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Disengagement among employees is a growing concern with low morale leading to high turnover rates, low productivity, and a negative impact on your bottom line. In fact, unhappy workers cost the U.S. up to $550 billion per year.
Leaders and HR have a significant role to play in sustaining employee engagement and motivation. To do so, you first have to understand the state of recognition, what it means for your workforce, and how best to incentive your teams today.
What is the definition of Incentives?
An incentive is something that motivates or encourages someone to take a specific action, or to avoid action. It refers to an external influence, like the expectation of a reward, which prompts an individual to take an action. The role of an incentive is to drive desired behaviors and attitudes for a desired outcome.
What are employee incentive programs?
Employee incentive programs are designed to attract, engage, and retain talent. Incentives themselves are rewards and benefits used to motivate positive behaviors in your workforce. Employee incentive programs also known as employee rewards programs, come in many forms, like tuition reimbursement, more time off, and additional flexibility in work arrangements. You should choose employee incentive programs that suit the desires and personal styles of your staff and align with your company’s values.
What are the most common incentives?
Employees are incentivized by different things, however the most common employee incentives include:
- Monetary bonuses
- Salary raises
- Additional vacation days
- Public recognition
- Health and wellness reimbursements
- Referral bonuses
- Professional development opportunities
- Tuition reimbursement
- Shared team-building experiences
- VIP experiences
- Company swag
- The option to select a personalized reward
The value of employee incentive programs
If you want to boost employee morale and drive engagement, you need employee incentive programs. Organizations worldwide recognize the importance of incentives, with the incentives industry now being valued at over $100 billion, $46 billion of which is attributable to non-cash incentives.
Incentive programs work because they leverage human behavior. Research out of Cornell University showed that immediate rewards increase intrinsic motivation by linking an activity and a goal, so employees rewarded more frequently are more motivated to complete associated tasks. Organizations that use employee incentive programs experience a 79% success rate in achieving their established goals when the reward was offered. This means that your organization needs to move beyond just annual years of service awards and embed employee incentive programs into your everyday culture.
The value of incentive programs is that they can increase employee performance by as much as 44% as well, and they can motivate up to 66% of employees to remain with their company. Companies that use tangible sales incentives also see annual revenue increases that are three times higher than those that don’t. And professionals satisfied with their benefits are more than twice as likely to also be satisfied with their work.
18 employee incentive programs to improve engagement
Employee incentive programs have tremendous benefits, but where should you start? Here are some incentive examples that have been proven to engage and motivate employees over the long haul.
1. Recognition and rewards programs
Recognition matters more than ever before: when asked how organizations could better support them in our new normal, 35% of employees said they wanted more recognition. Sixty-nine percent of employees cite recognition and rewards programs as motivation to stay at their current job. And organizations that rate their culture of recognition highly are three times more likely to see increased employee retention and over twice as likely to see increased employee engagement. Despite these data points, organizations are just starting to recognize that recognition is a critical tool for incentivizing employees: one in five employers started their recognition program in the last 12 months.
An recognition and rewards program is a foundational requirement of the employee incentives experience, as it embeds incentives into each team member’s everyday life. To accomplish this, recognition should be given frequently and in real time. Organizations that do so are 41% more likely to see increased employee retention and 34% more likely to increase employee engagement. Perhaps most importantly, make frequent recognition easy for everyone on your team with an employee recognition platform that facilitates recognition from anywhere at the click of a button.
Incentivizing employees effectively requires both social and monetary recognition 一 the latter through a points-based reward system.
Social recognition programs
Social recognition is the acknowledgement from one employee to another for their great work. As Harvard Business School researcher Amy Whillans notes, “cash matters in people’s lives, but it’s not all that matters.” Social recognition can be even more meaningful to employees than tangible rewards. It’s a low-cost way to allow everyone at your organization to express their gratitude for other team members publicly 一 even a simple thank you can be enough to keep someone motivated. Harvard Business Review found that when workers’ strengths were recognized by managers, it resulted in happier workers and a 14% to 29% increase in profit. And a survey by McKinsey discovered that companies can achieve a 55% improvement in engagement by offering social recognition.
Points-based recognition programs
A points-based rewards program lets every employee redeem points for rewards of their choosing in categories like merchandise, digital and physical gift cards, experiences, give back, and concierge. Offer an extensive catalog so employees can find rewards they crave whether they prefer electronics, fashion, hotel accommodations, or music. To give your employees even more options, consider rechargeable prepaid cards that allow your employees to have full control over what they spend their points on and personalize their rewards experience. This freedom is critical, as employees will value rewards they actually want far more highly than yet another generic mug or t-shirt.
Points are tied to specific recognitions as well, which makes it easy for all team members to frequently recognize and reward each other. You can even enable a one-click “boost” option that lets employees add points to successes as they’re shared. Employees will enjoy seeing their balance rise as points accumulate along with recognition.
