16 Examples of Effective Employee Incentive Programs
Incentive programs are among the most powerful assets that can help you re-establish engagement and excitement in the workplace. One of the best forms of employee recognition, a well-structured program can increase productivity by up to 44%.
However, there’s a wide variety of incentive programs out there, which makes it hard to find the right one for you! To help you with that, today, we’ll take a closer look at 21 examples of effective employee incentive programs as well as tips to make them successful.
Table of Contents
- What are employee incentive programs?
- What are the roles & benefits of employee incentive programs?
- 16 examples of effective employee incentive programs
- Monetized and partially monetized incentive programs
- Non-monetized incentive programs
- Best practices for implementing an incentive program
- Final thoughts
What are employee incentive programs?
Employee incentives are any motivation programs that are designed to reward or benefit employees. Such incentives serve as great coaching tools, improve engagement, and help renew a sense of focus and motivation for employees.
These programs come in a huge variety of types and choosing the right incentive program yields benefits to both employees and the company. It’s the definition of a win-win investment.
What are the roles and benefits of employee incentive programs?
The role of an employee incentive program may vary from one situation to another, but it usually plays a major role in encouraging positive behaviors and attitudes among the workforce.
Additionally, it can encourage and benefit various aspects of a healthy workplace. Here are some of the advantages of these programs:
Improve productivity rates
The biggest benefit that business owners get or expect from incentive programs is higher productivity rates.
As previously established, the right incentive program can ramp up productivity levels significantly.
The exact rate may vary depending on the quality and quantity of the incentive program, but when employees feel rewarded and valued for their work, their much more likely to be engaged in it.
Help retain top talent and loyal employees
One of the biggest problems that employers face nowadays is the continuously increasing turnover rate.
According to the latest reports, the current average turnover is around 57.3%. In other words, for every 10 people that you hire in your company, around four of them will stick around in a given period.
Constantly hiring for replacements can be costly, especially in large firms that screen, interview, and train a lot of potential employees. In fact, up to $11 billion is lost every year due to turnover.
For that reason, reducing turnover rates and increasing employee retention and loyalty, especially among top performers, should always be a priority for you.
A 2021 study found that incentive programs can increase employee retention and the decrease turnover rate by around 14% to 26%.
Boost employee morale and motivation
Employee engagement and motivation are among the core driving factors when it comes to achieving results.
In fact, a report by Teamstage shows that employees are up to 20% more likely to be productive if they feel engaged or motivated to do work. That’s where incentive programs come in handy.
Matching your team’s needs with the right incentive program could manifest in all sorts of ways. More attention to smaller details during briefings and meetings, lower absenteeism, and more enthusiasm among team members to achieve results.
Encourage teams to collaborate on group projects
In addition to personal and competition-based incentive programs, you can also offer incentives in the form of a reward for the entire team after working on a project.
Group incentives help teams create stronger bonds and enjoy working together, which is a benefit that extends beyond the incentive program itself. Team incentives are a great form of long-term investment in team building.
Easily customizable with great return on investment
One of the best things about using incentives to encourage your employees is versatility and customizability. Depending on the current needs of your team, you can use just about any type of employee incentive program to motivate them to be more productive.
Whether that’s a cash reward, team incentive, or recognition program, the main thing is to put a program in place. Despite the costs, employee incentive programs almost always achieve results. In fact, even a small gesture of gratitude can go a long way and increase productivity significantly, and therefore drive more sales and profits, according to studies.
16 Examples of effective employee incentive programs
There’s a wide variety of examples when it comes to effective employee incentive program ideas. Some of them offer a financial incentive while others are non-monetized. In this section, we’ll take a closer look at those different forms of incentives and how they work:
1. Awards/rewards-based incentive programs
According to a recent survey into employee satisfaction at work, the majority of respondents wanted more recognition at work to stay engaged at work. That same report found around 37% of employees say that recognition is the most important thing to them.
One of the best ways to give your employees the recognition they deserve is by using an award-based incentive program that keeps up with employees’ contributions in real time and grants them various rewards according to their achievements.
A great way to achieve that is by using modern tools to make it easy to recognize employee performance and make employees feel valued at work.
2. Remote/hybrid workplace-friendly programs
This one is a unique classification of incentive programs that include incentives specifically designed for remote and hybrid workplaces. One of the biggest challenges of these lines of work is ensuring employees are interested and engaged.
For that reason, using monetary rewards and non-monetary incentives like outdoor gatherings, shoutouts, and notes of appreciation can positively impact the dynamics of the workplace and increase employee engagement.
3. Referral bonuses
A referral bonus is a type of monetary incentive in which you reward employees who recommend or bring in quality talent and job candidates to work for your company.
Of course, not all candidates will end up being hired (only around 6%), so employers usually pay the bonus only after successful onboarding and spending a few months with the company.
4. Profit sharing
Profit sharing is one of the most popular incentive programs out there in which the company pays the employee(s) upon making profits.
This incentive plan is highly versatile and can be executed in a variety of ways. Additionally, it has the additional benefit of boosting the employee’s motivation and productivity level while aligning with the company’s long-term goals.
5. Travel incentives
Incentive travel is another great way to motivate your employees and keep them engaged. It comes in a wide variety of forms from business trips and team-building retreats all the way to fully paid vacations in overseas countries.
Additionally, a simpler form of travel incentives may include discounts on hotels and flights, reimbursements, pocket money, free rental cars, etc.
6. Fringe benefits
Fringe benefits, also known as “employee benefits”, are a type of incentive that includes different types of non-wage compensation and perks.
These can include a variety of items, but among the most common elements are paid vacation days, health insurance, child care, retirement plans, club memberships, and other items that are included or not included in the salary package.
