Leading a donkey by dangling a carrot or employing a stick, may keep the poor beast moving, but at what cost?

The carrot assumes that there is an incentive just out of reach. Surely this is not a long-term solution to inspire action by your staff.

To be effective, incentives need to be attainable. If you achieve this specific tasks or tasks, you will receive this reward. Experience would suggest that in a modern economy the stick approach has had its day.

The carrot too will not inspire the desired result if the bar is set too high.

Firms no doubt take theses matters into account when designing their own incentive schemes; for example, a bonus for introducing a new client.

Tax concessions for reward schemes are still available. There are two kinds:

• encouragement awards – for good suggestions, or to reward your employees for special effort
• financial benefit awards – for suggestions that will save or make your business money

Encouragement awards are exempt from tax and National Insurance up to £25.

Financial benefit awards are exempt up to £5,000. The amount that is exempt is the greater of:

• 50% of the money you expect the suggestion to make or save your business the year after you put it into action.
• 10% of the money you expect it to make or save your business in the first 5 years after you put it into action.

Source: New feed