Monday 09 May 2016 7:30 pm

This is what Leicester City’s win can teach businesses about incentivisation and the power of bonus schemes

Leicester City’s Premier League win has been the sporting story of the year, if not the decade.

In twelve months, the team has gone from narrowly missing relegation to flying high as champions, and players like Jamie Vardy have been elevated from near obscurity to household names.

The club has given hope to sports teams everywhere who now dream about emulating their success – but Leicester City can also teach important lessons to businesses.

Emphasising rewards

The club made the critical decision to engage its players at the start of the season, and an attractive reward scheme was a vital element of that strategy.

Not everyone is aware that Leicester’s success is underpinned by an unusual bonus scheme. When manager Claudio Ranieri joined the club in July 2015, he reportedly agreed a lucrative reward scheme for his players based on the team’s performance and their final position in the 2015/2016 league.

Initially, the scheme was intended to motivate players in the early part of the season to avoid the relegation panic of the previous year.

This is exactly the same principle as businesses using bonus schemes to encourage sales teams to close deals to meet revenue targets.

In reality, Leicester players like Jamie Vardy and Riyad Mahrez are no different to employees in the business world. They have skill, raw talent and passion, but they need to be motivated to perform.

Research suggests that financial incentives are key to boosting employee productivity and motivation.

According to a study by Xactly, 69 per cent of people state that a financial bonus is what motivates them to meet their next professional goal within six months.

The players at Leicester City earn a fraction of those at their rivals, Manchester United or Arsenal, but the addition of an innovative variable pay scheme helped to leapfrog those clubs to the top of the league.

Embracing great incentive schemes

Bonuses play an important role in aligning every employee with the corporate mission.

Leicester’s bonus scheme was set up to avoid relegation and secure a safe spot in the Premier League for 2016/7. In the same way, businesses can use bonuses to very clearly communicate to team members a company’s objectives – and give them a stake in achieving them.

Leicester City will now face the challenge of retaining its exceptional players, as their value is realised by league rivals. Club chairman Vichai Srivaddhanaprabha is already trying to keep his players engaged and loyal with the reward of a Mercedes and trip to Las Vegas for the victorious squad, along with their share of a £6.5m pot.

Similarly, businesses should be aware of what their rivals are offering and provide competitive packages for employees to retain top performers and reduce staff turnover.

This year, Leicester City have given businesses a masterclass in team engagement. Their challenge will be replicating it next year.