EXUS Collections & Recovery Blog

How to Structure and Implement Incentive Programs

Posted by Nikos Lambrou on Thu, May 19, 2016 @ 01:00 PM

How to Structure and Implement Incentive Programs

In an increasingly competitive environment, it's more crucial than ever that businesses work to get the most out of their employees. Incentivising your workers is the best way to make sure they are giving you 100% and that you're making the most of their abilities. This is particularly evident in the case of debt collection, where collectors are asked to meet ambitious deadlines and to juggle various debtors on a daily basis.

Making sure employees are properly trained is a great start, of course, but it's only natural for collectors to lapse into indifference unless they are being given daily incentives to excel and make the most of their potential. With the right motivation, your collectors will perform better and collection rates will be higher. Indeed, according to a recent ThinkSmart survey, companies using incentive programs reported a 79% success rate in achieving their established goals when the correct reward was offered.

Besides increasing productivity, a well-structured incentive scheme should boost both employee morale and loyalty. However, not every incentive program is successful. They must be smartly designed to improve results, without encouraging employee entitlement. If they’re poorly designed, your department could also end up spending more money to achieve no real results.

Here, we'll run through exactly how collections managers should be structuring their incentive programs to foster improved performance, a smarter work ethic and better results.

Why Are Incentives Important for Performance?

Your collectors are your first line of defence and, as such, operate as the de facto face of the business. They are also, ultimately, the employees that are responsible for closing the deal and making sure debts are paid. Considering how vital collectors are to the health of any bank or collection agency, their performance should be one of the key pillars of any operation and should be treated as such.

Of course, personnel costs are one of the greatest costs for any department, but these costs are almost always returned and emboldened as long as the department genuinely cares for its people, sets them achievable and rewardable goals, and motivates them with feedback, financial and professional rewards.

Incentives encourage collector improvement in areas like compliance, communication and increased technology usage with tangible rewards. Done right, they attract and retain top talent, which gives your department a serious competitive advantage. However, to achieve this result, you need to structure your incentive program with certain best practices in mind.

What Should an Incentive Program Look Like?

Any well structured incentive program will be split into three key parts - the planning, the programme and the execution. You need to lay the foundations before using them as a platform from which to build a program that encourages employees to want to hit your targets, as opposed to their own.

The Planning

Know Your Team

Offering relevant incentives will be a strong motivation for continued employee success, and they will appreciate the investment in their overall well-being.

Daniel Rounds, danielrounds.com

In order to properly motivate your team, you should first understand what drives them. Understanding their motivations will help you implement a more tailored incentive program that should prove more effective in getting results. You can keep track of your team's specific motivations by conducting regular performance appraisals, surveys and conversations, as well as call monitoring. Whilst monetary motivations are common in collections (as in any sector), employees will also commonly be motivated by career progression and increased recognition.

Know Your Goals

Do you simply want to increase performance at any cost? Or is customer satisfaction more important to you? It could be argued that the former could encourage sloppy work or strong-arm tactics (which is something that financial regulators may look down on), whilst the latter encourages a more customer-centric approach.

Are you planning to reward results or to reward the actual work and experience of your team? Digital recruitment firm Identifi, for example, uses its Candidate Charter to pay bonuses based not on sales, but on candidate experience. Rewarding your workers for a job well done, even if the results might not (on paper at least) match up to your goals, could also incentivise them to go the extra mile next time. Because we all know too well - just because you’ve tried your best, it doesn’t necessarily mean you’ll always reap the rewards.

Rewarding good work, regardless of the metrics, will mean happy employees, and happy employees will lead to a thriving business. Indeed, one recent study has found that happy employees are 20% more productive than unhappy employees.


I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better.”

Elon Musk, Founder and CEO of Tesla

Any incentive program should start with regular feedback (positive and negative) in order to let your collectors know what they are doing right, what they are doing wrong and how they could be better utilising their time in order to achieve better results. This is the most direct and cost-effective way to impact a collector’s performance.

Positive feedback has a number of obvious benefits. It promotes confidence and self-esteem and also reinforces best practices amongst your employees. By acknowledging a collector's competence, it will also reflect on the other collectors, who will work to match the performance of their peer. Negative feedback can be equally powerful. If a collector is falling behind and doesn't appear to be working to their optimum potential, a piece of constructive criticism can make all the difference, catalysing behavioural change and a desire to train harder and explore more productive avenues.

Collectors won't improve unless they know what they are doing right and what they're doing wrong, but the real art is in finding the right balance. Too much positive reinforcement can lead to arrogance and complacency, whereas too much negative reinforcement can lead to poor morale and even resentment.

As for where the feedback is coming from; it doesn’t necessarily need to come from up top. High performers can help struggling low performers, for example, and you should always make sure there is a strong training and support network in place in the contact centre. Leaders, meanwhile, should always support their staff by offering them guidance on how to overperform and letting them know when they are failing to reach goals or meeting and exceeding them.

