Seven Elements of Effective Employee Incentives

Engaged employees are more productive

Gallup found that engaged employees are 21% more productive than disengaged counterparts. Their research suggests that employee engagement activities are an important part of creating a happy and productive workplace. Effective employee incentives are a great way to initiate engagement.

Organizations that prioritize employee engagement are likely to see benefits in terms of employee productivity, well-being, company culture, and customer satisfaction.

When planning an incentive program, recognizing a few simple guidelines can go a long way toward making your incentive programs as effective as possible.

Seven simple elements for effective incentive programs

1. Clear Goals

Effective employee incentives should be based on specific goals or outcomes. Whether incentives are announced as part of a program in advance or as a surprise based on accomplishments, ensure employees understand what is expected and what success looks like.

According to Gallup, next to favoritism, lack of clarity is the second most common reason employees note dissatisfaction in how their organization distributes incentives and rewards.

2. Fairness

Incentives should focus on measurable and objective criteria rather than value judgments. Clear metrics such as the number of trouble tickets cleared, projects completed, or sales goals met are tangible measurements.

An employee of the month award quickly loses its appeal, and it loses the ability to motivate employees if the reason for the award is not tangible. Too often, rewards and incentives seem like popularity contests rather than rewards for behaviors that advance the organization’s goals.

3. Achievability

Tie rewards and incentives to goals that are challenging yet achievable. Unachievable goals have a detrimental impact on employee motivation, performance, and overall well-being. When goals are perceived as unreachable, employees may experience increased stress and anxiety as they strive to meet unrealistic expectations. Unattainable goals can foster a counterproductive work environment, where employees may resort to cutting corners, prioritizing short-term gains over long-term success, or even engaging in unethical behaviors to achieve the desired outcomes. Achievable goals promote growth and development while also ensuring that employees are equipped with the necessary resources, support, and recognition to succeed.

4. Budget

Determine how much can be put towards incentives and how often you will offer them. Make sure that the expenditures are sustainable over an appropriate length of time, so the program has a chance to be impactful.

According to Gallup, providing regular and predictable recognition is key to reinforcing desired behaviors and increasing job satisfaction, motivation, and productivity.

Psychology Today emphasizes that offering repeated, smaller incentives can be more effective in motivating and engaging employees than providing a single, large reward, as it fosters sustained effort and reinforces positive behaviors consistently over time.

5. Variety

Employees may be motivated by many different types of incentives. One size does not suit everyone. It’s important to have a variety of options to choose from. Some employees may be motivated by monetary rewards, while others may be motivated by non-financial incentives like recognition or extra time off.

Popular strategies include letting employees choose from National Gift Cards (Amazon, Visa, Starbucks, etc.) Local Gift cards (based on each recipient’s zip code) or Merchandise. You can curate selections to have the maximum impact specific to the members of your organization. Consider different themes over time. Offer a selection of choices from food delivery vendors for lunch or a selection of coffee cards. Consider what will be most meaningful and appealing to your employees.

6. Communication

Communicating clearly with employees about the incentives, how they can earn them or why unexpected and surprise incentives were awarded is key to solidifying behavior

Celebrate successes along the way. Provide visibility into the behaviors and actions that led to the award. That can go a long way toward motivating other employees and signaling that the organization is serious about employee engagement.

7. Fun

Incorporating elements of enjoyment into incentives can be a good way to increase engagement and participation. For example, offering incentives that involve team-building activities or social events, which can help to build camaraderie and foster a positive work environment. If you provided a choice of options to recipients, following up with a group discussion about what employees chose is a fun way to highlight employee success and reinforce the organization’s commitment to their teams.

A great way to motivate employees

Incentives and rewards are a great way to motivate employees. They are not a substitute for caring management, career growth, pay or work-life balance. They are just one part of creating an organization that has a positive and productive culture.

Get Inspired and Celebrate Talent!

Employee retention is critical to the success of your company.
Hiring is costly. Employees at times are difficult to attract. The great resignation is still top of mind.
Employees know they can move on if they aren’t satisfied that they’re making a positive contribution.
When employees feel valued they perform better.
Employees who know they’re making a positive contribution to the organization feel more valued.
Employees who see the results of their contributions and are acknowledged for them, will work harder.
Recognition and appreciation makes a difference.

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