Using employee incentive programs to rev up productivity

Employee happiness is essential to employee productivity and often translates to increased profitability. Part of HR’s mandate is to find effective, cost-efficient ways to ensure employee happiness, leading to increased productivity and profitability.

One of the many tools available to HR personnel is employee incentive programs. At first glance, employee incentives may appear the same as employee benefits, but they are quite different.

While both are designed to increase or maintain employee happiness and arrive at similar outcomes like employee retention, benefits are a mix of those required by law and those created to make working at a company more attractive to prospective employees. Meanwhile, employee incentives are meant to reward employees for their performance, especially if they meet or exceed certain metrics, like sales quotas, customer satisfaction, and the like.

In this article, Benefits and Pensions Monitor discusses effective employee incentives. We’ll shed light on the benefits of employee incentives programs, and how they can benefit your organization, whether it’s a small business or large company. Get to know more about these programs and use these to inspire you to create your own ideas for your employee incentives.   

Introduction to employee incentive programs

Employee incentive programs are designed to motivate employees by rewarding them for their performance, or in some cases, their behaviour. Sometimes, incentives work as:

• coaching tools
• tools for improving employee engagement
• ways for employees to renew their focus and motivation

Employee incentive programs can come in a dizzying array of options. Selecting the appropriate incentive program can pay off for both the employees and the organization they work for.

Employee incentive programs are generally of three kinds:

• monetary incentive programs: these incentives give rewards in the form of monetary benefits to high-performing employees
• social incentive programs: these are mainly verbal appreciation or public recognition for exemplary performance
• moral incentive programs: these are designed to motivate or help people adopt ethical behaviours or do the right thing

Do employee incentive programs work?

The easy, straightforward answer is yes. Employee incentive programs work and benefit both employees and their employers. Here are some facts about the positive impact of employee incentives:

• Happy workers are found to be 13% more productive than the worker who is not as happy or content with their jobs, as evidenced by this Oxford study.
• Workers have more job satisfaction when their company has incentives like rewards or recognition for excellent performance.
• 82% of employees surveyed think that getting recognized for their efforts is an essential part of their happiness at work.
• Recognition for employees has a strong connection with their motivation, confidence, and respect.
• Those who feel appreciated at work are less likely to make plans to leave their current job within 3 to 6 months, compared to those who do not get the same recognition.

What makes employee incentive programs effective?

There is no big secret to making sure that employee incentives or incentive programs are effective.

The simple rule is for HR staff and management to come up with incentives that are both meaningful and have a positive effect on employee morale.

Pairing such incentives along with benefits that are popular with your workforce is a powerful combination that can help you hire and keep top performers.
Another way to make employee incentive programs effective is to consider the type of industry you’re in and the type of workforce you have. Employees at a manufacturing plant are not the same as those in an IT company, and the incentives they’ll want are not the same either. Here are a few examples of the kinds of incentives that are effective and appropriate for each industry type:

Benefits of employee incentives programs

In today’s environment where companies compete to attract and keep high-performing employees, your organization cannot afford to not offer employee incentives. Here are the most-touted benefits of employee incentive programs:

1. Healthy competition within teams

Programs with monetary incentives for performing well or exceeding expectations can foster a spirit of healthy competition. Each team or individual employee will strive to give their best at work, especially if there’s a substantial reward for their efforts.

2. Improved team morale

The more an employee feels that they are appreciated for working and getting rewards from the incentive programs, the higher their morale.

3. Better employee loyalty

Incentive programs can be avenues for HR and management to provide what employees need to feel good about their work, including recognition, rewards, and appreciation. Even a simple “employee of the month” award will make them want to stay. This is how incentives work to retain employees.

4. Increased productivity

The higher the loyalty and morale individual employees and teams have, the better their performance. When this happens, each employee can advance their careers and have a feeling of personal accomplishment; this is especially true if the employee incentives are meaningful to them. What’s more, the improved productivity is good for your company’s bottom line as well.

Employee incentive programs ideas

When it comes to creating and implementing employee incentives, HR staff and management have a wide array to choose from, or even create their own that no other company has devised.

Employee incentives can be monetary or non-monetary in nature. In fact, some incentives don’t even have to cost the company a cent if you are creative enough. Here are some examples of employee incentive programs that you can use as inspiration in your own organization:

1. Bring your pet to work day

This incentive is fun, simple, and won’t cost your company a cent – unless you want to spend on some pet food, treats, and pet care facilities. You can set one day a month or week for your employees to bring a pet to work.

Employees who have pets will proudly show off their furry friends and oftentimes they would love to introduce them to their work colleagues. Those employees without pets of their own get to experience the joy of having a pet and interacting with them throughout the day.

Studies have shown that having pets or just interacting with them provides several health benefits, like reduced cortisol levels that cause stress, better heart health, and improved well-being.

2. Performance bonuses

This incentive is by far the most common and probably the most requested by employees. Performance bonuses are still the most favoured motivation tool. In the US for example, 65% of employees would often choose bonuses as rewards for their performance or personal achievements.

The caveat about this classic incentive is that HR staff and management should make sure that the goals are clear, impartial and achievable. If any of these elements is absent, this could undermine your incentive program and de-motivate your employees instead.

