How to Structure and Implement Incentive Programs


Incentivizing your employees is a way of motivating them to perform to the best of their abilities. Collections departments are no different.

Even after proper training, collections professionals need daily motivation to excel. When they have it, they perform better and achieve higher collections rates.    

But not every incentive program is successful. They must be smartly designed to actually increase collections results. If they’re designed poorly, your department will end up spending money to achieve zero real results.

This post offers tips on how collections managers can structure incentive programs so that collectors actually work harder and smarter to improve C&R results. 

Why Are Incentives Important for Performance?

Collectors are the front-line personnel responsible for day-to-day collections success. Personnel performance is essential to the health of the organization. But, personnel costs are the greatest expense for a department. A department that cares for its personnel and takes the time to motivate them will be happy with results.  

That’s why incentives are so important: they encourage collector improvement in areas like compliance, communication and technology usage with real-world rewards. Done right, they attract and retain top talent, which gives your department a serious competitive advantage.

But, to achieve this result, you need to structure your incentive program with certain best practices in mind.

What Should an Incentives Program Look Like?

Your incentive program should start with daily feedback about collector performance. Both positive and negative feedback serves a purpose and impacts a collector’s performance.

Positive feedback improves self-esteem, competence and confidence. Negative feedback drives training activities and behavioural change. You’ll need to experiment with the right mix, but the fact remains: collectors can’t improve if they don’t know what they’re doing right and wrong.

Keep your collections incentive program simple, too. Pick a few dynamic goals you’d like to improve in your department and associate an improvement goal with each one. Finally, set a date by which you’d like to complete the goal.

For instance, you might want to incentivize collectors to increase their average number of kept promises by 10% in three months. 

Once you’ve done that, choose the right level and type of incentive to make achieving the goal desirable. There are different types of incentives you can offer your collectors: financial incentives and non-financial incentives.

Financial incentives take the form of pay raises, bonuses and commissions. These are around 10 to 15% of monthly salary. They shouldn’t exceed 20%, as you don’t want to create an atmosphere of entitlement.

Examples of non-financial incentives include clothing, vouchers, parking spaces, gifts and days off. Get creative with these, and present your collectors with something they'll enjoy.  

Once you’ve selected the proper incentives, it’s time to execute the incentive program. Here’s a sample.

How to Execute an Incentive Program [Sample Program]

1. Centralize collections performance with a single dashboard. The easiest way to do this is with debt collection software.

2. Track the amount collected per collector over a set timeframe using the central dashboard. (Try quarterly or bi-annually to start.)

3. Plot out the average amount collected per each hour worked across the department. 

4. Determine what exceptional performance looks like based on your goals. For example, if your department’s goal is to collect 10% more this quarter, set 10% or 15% above average.  

5. Award simple, appealing incentives when you see collectors reach their goals.

Now that you know how to structure an incentives program, you’ll soon see better results.

One area you’ll want to incentivize better performance in is collector communications. Download a copy of our communications guide for ideas on goal setting. 


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