Many believe that if you want to achieve a certain behavior, you must continue to reward it. It’s a simple concept that people have been using to tame dogs (looking at you, Pavlov!) and toddlers since the beginning of time. Luckily for managers, it also works on employees.
Whether it’s a tasty piece of bacon, a shiny new toy, or additional PTO days, offering a reward is one of the most powerful ways to get a creature–human or otherwise–to repeat a desired action. A psychologist would call it positive reinforcement. In the staffing world, we call it an employee incentive program, and it’s a highly effective way to encourage positive behaviors in the workplace.
Here, we’ll cover some of the best employee incentive programs you can use to attract talent, retain your best workers, and accomplish strategic objectives. But first, let’s take a closer look at how such programs are used.
What is an Employee Incentive Program?
The primary purpose of an employee incentive program is to achieve a certain outcome, one that’s usually tied to an organizational goal. If you want to lower your health insurance costs, you might incentivize wellness with a smoking cessation program or a discounted gym membership. If it’s employee referrals you’re after, you might offer a monetary bonus for any referral that results in a hire.
Another category of employee incentive programs is a more general one meant to boost overall engagement and aid with recruiting. While incentives like unlimited PTO days might not be directly tied to any strategic initiative, for example, they can be highly attractive to top candidates who are considering working for you. Thus, they pay off differently. The same goes for keeping your existing employees happy on the job.
Do Employee Incentive Programs Work?
Incentive programs work–and work very well–because they’re rooted in human behavior. Science has shown that a positive reward (i.e., an employee incentive) is extremely effective in reinforcing behavior, especially if it’s given immediately after the desired behavior occurs. By using employee incentive programs to create a direct link between a goal behavior and a positive outcome, employers can boost motivation and cement the habits they most desire in their employees.
According to the Incentive Research Foundation, properly implemented incentive programs can increase performance by an average of 22%. For team incentives, that number jumps to as much as 44%. Incentives can be even more impactful as a culture-enhancing tool and are especially paramount to promoting engagement now that workforces are largely decentralized, with workers operating in disparate locations.
If you’re not already using employee incentive programs to attract and retain top-notch talent, now is a great time to start. Here are ten types of programs to consider implementing in your organization.
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Motivate Your Employees With These 10 Incentives
Recognition-reward programs
It’s no secret that praising a job well done helps keep employees engaged and productive; it’s a standard practice among good managers. An employee recognition program formalizes the process, using a system to reward employees for noteworthy achievements, work milestones, and going above and beyond in their roles.
Such a program can take many different forms. An employee recognition app, for example, enables workers to give recognition shoutouts to their peers in a social-media-like setting. In a points-based program, managers can dole out points to their reports, which can then be redeemed for things like days off or gift cards.
Receiving public recognition for their work does more than make employees feel good; it also sparks productivity. According to research by Aberdeen Group, 60% of best-in-class organizations say employee recognition is extremely valuable in driving individual performance.
Tuition reimbursement
Investing in your employees’ continued growth is never a bad idea. With the cost of higher education at an all-time high, offering tuition reimbursement is a fantastic way to demonstrate your commitment to an employee’s future, not just at your company but in their career as a whole.
Because it’s such an impactful personal incentive, tuition reimbursement can go a long way toward instilling a sense of loyalty in the company and helping retain top performers. Offered by many organizations in the Fortune 500, it’s particularly useful for retention in cutthroat industries, like tech, or those with high turnover, like food service.
A tuition reimbursement program is valuable to you as an employer because you can customize the requirements on the candidate’s side to suit your needs, like meeting certain performance criteria to qualify for it or requiring specific coursework that will help you mold your skills to serve the organization best. Tuition assistance programs are also tax deductible. Just be sure to seek guidance from a knowledgeable accountant or lawyer to ensure your program is structured properly to receive tax benefits.
Profit-sharing
In a profit-sharing program, the company contributes part of its pre-tax profits to a pool, which is then distributed among employees according to their stake. Participating employees “own” part of the company, which can directly affect their sense of ownership over their work. And because an employee’s financial gain depends on how well the company does for the year, it can incentivize stronger performance.
Once established, a profit-sharing program has few fixed costs, and those that do exist rise and fall with the company’s revenue. Profit sharing can be a less costly alternative to other monetary incentives like bonuses and supplement other benefits, like retirement plans.
Employee referrals
Establishing an employee referral program is a no-brainer if you want to incentivize employees while establishing a pipeline that’s consistently filled with high-quality talent. It’s well-established that employee referrals consistently produce the most quality hires of any recruiting channel. Referred employees are more likely to stay with the organization long-term and, when referred by high performers, often wind up being high performers themselves.
On the employee’s side, a referral program can help keep staffers engaged in the company’s growth by giving them an active role in selecting new team members. Plus, the monetary bonus that results from a successful referral is a nice perk and makes their efforts feel appreciated.
Related: How to Make Your Employee Referral Program a Powerful Recruitment Tool
Health & wellness programs
From onsite gyms to personal training sessions, meditation coaching, and mental health services, the options for health and wellness programs to engage your employees are endless. Wellness programs can help employees adopt behaviors that improve their physical and mental health, contributing to a happier workforce.