Every time an employee sees their reward, they’ll think about the actions that got them the reward. The more key behaviors are recognized, the more likely they will be repeated: 92% of employees say that they’re more likely to repeat an action when they’re recognized for it. If you reward employees for generating leads or completing tasks more efficiently, you’ll continue to see that type of success.
2. Referral programs
Referral programs are incentive programs that reward employees for referring new talent. Why have your recruiters spend time posting job descriptions online if you can rely on your own employees to source qualified candidates? Employers often offer benefits for candidate referrals, and for good reason: 82% of employers rated employee referrals highest in terms of ROI. Remind your workforce about this benefit several times a year to ensure that you continue to get a stream of candidates in your queue. Employees will appreciate this benefit because they receive a monetary incentive for recommending qualified candidates that they feel will fit in with your culture.
You also can develop a tiered system so that candidates can get more rewards based on how far their referral goes in the interview process, which is easy to facilitate with reward points. For instance, a worker might get 1000 points (equal to $10) for submitting a referral. The reward could then rise to 2500 points (equal to $25) if their recommendation reaches the interview stage, and so on. This approach saves you the trouble of creating a separate referral program 一 instead, you can seamlessly incorporate it into your recognition and rewards program.
3. Professional development programs
Professional development is the continued coaching of employees to reach individual and company goals. Did you know 40% of employees with limited professional development opportunities development will leave in five years? And millennials value it the most: 87% said that development is important in their job. When you invest in your employees’ careers, it matters to them, and they’ll stick around for the long haul. Your company benefits in turn from the new knowledge and experiences that employees have to share, allowing for more in-house promotion opportunities.
There are several ways you can engage employees in professional development. You can create your own learning and development (L&D) program, or take advantage of a third-party learning management system. Adobe and Salesforce have built terrific L&D programs (Learning@Adobe and Trailhead) to train team members on their tools, and they even give employees the chance to win recognition points every step of the way. You can also provide a coaching program for new managers, as Facebook does. At the end of the program, managers get one-on-one time with an executive mentor. You might even try gamifying your current L&D courses to make them more engaging.
4. Profit sharing programs
Profit sharing is a way for employers to provide employees with a portion of the business’s profits, based on quarterly or annual earnings. Profit sharing plans are a type of defined contribution plan that can serve as an alternative or supplement to more traditional plans like a 401k. In a profit sharing plan, employees receive contributions to their retirement account (in the form of cash or stock) and sometimes get direct payments as well. Employers have the freedom to reduce these at any time, so they can rein in expenses for a year or two when necessary.
Beyond the obvious financial incentives of these programs, profit sharing empowers employees to view themselves as owners rather than just staff. This fosters company loyalty and incentivizes employees to stick around and invest their sweat equity to grow the business.
If a profit sharing plan doesn’t suit your company, you can still use retirement benefits to incentivize employees by offering to match part or all of their 401k contributions. The amount of the match will typically be limited based on a percentage of the employee’s income.
5. Health and wellness programs
Health and wellness is the practice of incentivizing employees to make healthier lifestyle and fitness choices. Employees aren’t able to perform at their peak if they’re unhealthy, so wellness incentives are imperative for companies looking to prevent burnout and promote physical and mental health. This is especially critical with the pressures employees face now: 59% are taking less time off than they normally would, and 42% of those working remotely aren’t planning to take any time off to decompress. Easy examples to apply in your business include free healthy lunches, on-site health screenings, bike to work reimbursements, standing desks, and annual wellness fairs. You can also reward employees who hit wellness milestones like quitting smoking or completing a steps challenge.
One of the best ways to encourage employee wellness is by using a centralized rewards marketplace that encourages the adoption of healthy habits both at work and home. For instance, WellRight, a leading corporate wellness platform, integrates with Achievers, a recognition and rewards solution. The integration between the platforms streamlines employee wellness, rewards, and recognition.
6. Tuition reimbursement programs
Tuition reimbursement programs are when an employee pays for an employee’s partial or complete tuition costs. Employees today consider ongoing education a priority. EdAssist found that 79% of employees say that tuition assistance is an important or very important factor in joining a company. And employees who participated in Cigna’s tuition assistance program were 10% more likely to be promoted and 8% more likely to stay with the company.
Every employee, up to and including the CEO, should be learning new things on a daily basis. Offering tuition reimbursement can solidify this best practice. What’s more, encouraging continuing education can be a great way to build a culture of recognition. Take the time to congratulate employees on completing educational milestones, such as getting a new certification or graduating in their Masters program, with team-signed digital cards and public recognition of their achievements.
