A good incentive scheme ties a preset amount to measurable results the employee controls, with a written formula they know before the period. Start with the goal, then the measures, budget and formula, and test it on past data before approving it.
Step by step
- 1
Define what the incentive is for
What you want to change: more sales, higher quality, lower cost or punctuality, since each goal needs a different measure.
- 2
Pick a few measures
Two or three per role, measured from company data rather than impressions, and genuinely influenced by the employee.
- 3
Set the budget and cap
An incentive amount per role or a percentage of pay, a minimum achievement level where payment starts, and a cap that protects the budget.
- 4
Write the formula and timing
How the incentive is calculated from the achievement rate, when it is paid, and what happens with absence or leaving during the period.
- 5
Test it before approving
Run the formula on past months' results to see the cost and who would benefit, then adjust it and announce it in writing.
- 6
Count the full cost
In Egypt incentives are part of the insurable wage and subject to salary tax, so include the employer insurance share in the incentive budget.
A common mistake is a fixed incentive paid to everyone every month with no criteria. Within a few months it becomes an expected part of pay, and any cut is read as a penalty.
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