Healthier employees miss fewer days of work, which reduces the costs associated with absenteeism. Over the long term, employee health programs can lower your staffers’ risk factors like obesity and smoking, resulting in lower employer healthcare costs. In one dramatic example, health insurance company Aetna reported a 28% reduction in employee stress levels, a 20% improvement in sleep quality, and a 19% reduction in pain after implementing a mindfulness program.
In addition to their health-related benefits, employee wellness programs can signal an organization’s care for its workers, especially during challenging times like those we’ve seen in the past few years.
Related: 10 Ways to Improve Employee Mental Health
Additional time off
Everyone likes days off. Unlike monetary bonuses and other incentive programs, which come with startup and maintenance costs, using paid time off as an incentive is essentially free for the company to implement.
Extra time off can be a particularly useful motivator for achieving short-term objectives, such as incentivizing the sales team to exceed its target or motivating a project group to hit a challenging stretch goal.
Related: Attract Top Candidates With These In-Demand Perks and Benefits
Experiential rewards
As the workforce skews younger with the mass retirement of Baby Boomers, employers must be more cognizant of incentives that appeal to millennial and Gen Z workers. One such incentive is experiential rewards.
As the name suggests, experiential rewards focus on experiences, with rewards ranging from concert and sporting event tickets to cooking classes and even hotel vouchers. Research has shown younger workers to be highly interested in these types of rewards and are likely to be significantly more interested in them after taking part in them for the first time.
Gift cards, points, and cash
The latest Incentive Research Foundation survey of more than 1,000 employees and managers found that tangible rewards are the most effective type of incentives for driving employee engagement and retention. Among those tangible rewards, cash, gift cards, gifts, and points were in the highest demand.
Tangible rewards like cash appeal because they have an immediate and gratifying payoff. Whether an employee puts the funds toward an indulgent purchase, like a vacation, or a more practical one, like next month’s rent, they feel an instant boost of satisfaction that makes the incentive feel highly worthwhile.
Greater flexibility
Though compensation-based rewards provide instant gratification, another form of incentive is particularly effective when navigating the nuances of motivating remote workers. In the same IRF survey we just mentioned, managers said greater autonomy and flex time were particularly effective rewards for incentivizing remote and hybrid workers.
Not only does offering greater flexibility as an incentive give employees the increased work-life balance they crave, but it also communicates a sense of trust and empowerment that goes a long way in building loyalty to the organization.
Travel
When additional compensation was not an option, travel was the most preferred incentive program among employees. Incentive travel can be individual or group-based and typically consists of a two- to four-day trip to a destination that’s accessible via a short drive or direct flight on the company’s dime.
The key to successful incentive travel programs is to set clear expectations. This applies to both the requirements to qualify for the incentive and the agenda during the trip. For example, how much of the trip will be dedicated to team-based activities, and how much free time will employees have to explore the destination?
Even if you’re not ready to commit to a multi-day incentive trip, you can still capitalize on the interest in travel rewards with things like airline points and airfare vouchers.
Common Employee Incentive Mistakes to Avoid
Strategy, planning, and optimization are critical for a productive employee incentive program. Here are some mistakes to avoid when setting one up.
Not basing it on your actual employees
Even the best third-party incentive research is still just that: third-party information. In order for an incentive program to be successful, it must be based on the needs and wants of your actual workforce. How can you discover these needs and wants? By asking!
Use tactics like employee feedback surveys and focus groups to ask targeted questions focused on your employees’ motivations and drivers as well as their pain points. The feedback you receive should be central to the creation of your program.
Failure to set clear objectives
Offering incentives for the sake of incentives is a surefire way to spend money without getting any results. What are you hoping to achieve by offering employee incentives? As you develop your program, keep your attention on the core goal: boosting morale, improving performance, increasing retention, or some other business objective.
Inadequate promotion
Think of any company advertising a product. They don’t just promote it one time and expect the sales to roll in. Companies run ads endlessly to make sure their products and services stay at the top of customers’ minds.
You’ll need to do the same to maintain awareness of your incentive program and keep employees engaged in it. Your promotional strategy could include email blasts, social media posts, team-wide Slack messages, reminders in staff meetings, and company-wide presentations outlining the program details.
Focusing solely on performance
Performance is important, but employees care far less about revenue and margins than they do about feeling valued, included, and supported at work. In addition to recognizing employees for their strong KPIs, reward others behaviors and characteristics you want to see more of, like continued learning, creativity, and being a team player.
Excluding certain employees
Not every incentive will appeal to every employee. While a group trip to a beach resort might sound like a dream come true for some, it will be others’ nightmare. The same goes for perks that exclude employees with different physical capabilities or the time to engage in activities outside of normal work hours. Be mindful of these potential exclusions as you select rewards.
Level-Up Your Hiring Efforts With the Help of Our Staffing Experts
Whether you choose to use employee incentive programs on a limited basis or you make them an overarching part of your employee experience, they’re a valuable tool for making work more enjoyable for existing employees and making working for you more attractive for top candidates.
Gain more helpful strategies for attracting and retaining star talent by working with the experts at 4 Corner Resources. We help forward-thinking organizations fill open roles quickly and chart a course for future staffing success.
Schedule your free consultation to learn about how we can help you achieve your workforce goals.