7. Bonuses and raises
Bonuses and raises are additional monies paid to employees for attainment of specific goals or metrics. Rewarding employees with bonuses and raises can be incredibly powerful. A survey conducted by Payscale found that 65% of U.S. employees prefer bonuses based on personal performance. That said, you need to lay out crystal clear metrics and objectives so that employees know exactly how they can achieve their bonus. Strike a balance with your policies 一 the requirements shouldn’t be too difficult or too easy to meet. Be careful not to pit employees against each other, either. This can backfire and lead to resentment or even alienation from your company.
8. Fun gifts
Fun gifts are personalized or unique gifts given to employees showing appreciation for their work or to celebrate achievements. Celebrating your employees through gift-giving shows that you care. Gifts are great incentives for company-specific holidays, like work anniversaries, customer service week, global wellness day, or boss’s day. Try gamifying each of these holidays with fun contests and quizzes, and reward and recognize employees who participate the most.
Popular employee gifts run the gamut, from onsite massages, to catered lunches, to a half day off of work. Tech gadgets, delicious snacks (delivered or in-office), and quality swag (branded or unbranded) are great ideas as well. And for employees who would rather choose a gift themselves, providing gift cards is a great solution.
9. Additional time off
Additional time off is extra paid vacation time given to employees as an incentive. Fifty-eight percent of workers would agree to a salary reduction if they could get extra vacation time. Time off gives employees the chance to maintain work-life balance and can greatly increase motivation. Encourage them to take the paid leave they have 一 only 35% of employees actually use all the PTO they earn 一 and offer extra vacation time and flexibility if employees meet certain goals. Additional time off can also help with rising employee burnout and disconnection.
Employees don’t necessarily need paid time off, either. Most people say they’d take a lower paying job if it meant having more flexible working arrangements.
10. Choice of projects
Choice of projects is the ability for employees to choose what they want to work on based on their interests or areas of expertise. Giving high-achieving employees the right to choose their own projects is a wonderful way to empower and incentivize them. Managers build trust when they permit employees to decide what to work on, something that many companies struggle with. A Harvard Business Review meta-analysis found that leaders who empower their employees are more likely to be trusted by their subordinates compared to leaders who don’t. Prioritizing this incentive 一 and other ways to foster an environment of trust 一 is a great decision, as employees who feel their organization supports them are likely to support their organization in turn by going the extra mile and delivering exceptional results time after time.
Of course, the project options you offer should be personalized and appealing to each employee. A blanket, one-size-fits-all incentive isn’t as impactful. Team leaders and staff should communicate with their employees about their short and long-term goals, as well as their career interests, on a frequent basis and offer projects to match.
11. Employee benefits program
Employee benefits are any form of tangible or intangible reward or compensation given to employees outside of their base salary or hourly wage. Examples of employee benefits include things like insurance coverage (medical, dental, life), stock options, cell phone plans, health and wellness reimbursements, tuition reimbursements, etc.
12. Human resources development
Human resource development is the framework and tactics for helping employees develop their personal and professional skills, knowledge, and abilities. It is also the process of improving the effectiveness of organizations and the employees that work within them. Training is often regarded as a way to create immediate change within an organization, while development is the longer-term strategic approach to organizational and employee goals.
13. Bonus payment programs
Bonus payments are financial compensation given to employees beyond their base salary or hourly wages. While bonus payments are traditionally given to employees who exhibit outstanding behavior or achievement, they can be awarded to employees at all levels within the organization as a way to incentivize engagement and performance.
14. Performance management programs
Performance management is the ongoing communication and coaching between managers and employees to support their professional goals and the larger, more strategic goals of the organization. Elements to performance management include: clarifying job responsibilities, highlighting priorities, outlining performance expectations, and development planning to ensure that an individual’s performance aligns with organizational strategic goals.
15. Travel incentives
Travel incentives are designed to be part of an incentive, recognition or program, with the goal to shape employee behaviors, drive engagement, and improve performance. Travel incentives are typically paid-for trips for individual employees or teams who have achieved a predetermined set of goals within a specific timeframe, rewarding them for their achievements.
Wages are the fixed regular monetary payments made by an employer to employees for work completed. They are typically paid on a daily, weekly basis, or biweekly basis and can be based on hourly, project-based, or annual salary amounts.
17. Commission programs
Commission is additional compensation earned by an employee based on their job performance. Most frequently used on sales teams, agreement to a commission-based role or commission structure means that the employee agrees to be paid a certain amount of money that is entirely dependent on hitting a specified goal or metric.
18. Flextime programs
Flextime is flexible hours or schedules that allow employees to modify their workday based on their personal needs or preferences. They can adjust their start and finish times to work around other personal needs, like childcare, aligning with the time zones of colleagues, or to better suit their most personally productive work hours.
5 best practices for employee incentive programs
After you choose the right employee incentive programs for your company, you need to put them into practice. Here are some best practices that can help you implement impactful incentive programs.
