter how big or small your practice is. Reach out to learn more about how your annual incentive plan can be customized for you, with support from an HR for Health account representative.