With sales constantly changing, companies often engage in projects to enhance employee skills and increase operational efficiency. While firms can have a solid plan on paper, the execution of these projects may go in a different direction, resulting in companies failing to meet their original goals. Not only can firms fall short of their desired results, they also stand to lose a substantial amount of money.
Poor performance in meeting strategic initiatives could result in businesses losing $109 million for every $1 billion of investments in projects and programs, according to PMI’s Pulse of the Profession report. The high cost of failing projects and programs could be attributed to businesses not executing their initiatives correctly.
Number of organizations that fail at meeting goals
The report said just 9 percent of organizations gave themselves an excellent rating for implementing initiatives to fulfill their strategy. However, almost half of companies were unable to achieve their goals. The survey found 56 percent of strategic initiatives achieved their initial goals.
“Projects and programs that are aligned to an organization’s strategy are completed successfully more often than projects that are misaligned (48 percent versus 71 percent),” the report stated. “PMI’s earlier research reported that aligning projects with strategic objectives has the greatest potential to add value to an organization. But on average organizations report that three of five projects are not aligned to strategy.”
To ensure companies meet their goals, they should concentrate on making sure their objectives help drive project results through incentives.
With short-term incentive use increasing, companies could launch more bonuses targeted toward projects. By offering project bonuses, firms can ensure that employees accomplish their targets because incentives can increase motivation among the workforce, Society for Human Resource Management reported.
Bonnie Schindler, partner at Vivient Consulting, said companies are increasingly using short-term incentive plans compared to long-term because they are better at motivating employees, among other benefits.
“Private companies are motivating employees using more straightforward short-term plans based on cash because they have found short-term incentives to be motivational for executives and employees,” Schindler said. “Also, short-term plans are less complicated than long-term plans for private companies. Private companies are getting creative with short-term incentives by adding plans and are scaling back a bit on long-term incentives.”
Here are ways to better align a company’s objectives and projects:
Give bonuses for completing projects
Structure the incentives by giving bonuses when employees complete certain parts of the project or when they see desirable results, such as increased profitability for the business. Companies could pay project completion bonuses for employees who accomplish their assignments for the project. These bonuses could take the form of monetary rewards or noncash incentives, depending on what employees demand.
Remind workers of project goals
When it comes to long-term projects that last over the course of a month or better part of a year, workers may lose sight of the main focus of this initiative. Rather than assume employees will be able to always keep in mind the project’s goals, give them periodic reminders of the aims of the project to give them the understanding they need to complete the project to its fullest as well as provide meaning to the work they’re doing.
Award bonuses as percentage of salary
Workers often undertake projects on top of their current workload and these initiatives could take away time spent on other tasks. To pay employees accordingly based on their skills, companies could give out bonuses based on a percentage of their salary. This approach could help keep workers driven to complete their projects. Companies can also offer a bonus that is the equivalent of a certain amount of days of pay.