During difficult quarters or stressful projects, it’s common for your employees to feel exhausted and disengaged.
But the problem with disengagement is that it can lead to low employee morale, higher employee turnover rates, and decreased productivity.
So how do you ensure your employees stay motivated and engaged?
Simple: by implementing employee incentive programs.
In this article, we’ll explain what employee incentive programs are, their four key benefits, and 10 excellent incentive programs you can introduce at work. We’ll then highlight five best practices for an effective employee incentive program.
This article contains:
(Click on the links below to jump to a specific section)
- What is an Employee Incentive Program?
- 10 Excellent Employee Incentive Programs
- 4 Key Benefits of Employee Incentive Programs
- 5 Best Practices for Incentive Programs
Let’s get started.
What is an employee incentive program?
An employee incentive program is a system that business leaders use to motivate, engage, and retain in-house and remote employees.
Incentive programs are a crucial component of human resource management since these programs can boost employee productivity rates by 52%.
How does an incentive program work?
Businesses can use employee rewards, tuition reimbursement, bonuses, and more to boost employee engagement.
Additionally, you don’t only need to stick to one type of employee incentive program; you can offer a variety of incentives based on employee productivity, revenue, and the time of the year.
For example, you can offer year-end bonuses and host a year-end function for employees near the holiday season.
However, it’s crucial to offer incentives that align with your business goals, company values, and employee needs.
Next, we’ll take a look at ten effective employee incentive programs that you can implement.
10 excellent employee incentive programs
Here are ten impactful employee incentive programs that’ll help you improve your work environment and optimize productivity:
A. 5 monetary incentive programs
Monetary incentives are cash-based rewards and other financial perks that businesses use to boost employee engagement and workplace productivity.
Here are five excellent compensation-based employee incentives you can introduce:
1. Performance bonus
A performance bonus is a scheduled cash reward that a motivated employee receives for exceptional performance. For example, you can reward an employee with a performance bonus for achieving the most sales or securing the most clients.
You can introduce year-end or quarterly performance bonuses to track employee performance and reward top performers.
2. Spot bonus
A spot bonus is an employee recognition cash reward given to employees for good work. For example, you can reward an employee with a spot bonus for taking the initiative in an incredibly challenging project or taking on extra tasks that are beyond the scope of their position.
A spot bonus is a particularly motivational monetary incentive for employees since it is immediately awarded to them.
3. Employee retention bonus
An employee retention bonus or retention package is a financial incentive that you can offer to top-performing employees so that they stay at your company for a specified period.
Employee retention bonuses can range from 10%–25% of the employee’s base pay.
Retention bonuses are beneficial for large companies experiencing stressful challenges or changes. For example, companies going through mergers and acquisitions can offer this cash incentive to their employees to prevent competitors from poaching their top talent during these stressful times.
4. Profit sharing
Profit sharing is an effective employee monetary reward for start-ups and small businesses that might not have a healthy cash flow (have more incoming than outgoing cash).
Profit sharing is when a business shares some of its revenue with its best employees when it makes more profit. This employee bonus can be a percentage of the employee’s salary, revenue, or a flat rate.
Additionally, this employee incentive can help team members feel more involved in the company and help them understand how their efforts impact the company’s bottom line.
5. Referral programs
A referral marketing program encourages employees to find qualified candidates for a company’s open positions and can benefit both recruiters and employees.
Instead of spending hours sourcing candidates from LinkedIn and other sites, recruiters can now spend their time focusing on other essential tasks. Additionally, your employees will receive a cash reward for recommending qualified candidates.
Not to mention, 82% of employers rated employee referrals above all other sources for generating the highest return of investment (ROI).
B. 5 non-monetary incentive programs
Non-monetary incentives are benefits that don’t rely on cash perks. These incentives are usually cheaper than monetary rewards.
Here are five non-monetary rewards you can introduce to boost employee satisfaction and morale:
6. Health and wellness programs
Employees who are unhealthy or burnt-out can’t perform to the best of their ability. This is especially relevant in today’s pandemic environment.
That’s why business owners should implement employee wellness programs to boost employee engagement and promote a healthy work-life balance.
To do this, you can introduce free healthy lunches, standing desks, on-site exercise rooms, free gym memberships, fitness-based virtual team-building activities, and even optional health screenings.
7. End-of-the year functions
Team-based and company-wide year-end functions are an excellent way to reward employees for their annual efforts and accomplishments.
Great year-end function ideas include a weekend away, tours, team activities, and Christmas parties.
Additionally, your virtual team can celebrate their annual achievements with a game night or virtual happy hour via Zoom.
These events help employees bond, improve work relationships, and communicate.
Employers can also publicly recognize and reward employees for exceptional performance during these events.
8. Bring your pet to work day
According to a US National Library of Medicine study, bringing dogs to the workplace can decrease your employees’ stress levels.
As a result, you can reward employees by letting them bring their pets to work for a day, or you could organize a local adoption center to bring their dogs to your company for the day.
Here are a few other benefits of this employee incentive:
- Improved relationships: Employees who might not know each other well will have the opportunity to discuss their pets and find some common ground.
- Increased physical activity: Having pets at the office will encourage employees to leave the desk to take their pets outside and feed them.
- Increased flexibility: Pet owners who usually worry about their pets can now spend an extra hour or so at the office to finish up their work without having to rush home.
9. Additional time off
Paid time off (PTO) gives employees some time to destress and maintain a healthy work-life balance. Additionally, employees are usually more motivated and productive once they’ve had a decent vacation.
