First, I have to give credit where credit is due - the idea of a "Win-Win" agreement actually came from the Steven Covey's 7 Habits training course. I'm a huge fan of these works and they have dramatically impacted my management style. I've took the concept of a "Win-Win" agreement and made it my own with great success. It is something I wish I'd started using a long time ago.
The idea of the "win-win" agreement for employees is that you want to find the ideal relationship between the employee and the company where both parties "win" - they get what they want and need. Early in my career as a manager, I used to think this was simple - the company wanted/needed the employee to produce work in whatever capacity they were assigned, the employee wanted a paycheck and some occassional recognition, and both were happy and productive. This is a very shallow approach though, and only barely touches the concept of a true "win-win" relationship.
Of course the employee wants a paycheck. Unless you are finding a cure for cancer or petting baby kittens, most people probably aren't going to come to work if they stop getting a paycheck. But, there is a lot more than this that motivates employees. We could certainly get into the expectancy theory, X and Y motivational theories, pyramid of needs, and all those, but, those aren't too important for now. At the end of the day, I believe all people want to feel good about themselves, feel they are valued, and feel they are progressing. So, I combined the idea of a "win-win" agreement with progression planning. Another mistake I made earlier in my career was assuming that all employees desired the same progression path that I had, but, this simply isn't true.
I would hold one on one monthly "win-win" meetings with each of my direct report staff. This took a good bit of time and was a commitment, but, I feel it was very worthwhile. I would talk to each employee about what they wanted to do, what types of projects they enjoyed, and what areas of the company were the most attractive to them. Once we defined what their "win" was, we next openly discussed how that would benefit the company. This allowed them to take an active role in their progression and help determine ways that the business could be improved by allowing them to do what they wanted to do. Once this was determined, we could lay out a roadmap of how to get there. Perhaps they needed more training, more exposure to certain types of projects, a better working network with certain other teams, etc. We could lay out goals and have a clear understanding of what hurdles may be in the way.
I'm sure you can imagine the impact this has on employees - to feel that they have a say in their progression and are valued enough by their employer to control their own destiny. I've heard people say before that the way you progress and move forward is by jumping between companies getting progressively higher roles - and with many companies this does seem like the best method. Why loose your greatest talents, though. By giving them opportunities to progress internally and feel that they are progressing with each passing month, you greatly increase loyalty and decrease turnover.
This program did have a few downfalls, however. First, things may not move at the pace some team members might like. A team member might have felt that if they did X, Y, and Z, they would instantly get what they wanted, and forget that the business need still has to exist. Also, what happens when multiple employees are working towards the same goal. Obviously, good incentive programs recognize all employees who achieve certain levels, but, within a hierarchial organization structure, only one person can get that next level. So, if multiple employees are working towards the same goal, both are doing everything in their goals to progress, you must pick the best, and have to play careful damage control to avoid demotivating the one(s) that didn't get the promotion. The best defense for this is simply to be upfront with expectations.
Despite some potential liabilities from the program, all in all it is a great way to motivate and retain employees. It opens up communication and keeps employees engaged. This is definitely a program that I will continue to use in future teams.