Armed For Success

Do your employees have all of the tools necessary to reach the goals you’ve set for them? This can include everything from up-to-date software and hardware to home comforts that allow them to perform with greater efficiency because they feel comfortable at work. In an increasingly tech-centric industry, collectors might also be motivated by technology that will allow them to do their jobs more efficiently.

You need to make sure you’ve laid the foundations and given them the basic tools so that they can be the best they can be without feeling inhibited in any way.

The Programme

Financial Incentives

"In many cases, people who work at large companies seek stability, benefits and perhaps status. Incentives generally work when people are motivated by economics.”

Judi Rhee Alloway, Imagine Leadership LLC

In an uncertain economic climate, financial incentives are always going to be important. Offering a financial reward to your collectors for a job well done, or as a reward for meeting a certain target, will inspire them to continue delivering results for you. Financial incentives generally take the form of raises, bonuses and commissions, which often sit at around 10 to 15% of a monthly salary, but shouldn’t exceed 20%, as you don’t want to nurture an atmosphere of entitlement.

Financial bonuses

In collections, employees generally work alone, so this is something to consider when arranging monetary rewards. Competition between collectors is always something to encourage and a financial reward is the most potent way to inspire this kind of friendly rivalry. There's also an inherent 'top dog' quality when it comes to financial reward, which many collectors might work harder to attain.

Non-Financial Incentives

Monetary rewards (alone) are not a substitute for motivation.”

W. Edwards Deming, American engineer and management consultant

Financial rewards aren't necessarily the be all and end all when it comes to incentives. Indeed, with more than 65% of employees preferring non-cash incentives according to the Incentive Marketing Association, non-financial incentives are just as important as monetary incentives, if not more so. We’ve already discussed the importance of feedback, but there are a number of other non-monetary incentives that should be used to increase employee loyalty and productivity. Which will prove effective for your team will, of course, depend on their individual goals, but they can include any of the following:-

  • Vouchers that directly correlate to the desires of your employees. For example, younger employees might be more receptive to Amazon vouchers, whilst older employees might prefer vouchers that will allow them to enjoy a meal out with their families.
  • Recognition schemes that celebrate the collectors who have performed well in a certain period. The ‘employee of the month’ perk might be old fashioned, but it can still achieve decent results. Also, consider special social events for those that exceed performance goals. According to About.com human resources expert, Susan M. Heathfield: “Recognition is not a scarce resource. You can't use it up or run out of it.
  • Creative rewards such as reserved parking spaces, unique gifts that show you understand your employees, and paid days off will all help incentivise more effective practices. When arranging creative rewards, however, always take into account that not every reward will connect with every employee. Alcohol is a popular reward, for example, but some employees might choose not to drink for religious or personal reasons. Should they be penalised as a result?
  • Educational and training incentives that not only offer a break from the daily routine, but will give collectors new ideas, a boost of confidence and a fresh perspective on the job. According to Fleet Maill of New Line Consulting: “To work effectively, incentives need to be transparent and directly tied to a measurable action or achievement so they don't become entitlements.

Keep it Simple

Keep your collections incentive program smart and simple: pick a few areas that are key to business performance and associate an improvement goal within each one. This can be a personal goal, a team goal, or a combination of the two.

Goals in collections can be monitored by checking promise to pay rates collector contact efficiency and kept promise rates.

Set a date by which you’d like to complete the goal and make a point of rewarding your collectors when that goal has been reached. For instance, you might want to incentivise collectors to increase their promise kept rates by 10% in a certain period. Make it clear before setting this goal exactly what level and type of incentive is on offer in order to make it more desirable to your collectors.

The Execution

Once you’ve selected the incentives to match your employees and your goals, it’s time to execute the program.

How to Execute an Incentive Program

  • Centralise your collections performance using debt collection software that is utilised across every sector of the business. This software allows collection managers and collectors alike access to a central dashboard that uses the same easily-measurable performance metrics.
  • Track the amount collected (per collector) over a set timeframe using the central dashboard. Eventually, tracking on a monthly basis would be preferable, but you can start by tracking collections quarterly or biannually. Plot out the average amount collected for each hour worked across the department.
  • Determine what exceptional performance looks like based on your set goals. For example, if your department’s goal is to increase collections by 10% this quarter, set 10% or 15% above average.
  • Award simple, appealing incentives when you see collectors reach their goals.
  • Celebrate those that have reached your set goals so that others will attempt to do likewise next time.

Once you’ve implemented a well-structured incentive program using the tips above, you’ll soon start to see results. Skilled staff are the greatest asset of any company, particularly in debt collection, which is a notoriously challenging environment, where collectors stand as the front and last line of defence. Investing in them might cost you a little, but it will make you back a lot more!

Always remember, however, that communication is always key at every level. If you’re not communicating properly with your collectors, there’s no way they can know whether or not they are reaching targets and whether or not they stand to be rewarded for their efforts.

For more information, download our communications guide, which includes even more tips and ideas for goal setting and goal achievement.


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Nikos Lambrou

Written by Nikos Lambrou

Topics: Collection and Recovery Operations