7. Suggestion incentive
A lot of companies and organizations are willing to pay a lot of money to research and incorporate new ideas that can bring more success and profits. Since your employees are familiar with the inner workings of their business, their ideas can be quite valuable and that’s where suggestion incentives come in handy.
This one rewards engaging and proactive employees who suggest new methods or out-of-the-box techniques to solve work challenges. Some companies are also more focused on the engagement part of the suggestions, as employees who feel valued have better morale and higher productivity levels.
8. Tuition assistance
Tuition assistance, also known as “reimbursement”, is a type of employee benefit in which the employee is granted a specific predetermined amount of money upon continuing or completing specific courses towards a specific degree or education credit.
These programs benefit both parties because employers get to invest in the long-term benefits of the company by improving the knowledge and loyalty of their company while employees get to develop and learn new methods that help them excel in their jobs.
9. Employee stock ownership plans
Another type of employee benefit that comes with a variety of advantages is the employee stock ownership plan, in which the employee earns an equity stake in the company they work for.
The main perk of this incentive program is aligning the employee’s values with the business goals and increasing loyalty toward the company. It also helps in increasing employee retention and decreasing turnover rates.
10. Engagement and teamwork incentives
This one is a versatile type of incentive that is granted when employers are engaging with their teams. This can be in the form of a simple employee or team bonus for being proactive and taking initiative or for collaborating and helping other team members solve a challenging problem.
11. Training and development program incentives
Training your employees won’t only help them develop their own skill set and show you care about their growth, it also has a massive impact on your business profitability. These programs are another great long-term investment in your workforce. In fact, reports found that proper training can boost revenue.
Providing chances for your employees to develop their skills through high-quality training programs is an excellent incentive that can also boost employee engagement and retention rates.
12. Gifts and gift cards
Gifting your employees and using gift cards as a reward adds a unique touch that some bonuses and benefits may not achieve. They are a great way to let your employees know that you appreciate them on a personal and professional level.
And, with gift cards, employees can use them to pick the gift themselves, which makes them even more valuable and practical.
13. Career development opportunities
According to recent reports, up to 94% of employees are willing to stay in their company for a long time if their employer invested in their long-term career and gave them the chance to step up and develop their skills.
Career development as an incentive help employees and employers alike.
14. Extra vacation days incentive
Time off helps reduce employee stress and burnout and boosts engagement and morale. It’s one of the best incentives there is for increasing employee and workplace well-being.
15. Flexible working options
Another excellent form of non-financial incentive that you apply is rewarding your employees with better flexibility at work. This includes allowing them to adjust their working hours and work from home on certain days.
This incentive is often ideal for parents and caregivers who are already highly stressed and will benefit greatly from a policy like this.
16. Company Outings
Another non-materialistic incentive that helps in building a sense of community among your team members is organizing team outings.
These can be a simple picnic, a camping trip for team members, or even an after-work hangout in a bar. Outings give the workforce a chance to unwind while building stronger bonds between them outside of a working environment.
Best practices for implementing an incentive program
Now that you know more about some of the best incentive program examples, here are some recommendations for making any incentive program successful.
Make it easily accessible
The easier it is for employees and managers to use the incentive program, the better employee incentive programs work. Make sure there are easy outlets to give all types of incentives and that managers are equipped with the resources they need – both the time and money – to make the incentives count.
Build it into the culture
Embed your incentive program into the company culture. For example, when it comes to employee recognition, think of it as a ritual. Set aside designated times and events to highlight employee success and make it special.
Managers are an important conduit of employee incentive plans. Set the expectation for how frequently they should give incentives for employees, but also teach managers how to do it well. Educate them on the power impactful employee incentive programs can have on your staff and the business.
Incentivize based on what your team is looking for
You should consider communicating with your team when deciding on the right employee incentive to offer employees. Involve them in the decision-making process and offer them the ability to choose from multiple options. What motivates one employee might not motivate another, so it’s important to ask your employees what matters most to them.
Keep things simple
Having simple but consistent incentives are much better than extravagant ones that are rarely announced.
Incentives don’t always have to be big, and even if you don’t have enough budget, you can always use a non-monetary incentive to motivate your employees, such as career development, flexible working options, independent project choices, and more.
Make the incentives personal whenever possible
Group incentives are great for improving teamwork, but you should also focus on the personal aspect from time to time.
Try to add a personal touch to incentives to make them feel more sincere and endearing to the employees.
Leverage the winner status occasionally
Since there are different types of incentive programs, a lot of them can be personal, but you can also design them in the form of competition, and leveraging the winner status can motivate some employees to give their best.
For example, the highest 5 achievers get monetary bonuses according to their ranking. In that case, you should expect all the employees to compete for first place to earn the biggest prize.
Of course, keeping the whole thing fun, monitoring the employee’s progress, and engaging with the team equally is essential to ensure that the competition stays healthy. Also, make sure that you recognize and appreciate everyone’s efforts, even those who didn’t win.
Consider other factors and consequences
Lastly, make sure that you look at the chosen incentive programs from all available angles, including financial, legal, ethical, and functional perspectives.
Doing your research here guarantees that the program gives you the highest return on your investment and benefits you on multiple levels.
The answer to this question depends on the nature of your company and the types of projects you engage in. However, the more frequent the incentives, the better.
To keep things balanced, you might want to split your larger incentives into multiple smaller ones that are handed out weekly or biweekly with occasional big incentive programs every couple of months.
A well-planned incentive program can have a myriad of benefits, including improved levels of engagement, retention, and productivity.
It can also help you boost sales, morale, and workplace well-being.
Effective employee incentive programs can keep your employees motivated and engaged. As discussed, incentives don’t always have to be monetized ones, as non-monetized incentives can be just as successful.
Compensation & Benefits, Employee Engagement
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