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1. Make your program inclusive
Ensure all team members have access to your incentive programs by implementing a variety of programs that fit every area of your business. You should also recognize every stakeholder who helps lead your incentive programs, as well as all those who participate in them. And make sure your incentive program comes with an engaging, user-friendly platform where team members can easily participate and reap the benefits. All these practices can help employees feel involved and part of an inclusive work environment.
2. Promote your incentive programs
Ensure that everyone knows about your incentive programs to grow awareness and encourage company-wide participation. To accomplish this, HR should build a promotion and communications plan to make every employee aware of the available incentives programs. They can follow this up by working with leaders to run ongoing campaigns that engage employees and keep them participating. These campaigns might include marketing tactics like posters, fun messages using the company email or intranet, or games that tie into the incentives. Also, provide information about your incentive programs in your employee onboarding checklist so that every new hire is educated on day one.
3. Have leaders show the way
Leaders must serve as examples by actively participating in and advocating for incentive programs. After all, the success of employee incentive programs relies on leaders promoting and building awareness of incentives programs within their teams. Your HR team should train leaders on how your employee incentive programs work and on the value of using them as engagement tools. This could take the form of reference materials, training sessions or webinars, and even online learning courses. They can then effectively encourage their team members to adopt your company’s incentive programs.
4. Personalize your incentives
Personalizing your employees’ incentives experience is a must. Team members won’t work hard towards a goal if they aren’t compensated for it in a way that’s meaningful to them. While 56% of employees think their employer should understand them as well as they’re expected to understand customers, only 39% felt their workplaces were fulfilling this expectation.
Leverage technology like AI and advanced analytics to start tailoring each individual’s employee experience. Some HR leaders are using HR hackathons, employee-journey mapping, and design thinking to uncover employee needs. And of course, seeking feedback from employees is the best way to personalize their incentives.
5. Ask for feedback
Listening to your employees is the only way to gather accurate feedback on your incentive programs. Take the time to see how well your current incentives are being received and to understand what your employees really want.
To start listening, use an employee feedback platform that allows you to conduct pulse surveys. This can give you invaluable insights: employees can provide ideas you wouldn’t have thought of otherwise, and they’re your best source to gain a better understanding of what types of employee incentive programs will make the biggest impact. Consider an always-on feedback channel that can keep the door open for employees so they can share their input anytime, anywhere as well.
Customize your incentive programs based on employee feedback to demonstrate that you care about and have considered their opinion. Then continuously check in with employee engagement surveys to make sure your adjustments are landing well. And it’s often helpful for leaders to set up meetings with their teams to review survey findings and build collaborative action plans together.
What are common incentive mistakes?
These are the top four common incentive mistakes and how to avoid them:
1. Launching a plan without input
Be sure to gather feedback from individuals who will be engaging with the incentive plan to ensure that what you’re offering is something that they want and will work towards achieving.
2. Failing to communicate or be consistent
When launching an incentive plan, be sure to clearly communicate how it works, how to participate, and what the outcomes will be. And, be consistent in how you maintain the program, ensuring that when achievements are made, individuals are rewarded as promised.
3. Being inflexible
Not everyone wishes to be rewarded in the same way. To achieve wide-spread participation and enthusiasm for the program, be sure that it’s agile and can flex to fit what works best for certain individuals or teams.
4. Offering one type of reward
Some people value cash rewards, while others prefer to choose from a catalog of options. Before you set the reward types, talk to your teams to understand what they value and what would motivate them.
What are examples of good staff incentives?
Motivating staff with incentives that they value helps drive desired behaviors and attitudes across teams. Here are some examples of ways to incentivize staff:
- Awards and rewards
- Profit sharing
- Paid time off
- Travel incentives
- Remote/hybrid work options
- Club memberships
- Childcare subsidies
- Retirement plans
Make your incentives meaningful today
A recognition and rewards solution is the best way to create and manage employee incentive programs by consolidating them all in a centralized platform. Achievers Recognize is an award-winning platform that gives every team member (from staff to managers to the C-suite) the opportunity to quickly send social and points-based recognition to each other. And with over 2500 global brands, the Achievers Reward Marketplace lets employees redeem their points for rewards they truly want.
Achievers recently secured ranking as a top provider in the latest HRO Today’s Baker’s Dozen Customer Satisfaction Survey for Recognition. And it’s trusted by major companies like General Motors, Discover, and McDonald’s.
“It’s brought everyone closer than they ever have been before. Everyone has visibility into the work that’s being done in areas that they normally would not have seen visibility in the past. And it allows people to recognize each other that typically might not have occurred simply because of the time and the distance.” – Tom Gergets, McDonald’s CTO
Jumpstart your employee incentives programs today by scheduling a free demo of Achievers Recognize.
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