Project-Specific Employee Incentives

Increased competition and the constant push to improve capital productivity within the engineering and construction industry has led many organizations to seek innovative solutions to capture additional market share, decrease cost and schedule, or better use new technology.

In support of this effort to optimize project performance, one successful management method focuses on the use of employee incentives to encourage desirable employee behavior and performance. This method of providing an extrinsic form of motivation to employees has resulted in many noteworthy results on capital projects.

The objective of this research was to establish a process to assist in the implementation of project-specific employee incentives. To achieve this objective, the following activities were undertaken:

1. identify performance benchmarks achieved through employee incentives,
2. identify key success factors for and barriers to the implementation of project-specific employee incentives, and
3. develop a guide to assist in the selection, development, implementation, and management of a project-specific employee incentive program.

These activities were supported by gathering information in the following manner:

1. surveying published literature on subjects related to employee incentives,
2. conducting 20 interviews with representatives from projects incorporating employee incentives,
3. analyzing 972 employee incentive surveys for preferred incentive award options, and
4. incorporating suggestions from members of the Construction Industry Institute research team.

The research led to the creation of the Employee Incentive Process, which identifies a three-phase process for developing and managing employee incentives. The process begins with an assessment phase, focused on the development of project objectives. This assessment leads to the identification of specific “opportunities for improvement” that, if addressed, can lead to successful project outcomes. The next phase of the process includes an analysis of the management approaches available to project management, and the selection of the one best approach. This selection phase incorporates an appraisal of project leadership, company culture, task relationships, and benchmarks which are them compared with the environment. If the selected approach includes the use of employee incentives, the process continues on to phase three, the development, implementation, evaluation, and revision of the employee incentive program.

The employee incentive process is a tool to be used by those either considering or already involved in incentive use to understand the principles that lead to an effective employee incentive program. The process suggests adherence to a step-by-step procedure to develop, implement, and manage employee incentives within the context of a single project. This process recognizes that employee incentives are dependent upon characteristics of the project environment, project personnel, and company processes. Should such characteristics not support incentive use, alternative management approaches should be utilized.