3. Hybrid or remote-friendly workplace setups

This unique incentive can be beneficial for employees who must endure a long commute to and from the workplace. One of the biggest obstacles to this incentive is making sure employees remain interested in their work and engaged by their team members.

To be highly effective, hybrid or remote working setups should be supplemented with monetary and non-monetary incentives. This can include outdoor gatherings, gift cards, and notes of appreciation, which can go a long way to positively impact the work dynamics and increase engagement.

4. Organize shared experiences

Organizing a company outing, giving free concert or movie tickets, wine-tasting events, and other creative experiences make for great incentives. These shared experiences can make for a unique reward for teams that meet or surpass performance objectives.

If HR and management are at a loss as to what sort of experiences to offer, pose the question to your employees and let them decide what they want.

5. Referral bonuses

This type of bonus is given to employees who refer potential top talent for HR to recruit. A possible setup for this type of incentive is to give half the referral bonus to the employee who made the referral, and if the person they referred performs well, then the second half of the referral bonus is released.

6. Travel incentives

Apart from performance incentives like monetary bonuses, travel incentives rank high in employee incentive programs.

You can offer travel incentives in many ways, ranging from business trips and team building retreats, or go as far as rewarding high-performing workers with fully-paid vacations in overseas locations.

You also have the option to offer less complex travel incentives, like discounted hotel stays and flights, travel expense accounts or reimbursements, pocket money, and more.

7. Improvement incentives

Since tenured employees are very familiar with the processes or inner workings of the company, HR can offer incentives to employees to come up with ideas that can improve productivity or profitability.

Employees are encouraged to identify problems within company processes or policies, and if they give novel or out-of-the box solutions that work, then they can receive monetary or non-monetary rewards.

8. Gifts for personal achievements or milestones

Sometimes, birthday gifts can help motivate and retain valued employees. Employees don’t need fancy gadgets or expensive items. A simple greeting card and gift card with some cake is all it takes to make a positive impact on employees.

9. Reward for perfect attendance

Employees who complete several weeks without taking a sick day or time off apart from government-mandated holidays can be rewarded with incentives. Here’s an example of how this incentive can work:

• $200 for a month of perfect attendance
• $300 for 2 months of no absences
• $600 for 6 months without taking a day off or sick day
• $1,000 for not taking a day off (apart from regular holidays) or sick leave

With this incentive, if an employee manages not to take a single day off for vacation or a sick day for an entire year, they can earn as much as $2,100 in bonuses.

How to implement an employee incentive program

There are ways to ensure that your employee incentive program is planned and executed properly. When implementing programs like these, keep in mind the following:

Make the incentive easily accessible for employees.

The simpler the incentive, the easier it is for employees and managers to access it and the better it works. It's HR's job to ensure that there are easy outlets for all types of incentives and that managers have the resources they need, whether it’s time or money, to make the incentives count.

Train and inform management.

It cannot be understated how important managers are for the success of employee incentive plans.

It's crucial for HR to set guidelines for the incentive programs, such as how frequently they should give incentives, and train managers on how to do it well. Educate managers on the impact employee incentive programs can have on your staff and the business.

Incorporate it into the company culture.

Make sure that the incentive program is embedded into the company culture. For example, when it comes to employee recognition, you can make it a ritualistic event. Make it a point to schedule designated times and events to highlight employee success and make it special.

Incentivize employees based on what they want.

Offer employees the incentives they want. For employees to feel valued and get motivated it’s important for the offered incentives to be what they would want to strive to earn. To determine what incentives employees want, it’s as simple as communicating with team members.

Involve your employees in the planning and decision-making process and give them a reasonable variety of options to choose from. Remember, incentives that motivate one employee may not be very enticing for another; always ask employees what incentives would appeal most to them.

Keep incentives simple.

Uncomplicated, consistent incentives are much better than extravagant ones that are difficult to earn or are rarely given out.

An incentive doesn’t need to be huge. Even employee incentives for small businesses can be valuable and impactful. And even if you’re in a big company with a small budget, you can always use a non-monetary incentive to motivate your employees.

Valued incentives that aren’t monetary can include career development, flexible work options, flexible schedules, employee recognition, employee appreciation, and more.

Make the incentives as personal as possible, whenever possible.

Group incentives are essential for improving teamwork, but HR staff and management should not forget incentives at the individual employee level. For employees to feel more valued and appreciate the incentives more, try to add a personal touch to them. That way, incentives can feel more authentic and sincere to employees, maximizing their impact.

Consider other factors and possible consequences.

Before securing final approval from decision-makers and rolling out the incentives, take a closer look at the employee incentive programs. Consider all possible angles, including financial, legal, ethical, and functional points of view. This will help you avoid pitfalls in these aspects, greatly increasing the success of the program.

Practicing due diligence and putting in the research at this point guarantees that the program gives you the highest return on your investment. This will benefit your employees, and ultimately, your company.

When an employee incentives program is planned thoroughly and takes stock of employees’ wants and needs, there is little reason for it not to work. You’ll know it’s effective when your employees feel engaged, valued, and motivated.

Another good sign that your employee incentive program works is if you observe an increase in productivity. This, in turn, can translate into higher profitability. Your incentives don’t even have to cost much, or can even be non-monetary in nature, to be successful.

What prize are you thinking of including in your employee incentive program? Let us know in the comments below