Canceling an incentive program that your employees have been relying on for years is one of the riskiest moves a leader can make. Your team members have already built those bonuses into their household budgets and monthly bills. Plenty of them also use those rewards as a measuring stick for how valued they are at the company. Taking it all away without giving them the time to get ready makes their trust in you disappear in a matter of days.
Plenty of businesses will drag their feet on this for months because they’re worried about the pushback from employees. As the participation numbers drop lower and lower, the budget problems pile up, and an old program that should have been retired continues to reward the wrong behaviors – the ones that no longer match up with what the business actually needs (and in some cases, ones that actively work against what matters now).
How you handle this process can be the difference between a smooth transition and chaos. Give your team 90 days to get ready, be honest about why you’re making the change and present them with a replacement plan that makes sense – and most of your team will get it and cooperate. Cancel everything overnight with little to no explanation, and you’re going to have complaints, plenty of updated résumés floating around and some pretty angry reviews plastered all over the internet.
A gradual and well-planned strategy protects the trust you’ve worked so hard to build with your team over the years, and it shows that you value them enough as an organization to handle big changes with care and respect.
How Your Old Programs Stop Working
Programs can fail for plenty of different reasons, and it’s not necessarily easy to figure out why. Your business may have shifted direction over time, and the incentive structure you put in place a few years back just doesn’t match the goals you have anymore. Something that worked well three years ago might not match up with what your company actually needs to accomplish.
Your budget is part of this equation, too. Leadership probably approved some pretty generous rewards back when the business was strong, and now those same commitments are taking up money that you need for other priorities. Eventually, you reach a point where the numbers just don’t add up anymore.
Another issue can be harder to see at first – it happens when your incentive program accidentally rewards the wrong behaviors. None of it helps the business move forward – the metrics might look fine, and everything might look productive. Your sales teams might concentrate on hitting the volume targets as the quality of their deals takes a hit. Customer support staff might rush through their tickets just to hit their numbers – they’re not actually solving the underlying problems. It slowly works its way into the system over time.
Your incentive program might not work anymore. But it keeps running on autopilot because nobody’s bothered to check it. Rewards keep going out month after month, year after year, and after a while, everyone assumes the program has to be working because it’s always been there. From what I’ve seen, the issue is that teams don’t usually pause to review if those rewards are still encouraging the right behaviors.
Deloitte published some research on total rewards programs, and one of their main findings deserves some attention here. When the incentive structure doesn’t line up with what the organization rewards and values in practice, the employee engagement drops. Employees can sense this misalignment even when they can’t quite put it into words. Before long, questions start to surface – what does leadership actually care about? Do they even know where we’re headed?
Your program may have been the right choice when you first launched it. Businesses change over time, and your incentive structures need to change right along with them. But when you can see where the misalignment is happening, you’re already halfway done with clearing out what isn’t working anymore.
Give Your Team Enough Lead Time
Employees are going to need at least 90 days of advance warning before an incentive program ends. 6 months is even better, and that’s the best timeline if your organization can make it happen. A longer window really helps because it gives your team enough time to finish up whatever projects they’ve already started working on and rethink how they’re going to plan out the next quarter.
A person on your team has been working for 8 weeks straight to earn their quarterly bonus. Late nights at the office, rescheduled dinners with the family – they’ve made real sacrifices to hit that target number. Then, on a random Tuesday morning, an email lands in their inbox announcing that the program ends in a week. The lost bonus stings. But that’s not even the worst part of it. The real damage happens when your employees start to question if management actually values their effort at all.
Announce the change too late, and your employees are going to come up with their own stories about what’s actually happening. Some of them will believe that the company is hemorrhaging money. Others are going to figure that leadership has never cared about rewarding hard work. In either case, those stories spread through the office way faster compared to whatever official explanation you eventually manage to send out.
The person who shares this news matters just as much as when they share it. Mass emails from HR fail every time. Employees should hear about big changes from their direct manager before anyone else, and if possible, that happens in person or at the very least over a video call.
One announcement won’t be enough for something like this. Your employees are going to need some time to process what this change means for their paycheck, for their performance goals and for the work they do on a day-to-day basis. About 2 weeks after you make the first announcement, make sure to follow up with answers to the most common questions you’ve been hearing from your team. Then check back in again at the 1-month mark. When you check in like this over time, it goes a long way because it shows everyone that you’re listening and you want them to bring their questions to you.
Maybe the program became way too expensive, and it just didn’t make sense to have it around anymore. Or maybe it stopped driving the behaviors that would help your company move forward. Whatever made you end it, just tell your team the truth in plain language that they’ll understand. Employees are a lot more willing to accept bad news when they know the real reasons for what happened.
Calculate What Your Team Has Earned
Break a promise to your employees, and they won’t forget it – these memories will stay with them for years. They’ll tell their friends, their next employer, anyone who wants to know what it was like to work there. And this sends the message that your company’s word only means something when the budget looks healthy.
You’ll have to work out what you should do with the employees who are already in the middle of their performance cycle when this change happens. The fairest way to go about this probably lets them finish out the period with the original commission structure still in place. That way, they’ll actually have a chance to hit the targets they’ve been working toward all along. Sometimes that won’t be possible, though. When the switch has to happen right away, pay them a partial commission based on what part of that cycle has already gone by.