As a result, you should encourage employees to take their paid time off.
Additionally, you can reward top-performing employees with gift cards to a service that sends them to surprise vacation destinations.
10. Offer remote working days
Remote working days allow employees to work from the comfort of their own home and according to their own schedule. Additionally, they can avoid spending hours commuting to work, reducing your company’s downtime.
To do this, you should create a simple remote work plan and devise a way to monitor your employees’ performance during these remote working days. This way, you can get insight into how efficient this incentive is, and employees have a sense of accountability.
Fortunately, you can monitor your employees’ performance with a productivity tool like Time Doctor.
With Time Doctor, you can:
- Track your employees’ time spent on tasks: Use Time Doctor’s built-in time tracking feature to track how much time your employees spend on specific tasks and projects.
- Monitor your employees’ web and app usage: Check what apps and web pages your employees access during work hours. Additionally, you can choose which apps and sites are ‘unproductive.’ This way, your sales team can easily monitor leads via Facebook and other social media sites.
- Keep your employees focused: Use distraction alerts to remind employees to stay focused on the task at hand during work hours.
- Access detailed productivity reports: Analyze the attendance report to see if there are fewer sick days due to the new rewards program. Additionally, you can use the projects and tasks report to check if the total time for specific tasks has decreased.
Next, we’ll learn how your business can benefit from incentivizing employees.
4 key benefits of employee incentive programs
Here are four ways your business can benefit from the right incentive programs:
- Boosts employee productivity: Implementing recognition programs that reward employees for exceptional performance can motivate them to achieve targets and company goals. Additionally, it can help prevent employee burnout since every employee has a specific goal to achieve.
- Builds loyalty: Employee incentive programs show employees that you value and appreciate their hard work and effort. This way, they’re more likely to stay loyal and invest in your company’s success.
- Boosts retention rates: Offering the right employee incentives can motivate 66% of your top performers to stay with the company and prevent them from looking for better benefits elsewhere. Additionally, according to the Incentive Research Foundation, companies that offer well-structured employee incentive programs can attract and retain higher quality employees than other companies.
- Improves the company culture: The right employee incentive program can help you create a culture of employee motivation, teamwork, and accountability. For example, you can create a strong team and collaboration culture by offering team-based rewards.
Now that you know all the excellent benefits of incentive programs, let’s take a look at ways you can ensure your employee incentive plan is a success.
5 best practices for employee incentive programs
Although there is a wide range of incentive plans you can choose from, you must prioritize those that will positively impact your business goals and company culture.
Here are five ways you can ensure your employee incentive programs work:
1. Define clear goals
The incentives you choose should contribute to your company’s overall objective and culture.
For example, if your business depends extensively on sales, the incentive programs you choose should increase your monthly and annual sales volume.
Additionally, suppose your company relies on teamwork and collaboration. In that case, you should provide a team incentive that will encourage employees to work together and contribute to the specific goal as a team.
2. Keep your budget in mind
Although rewarding employees with expensive incentives like monthly bonuses or an overseas year-end function can boost employee morale, it can be problematic when you realize that your company can’t afford these employee benefits in the long run.
This is especially important since long-term reward systems (running for a year or more) lead to a 44% increase in employee productivity, while short-term ones (six months or less) only lead to a 30% increase.
As a result, it’s a good idea to align your incentives with your company’s profits. This way, you can offer financially feasible, consistent employee benefit programs.
3. Personalize incentives
Before deciding on an employee incentive program, you should consider what motivates your employees. This is crucial since offering generic t-shirts and promises of career advancements might not encourage your employees to achieve business goals.
As a result, you should send out employee surveys and even have one-on-one meetings to find out what truly motivates your employees.
Once you’ve got an idea of what motivates your employees the most, you can create a catalog of benefits and gifts that your employees can choose from. This way, everyone has access to an employee reward that motivates them.
4. Promote your incentive program
It’s all well and good to have an employee incentive program in place, but you also need to ensure your employees know about the employee recognition incentives and benefits.
Here are a few ways you can promote your incentive program:
- Provide information about your incentive plans in employee onboarding resources.
- Put up posters about the incentives across the company.
- Send out emails reminding employees about the incentives on a regular basis.
- Encourage managers and leaders to participate in and promote incentive programs.
5. Measure the impact of your incentive program
Once you’ve launched your employee incentive programs, you need to measure the impact of these incentives on employee performance, productivity, and business goals.
Here are a few useful ways you can gain insight into the impact of your incentive program:
- Employee feedback: You can also send out surveys and host one-on-one meetings with employees to gather feedback on how their performance has changed since the introduction of the employee appreciation programs. You can also include a recommendations section to help you improve future programs.
- Customer feedback: An easy way to measure your sales or customer service team’s performance is to gather feedback from the customers they interact with. You can do this by phoning customers or sending our surveys.
- Use performance tracking tools: Performance tracking tools like Time Doctor have built-in productivity reports and time-tracking data that can help you track team productivity and improve performance.
- Performance reviews: Performance reviews allow managers to see if the incentive program is working, praise employees for exceptional performance, and gather feedback from employees.
Employee incentive programs can help human resource professionals and business leaders boost employee engagement and productivity, improving a company’s bottom line.
But to get the best results, you need to ensure that your incentive program aligns with your company’s goals, budget, and employee needs.
Use the list of employee incentive ideas we covered here to help you choose the best ones for your company. Additionally, you can use our list of best practices as a guide to help you implement your incentive plan successfully.
Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.