The Power of Incentives: How to Use Rewards to Drive Performance and Engagement
Incentives are a powerful tool for driving performance and engagement in the workplace. By offering rewards for achieving certain goals or milestones, companies can motivate employees to work harder and achieve better results. In this article, we’ll explore the different types of incentives and their benefits, how to design an effective incentive programme, and some best practices for implementing it.
But first – the stats you need to know.
Top incentive stats you need to know:
- According to a study by WorldatWork, 88% of companies in the US have an employee recognition program. (source: https://incentiveandmotivation.com/employee-recognition-programs-everything-you-need-to-know/)
- In a survey by CareerBuilder, 50% of employees said that they would stay at a job longer if they felt appreciated by their employer. (source: https://incentiveandmotivation.com/employee-recognition-programs-everything-you-need-to-know/)
- A study by the Aberdeen Group found that companies with formal employee recognition programs had a 31% lower voluntary turnover rate than companies without such programs. (source: https://incentiveandmotivation.com/the-power-of-employee-recognition/)
- According to a survey by the Incentive Research Foundation, 85% of companies in the US use non-cash rewards to recognize and reward employees. (source: https://incentiveandmotivation.com/employee-rewards-everything-you-need-to-know/)
- The same survey by the Incentive Research Foundation found that 70% of US companies use gift cards as an employee reward. (source: https://incentiveandmotivation.com/employee-rewards-everything-you-need-to-know/)
- A study by the Society for Human Resource Management found that companies that spend 1% or more of payroll on recognition have an average turnover rate of 14.9%, compared to 19.2% for companies that spend less than 1% of payroll on recognition. (source: https://incentiveandmotivation.com/employee-recognition-programs-everything-you-need-to-know/)
- According to a survey by the Incentive Research Foundation, travel rewards are the most popular type of non-cash reward used by companies, with 47% of companies using them. (source: https://incentiveandmotivation.com/employee-rewards-everything-you-need-to-know/)
Types of Incentives
There are many types of incentives, and companies can get creative in designing their incentive programme. Here are some of the most common types of incentives:
- Monetary Incentives: Monetary incentives are cash rewards that can be given to employees for achieving certain goals or milestones. These can include bonuses, profit-sharing, or commission-based incentives.
- Non-Monetary Incentives: Non-monetary incentives are non-cash rewards that can be given to employees. These can include perks such as flexible working hours, company events, or employee recognition programs.
- Tangible Incentives: Tangible incentives are physical gifts that can be given to employees. These can include items such as company-branded merchandise, gift cards, or other tangible items.
- Intangible Incentives: Intangible incentives are non-physical rewards that can be given to employees. These can include opportunities for career advancement, training and development, or increased responsibility.
Benefits of Incentives:
There are many benefits to implementing an incentive programme, including:
- Motivating Employees: Incentives can motivate employees to work harder and achieve better results.
- Driving Performance: Incentives can drive performance by setting clear goals and expectations for employees.
- Improving Employee Engagement: Incentives can improve employee engagement by making employees feel valued and appreciated.
- Retaining Top Talent: Incentives can help retain top talent by recognizing and valuing their contributions.
Designing an Effective Incentive Programme
When designing an incentive programme, companies should consider the following:
- Clear Objectives: The programme should have clear objectives that align with the company’s overall goals.
- Criteria for Selection: The criteria for selecting employees to receive incentives should be clear and objective.
- Communication: The programme should be communicated clearly and regularly to employees.
- Flexibility: The programme should be flexible enough to accommodate different employee needs and preferences.
- Measurement: The programme should be regularly evaluated and measured for effectiveness.
Best Practices for Implementing an Incentive Programme
Here are some best practices for implementing an incentive programme:
- Make it Personal: Incentives should be personalized to each employee’s preferences and needs.
- Keep it Timely: Incentives should be given in a timely manner, preferably immediately after the achievement.
- Make it Public: Incentives should be publicly announced and celebrated to recognize the employee’s achievement and motivate others.
- Make it Relevant: Incentives should be relevant to the employee’s job and contribution to the company.
- Keep it Simple: Incentives should be easy to understand and access, without complex procedures or requirements.
Incentives are a powerful tool for driving performance and engagement in the workplace. By designing an effective incentive program and following best practices, companies can motivate employees to work harder and achieve better results, improve employee engagement.