Key Takeaways

Rising pay expectations are real; employees who see a direct link between effort and earnings perform better and stay longer.
Incentive programs fail most often because of misalignment, complexity, and poor communication. The concept works; the execution is where things go wrong.
Tying incentives to three metrics (throughput, quality, and attendance) keeps programs simple, transparent, and effective.

This is Part 2 of our workforce strategy content series based on the iJility webinar, From Chaos to Calm: Workforce Strategies That Actually Work. Watch the short clip below, then read on for the full breakdown.

When warehouse operators talk about reducing absenteeism and building a more loyal workforce, the conversation almost always comes back to one place: pay. Not just how much, but how it’s structured and whether employees can actually see the connection between their work and their paycheck.

In our recent webinar, Valentine Trent and Campbell Diehl of iJility broke down why fair pay and measurable incentives are the first and most foundational step in moving from a reactive operation to a stable one.

Pay Expectations Have Changed

Inflation is real, and your workforce feels it. As Campbell put it during the webinar: “Pay expectations are rising. Everybody knows groceries cost more these days. You’ve got to find a way to accommodate that for your workforce.”

The old playbook of pizza parties and occasional perks isn’t going to retain people or drive performance. What does work, according to both Valentine and Campbell, is creating a direct and visible link between an employee’s effort and their earnings. When people see that connection clearly, performance rises naturally. A lot of the day-to-day noise begins to subside.

Why Incentive Programs Fail

Here’s the honest reality: roughly 60 to 70% of companies use some form of incentive program, but 90% of high-performing organizations do. The gap isn’t about who has a program. It’s about who has one that actually works.

Valentine was candid about where things go wrong. Companies often assume an incentive program will be straightforward to implement and manage. Then it falls flat or backfires. The reasons are almost always the same: misalignment with broader operational goals, an overly complex structure, poor communication, and a lack of transparency. Those conditions create unintended behaviors like gaming the system, short-term thinking, and quality tradeoffs. None of which move the operation in the right direction.

“I’ve never met a company, including mine, that doesn’t always need to work on communicating better,” Valentine noted.

The Formula That Works

So what does a well-designed incentive program actually look like? Campbell’s answer was refreshingly direct: keep it tied to three things: throughput, quality, and attendance.

“If you hit those three things, you’re going to have a good workforce,” he said. “If your incentive program allows for additional dollars in employees’ pockets, as long as they’re meeting expectations across those three buckets, you’ll see a performance increase.”

Transparency is the non-negotiable ingredient. Employees need to know exactly how the program works and exactly how they can achieve it. The moment it becomes ambiguous, you’ve lost them.

One important note from Valentine: avoid tying incentives to safety metrics. OSHA takes a dim view of this practice, and for good reason. When safety performance is incentivized, employees tend to stop reporting incidents rather than risk losing a bonus. Stick to throughput, quality, and attendance.

The Numbers Tell the Story

Only 33% of companies currently tie compensation to performance metrics. Campbell called that figure shockingly low, and he’s right. If your dollars aren’t connected to outcomes, you’re spending without accountability. The ROI on a well-structured performance incentive far outweighs the cost of the program itself, because you can see exactly what it’s producing.

The companies that are winning right now aren’t guessing. They’re measuring, adjusting, and holding the line on transparency. That discipline is what separates a program that transforms an operation from one that just adds a line item to the budget.