incentive schemes. They're a bit like minefields. Plan your route badly and it will all blow up in your face. However, spend a little time creating a positive scheme that works for you and your staff and you'll quickly make progress and be on the fast track to success.

And it gets better. As well as boosting staff loyalty, an effective scheme can also kick-start productivity and encourage teamwork. It can also help you track staff progress and identify areas where more training is needed. So if you feel that a highly motivated, loyal and happy team is for you, read on.

There are a number of things to think about when designing your incentive scheme, and the first and most important is cost.

It sounds obvious, but you must actually be able to afford the perks that you offer. Promising your team a trip to the seaside and then taking them down the local chippie because you've run out of dosh won't exactly score highly in the motivational stakes.

Next you need to decide what it is that you want to achieve, whether that be increased sales, a stronger team, or fewer absentees.

Once you've got your aim sorted you need to work out a simple scheme which can be clearly conveyed to the rest of the team.

It's vital that your staff understand what they have to do to get the perks, and should be kept updated on their progress.

The most obvious type of scheme to go for is one linked to profits. They go up by 10% and the team gets a night out on you. Easy.

Nights out are a popular choice as incentive scheme rewards. In addition to having a fun evening out, they also offer the chance for people to get to know each other outside of the work environment.

Also growing in popularity are vouchers and electronic gift cards which can be spent in a variety of stores. The UK gift card industry has come a long way since the launch of Book Tokens in 1932 says Andrew Johnson, director general of the UK Gift Card & Voucher Association. "There are now more than 70 gift cards available and 11 retail chains hosting gift card centres that offer cards from external providers," he says.

Cinema vouchers are another popular perk. UK company Filmology is a good place to start. It works closely with the UK's top cinema chains to provide discount vouchers for films.

The obvious option is to offer a simple cash bonus. However, retailers who have tried this method believe it is better to offer a more tangible reward.

Londis retailer Arjan Mehr, who has a store in Bracknell, Berkshire, says a present is a longer-lasting reminder of a job well done. "A cash reward is quickly forgotten," he says. "It's much better to do something that they will remember for a long time to come."

Arjan regularly takes his team out for meals when they hit their targets, which are focused around personal development rather than financial results. "I ask for quality work to be done in a reasonable amount of time and set regular targets for staff to achieve," he says.

In addition to taking staff out for meals, Arjan always makes sure that he buys a card and small present for staff birthdays. "It's small things such as this that make my staff feel appreciated and loyal towards me," he says.

However, Arjan is strictly against offering staff a discount on goods in the store. "Staff take these kinds of perks for granted," he says. "It's also a perk which is constantly on offer rather than a prize related to good performance. In my opinion, it's better to save money by not offering staff discounts and spending the saving in a more intelligent way."

One retailer who definitely thinks long and hard about his staff incentive scheme is Nisa retailer Kishor Patel, who owns a number of stores in Bedfordshire.

Kishor sets his staff sales targets for the year and rewards them accordingly when they meet them. This year the winning team are looking forward to an all-expenses-paid trip to Dublin.

"Over 2007 and 2008 I was looking for an increase of 10-12%. Two stores narrowly missed it and one made the grade, so all of that store's staff are going on a trip to Dublin. They'll head off on a Monday and do a study tour of Irish c-stores. The shops in Dublin have a lot more fresh food and have great customer service, so hopefully they'll pick up ideas. Then they'll go to the Guinness Storehouse, followed by a night out in Temple Bar. Everything will be paid for and they'll be back here on Wednesday."

Kishor favours incentives with group rewards as he believes strongly that they encourage team-building. "Organising staff incentives does pay off," he says. "You'll get a better performance from your staff and there will be more transparency. I'd definitely advise people to invest in incentives and allow staff to come up with novel ideas for rewards."

Next year Kishor is sending staff to an IGD retailing conference, followed by a night out in London. "There has to be some education involved - I don't want people to view it simply as a jolly," he says.

Another man with a plan is independent retailer Mark Johnson of Celebrations off-licence in Stockport, Cheshire. Last year he took his team for a night of high-octane thrills and spills.

"All our staff work very hard and are committed to the store so we feel that it is our duty to give something back to them on an annual basis," he says.

"Last Christmas we took them all go-karting at Daytona in Manchester and then out for a meal and to a nightclub afterwards. We had a fantastic time and the staff still talk about it now and can't wait for this year's trip."

Surrey independent retailer Dean Holborn favours the meal out option. Last Christmas he spent nearly £1,200 taking staff from his two Redhill stores out for a meal, and says it was worth every penny.

However, if funds don't quite stretch to that, don't forget that good things also come in small packages. Providing you have enough team members, a simple employee of the month scheme can be effective. Everyone loves a public pat on the back for a job well done, and if you throw in a bottle of wine or box of chocs all the better. Just make sure they're not those that have been languishing at the back of the store room for months.
An effective incentive scheme could:
Persuade staff to join your business

Help retain existing staff

Increase staff motivation, morale and loyalty

Boost productivity

Focus employees on achieving targets

Build teamwork