Employers who have tried to skip over this part or cut corners usually learn some pretty expensive lessons. Legal action over unpaid commissions or bonuses happens far more than it should. Mass resignations from your top performers (the ones who feel like they’ve been lied to) can happen fast. When these cases actually make it to court, judges will usually side with employees who were promised compensation that was pulled away without any reason.
The math on this is pretty simple. It’s usually going to cost you less to honor what you promised than it will to clean up the mess that comes from breaking your word. Employees who feel cheated don’t quietly move on to their next job. When they walk out the door, the knowledge and experience they’ve built up over the years walk right out with them. Those client relationships walk out with them, too. And you can bet they’re going to tell every talented person they know in your industry to stay far away.
Make a list of everything that your team has earned through the program you’re about to retire. When you have that list down, set aside the full budget you’ll need to pay out every dollar they’re owed. From there, give your team a timeline that shows when they’ll receive each payment. If you don’t have these pieces locked down first, everything else you try during this transition will fall apart.
Plan the Wind Down Step by Step
Taking your time with this process gives everyone a chance to adjust and get ready for what’s coming. When you pull back on a program bit by bit, the transition runs smoother for everyone involved.
The best strategy is to cut back on the rewards or benefits step by step instead of canceling everything all at once. You can lower the payout percentage by a small amount first, or tighten up what employees need to qualify just a little bit. Adjustments like these are much easier for everyone to accept, and they keep communication open so nobody feels abandoned or confused about what’s going on.
Another way to wind down the participation would be to shut off the enrollment for any new members but still allow everyone who’s currently in the program to finish out their full cycle. This honors your original commitment to the employees who signed up, and it prevents the program from expanding any further at the same time.
The financial side of this deserves some consideration. Breaking up the wind-down across a few different budget cycles prevents one massive expense from hitting all at once. Your finance team gets more breathing room to plan everything out and work out where those funds should come from.
Small gestures can go a long way for your employees when they’re going through a big transition like this. Something like an extra month of eligibility or a slightly higher final payout might not seem like much on paper, and the financial cost to your organization is probably minimal. Extending these small gestures sends a message that you genuinely care about how these changes are going to affect them on a personal level. Your employees will remember just how you handled this situation long after the program has officially ended.
A great guideline is to measure your timeline in quarters instead of weeks when you’re planning this out. A three-month wind-down period will feel a lot more natural and manageable than trying to wrap everything up in just 30 days.
Get the Feedback You Need First
A short survey or a small focus group will give you the story about what worked and what didn’t in the old program. Maybe the reward structure didn’t feel fair to most of the team. Or maybe the timeline was way too compressed, and nobody could reach their goals without burning out. Collecting this feedback first lets you design something that actually fixes the root problems instead of just recycling the same problems with a different label.
Your employees will like it if you ask them what they think, even after you’ve already decided to discontinue something. Gallup has done plenty of research on workplace engagement, and the findings point to something interesting.
Employees who feel like their voice actually matters (like their opinions count for something at work) are usually a lot more invested in what they do. This pattern shows up again and again, whether we’re talking about small teams or large organizations, and it’s true in just about every industry.
You don’t need long surveys and marathon focus group sessions – a few basic questions will get you all the feedback you need. Ask your team what parts of the program worked well for them and what parts felt like too much work. Ask if the old program got anyone excited about doing their best work, or if everyone just ignored it after the first couple of weeks.
The feedback you get can help shape a new program that matters to your team. If they tell you that the approval process was painfully slow, you can speed that part up. If they say that the rewards didn’t match up with what they were doing every day, you can fix how you connect rewards to performance. Listen to them now, and you won’t make the same mistakes twice.
Level Up Your Incentives and Rewards
The choice to cancel a tool or service that your team has used for months (or even years) can feel uncomfortable and maybe even a little unfair. This shouldn’t damage the relationships you’ve worked hard to build, though. Take the time to explain what’s about to change (and more than that, why it’s changing), give everyone enough time to get ready for it and honor every commitment you’ve made along the way – that shows you actually value the effort everyone has put in. A phased rollout has the flexibility to fix problems as they come up, and it makes the transition much smoother for everyone involved. This also creates space for open conversations about where the program should go from here.
Shutting down a program that isn’t delivering anymore doesn’t mean you’ve failed at anything. Your business has evolved, and you’ll have to make sure your rewards and incentives evolve right along with it. When you handle this, don’t rush through the announcement or go silent because you’re worried about pushback. Be direct about what’s changing, honor whatever commitments you’ve already made and have honest conversations with the team members this will affect. Handle it this way, and you’ll actually build more trust – even when team members weren’t all that thrilled about the change.
Your old rewards program might not be cutting it anymore, or you could be starting from scratch and need to build something new – something that will get your team excited and support the direction your company is going. Level 6 has the tools to make either one happen.
We work with businesses to design incentive programs that move the needle, whether you want to push your sales team to close more deals, make your employees feel valued and motivated or both. Branded debit cards, employee recognition systems, custom sales incentives – we build programs around what your business actually needs.
Reach out for a free demo, and we’ll show you how we help high-performance businesses get better results and higher ROI from their teams.