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Pay bonuses more frequently to boost the program.  Pay those designated employees who are eligible for incentives or bonuses as frequently as you feasibly can, regardless of the extra effort or costs involved.  Before you balk at this idea, there are several good reasons why doing so boosts your company’s bottom line.

Reasons to pay shorter bonus periods — smaller amounts more frequently:

1. Short bonus periods start the clock more frequently.   Shorter bonus periods ensure a new opportunity to start over again when things go wrong.  There are always going to be business periods where sales activity is slow for a company, thus ruining the ability of your incentivized employees to make more money.  This is normal and to be expected.  Your job is creating an incentive program that is designed to adapt and reduce the setback as quickly as possible.
2. Slow economic times anger those on incentive programs. Your employees on bonus programs are going to be angry with the results when sales activity is slow, thus shortening time frames will minimize slower periods by restarting programs more quickly.  This will increase awareness and interest since your people will not have to wait very long to begin on the next program.
3. Most employees want the chance of another start.  The participants will want to start over and restart the clock when things go bad.  If the program periods are too long, waiting will seem like forever and quashes motivation.  If the program periods are short it will be easier to get everyone’s attention and get back on track when another begins quickly.
4. Pay smaller amounts more frequently.  Employees will appreciate short programs (one month) since if they fail, it will not be long before the new period starts.
5. Annual programs are demotivating.  The real problem with annual programs is that they may end up demotivating employees.  For example, if projections look bad by mid-year, it most likely will destroy the motivation of those who do not see any money coming in the near future.
6. Long periods may drive good sales people away.  If this program was designed to last a year and subsequently seemed doomed by midyear, in June, the program actually becomes detrimental to the firm.  It turns a great program into a depressing trap to the sales guy who has to wait six more months for a new period to start.  The real problem with a lousy program like this is its time period flaw, good salespeople do not wait.  They leave.
7. Confident sales people go where they sense the programs are equitable.  Sales and marketing people who are sure of their ability to earn more money go where they find more favorable and equitable incentive programs.  Remember that those better designed programs may be offered by your competitors down the street.

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